Employment Eye – May 2026

Long-Term Absence: Getting It Right Before It Goes Wrong

Long-term sickness absence and capability concerns are among the most common challenges employers face. Acting too quickly can damage the employment relationship, while waiting too long  risks losing contact with the employee and increasing operational and financial costs. 

Getting the timing and process right can preserve the working relationship and reduce litigation risk. 

According to the Keep Britain Working report, prepared by the Department for Work and Pensions, employees absent for four to six weeks have a 96% chance of returning to work, but this drops to less than 50% after a year. Early intervention is therefore critical.

The Legal Framework

Capability as a fair reason for dismissal

An employer may only lawfully dismiss an employee for one of the five potentially fair reasons under the Employment Rights Act 1996:

1. Capability 
2. Conduct
3. Redundancy
4. Illegality, or
5. Some other substantial reason

Long-term sickness absence falls within the "capability" ground, but the employer must still follow a fair process and consider alternatives before reaching a decision to dismiss.

Discrimination risks

Discrimination claims under the Equality Act 2010 do not require a minimum period of service and carry unlimited compensation, unlike unfair dismissal claims which are currently subject to a two-year qualifying period and a statutory cap. Where an employee's long-term absence is connected to a disability, dismissal may give rise to claims for discrimination arising from disability, failure to make reasonable adjustments, or direct or indirect discrimination. 

A disability is defined as a physical or mental impairment that has a substantial (more than minor or trivial) and long-term (12 months or more) adverse effect on their ability to carry out normal day-to-day activities. Certain conditions, such as cancer, are automatically treated as disabilities from the point of diagnosis.

Medical evidence and Reasonable Adjustments 

Employees may self-certify for the first seven days of illness. From day eight, a "fit note" is required. Fit notes may confirm an employee is unfit for work or could return with adjustments such as, reduced hours. While these suggestions are not legally binding, employers should carefully review and document their feasibility to mitigate risk. 

For prolonged absences, employers are able to request up-to-date medical evidence and occupational health assessments. The assessments provide tailored evidence regarding the expected return date and of any limitations, helping the employer evaluate adjustments and the viability of a return to work.

Employers have a duty to make reasonable adjustments for disabled employees, addressing disadvantages stemming from the physical work environment, standard operating procedures, or the need for additional support tools.

Timing: The Risks of Delay and Acting Too Early

There is no prescribed length of absence that triggers a capability process. Decisions on timing are made case-by-case.

However, delaying too long risks losing contact with the employee, making it difficult to commence the initial stages of the process. This has a knock-on effect on workforce operations and may result in higher financial costs to employers if paying contractual sick pay. Conversely, processes started too early may damage trust and the working relationship. Critically, dismissing an employee without following a fair process or considering alternatives may result in a successful unfair dismissal and/or discrimination claim.

Key Case Law

In Kitching v University Hospitals of Morecambe Bay NHS Foundation Trust, An Employment Tribunal awarded nearly £50,000 to a cleaner dismissed after 406 days of absence. The dismissal was unfair and discriminatory, as the Trust failed to make reasonable adjustments for the claimant’s disability (bipolar disorder/anxiety), and ignored medical evidence and its own retention policy.

This case highlights the importance of engaging properly with medical evidence and internal procedures before making the decision to dismiss. 

By contrast, in McAllister v Commissioners of Her Majesty's Revenue and Customs, the Employment Appeal Tribunal held that dismissing a disabled employee for long-term sickness was not discriminatory. The employer had provided substantial support, made reasonable adjustments, and followed fair procedures. The dismissal was found to be a proportionate means of achieving a legitimate aim of managing absence. 

Practical Steps for Employers

1. Ensure policies are current and clear
   • Policies should define the formal stages.
   • Managers should receive adequate training on how to manage employees on long term absence to ensure consistent and correct application of the policy.
2. Maintain regular communication
   • Agree a preferred method and frequency of contact (for example, fortnightly) and designate a single point of contact to ensure consistency.
   • Consider whether the employee wishes to be kept informed of workplace developments such as organisational changes. However, it is important to agree this with the employee.
   • Ensure the employee continues to provide fit notes, to ensure sick pay provisions can be applied accordingly.
   • Once the employee is fit to return to work, it may be appropriate to arrange a return-to-work meeting. The purpose of such a meeting is to identify any underlying cause of the absence and to consider whether any adjustments are necessary to support the employee's return.
3. Seek medical advice and consider reasonable adjustments
   • Consider whether an occupational health referral is appropriate to understand an employee’s fitness to work and whether any adjustments are required to facilitate a return.
   • Adjustments might include flexible working, modified duties, reduced hours, phased return or assistive technology. Encourage employees to discuss being “fit for work with adjustments” with their GP, instead of issuing fit notes that simply states, “not fit for work”.

Employment Rights Act 2025: Key Changes

Statutory Sick Pay (SSP) - from 6 April 2026: 

• SSP is now payable from the first day of absence, removing the previous three-day waiting period.
• The Lower Earnings Limit (currently £123 per week) has been abolished.
• Employees receive the lower of the flat rate (£123.25 per week) or 80% of their normal weekly earnings.

Unfair dismissal – from 1 January 2027:

• The qualifying period for unfair dismissal claims is due to reduce from two years to six months.
• The compensation cap will be also removed.

Employment law 2026 – keeping you and your organisation up to date

There have been a number of notable developments since March’s edition of Employment Eye. Below is a short recap on some of those developments.

5 March 2026 – The Department of Business and Trade (DBT) has published an updated version of the Code of Practice on Industrial Action Ballots and Notice to Employers.

25 March 2026 – Equality (Race and Disability) Bill: the Government published its response to its consultation on mandatory ethnicity and pay gap reporting.  

1 to 6 April 2026 – various statutory annual increases took effect (eg national living wage and maternity pay). Vento bands for injury to feelings awards in discrimination claims increased to:

• £1,300 - £12,600 for the lower band, less serious cases
• £12,600 - £37,700 for the middle band 
• £37,700 to £62,900 for the upper band, the most serious cases
• £62,900 + for exceptional cases

6 April 2026 – Various reforms under the Employment Rights Act 2025 (the Act) came into force:

• Paternity and unpaid parental leave: Became a day-one right. The restriction on taking paternity leave after shared parental leave will also be lifted and up to 52 weeks unpaid bereaved partner paternity leave is also available.
• Statutory sick pay: Is now payable from the first day of illness and the lower earnings limit has been removed bringing into eligibility more than 1.3 million workers.
• Collective redundancy protective award: Was increased from 90 days’ to 180 days’ pay. Doubling the compensation available to employees where employers have not complied with their collective consultation obligations.
• Sexual harassment and whistleblowing: Disclosures about sexual harassment are recognised as ‘qualifying disclosures’ under the whistleblowing legislation.
• Gender pay gap and menopause action plans: Large employers (250+ employees) now need to create action plans, these requirements are voluntary as of 6 April 2026 but will become compulsory from 2027.
• Trade union recognition: Recognition is now simplified, with an updated Code of Practice expected in October 2026.
• Fair Work Agency: Established on 7 April 2026, bringing together existing enforcement bodies.
• Statutory annual leave and pay: Employers are required to keep adequate records of statutory annual leave entitlements and holiday pay.

7 April 2026 – The Government published guidance on creating gender equality action plans (for large employers).

8 April 2026 – The DBT published a call for evidence on the Transfer of Undertakings (Protection of Employment) Regulations 2006. Call for evidence closes on 1 July 2026. 

8 April 2026 – The DBT published its response to the consultation on the right of trade unions to access the workplace.

14 April 2026 – EHRC submitted the updated draft Code of Practice on services, public functions and associations following the For Women Scotland v Scottish Ministers judgment. The draft Code will be laid before Parliament for 40 days.

15 April 2026 – The DBT published a consultation on the misuse of non-disclosure agreements (NDAs). The consultation closes on 8 July 2026. 

28 April 2026 – Tarbuc v Martello Piling Ltd: The EAT held that a tribunal had wrongly applied section 111A of the Employment Rights Act 1996 by ruling that evidence from a protected conversation was not admissible for all the claimant's claims (the claimant claimed unfair dismissal, unlawful deduction from wages and less favourable treatment). Pre-termination negotiations are only inadmissible in ordinary unfair dismissal proceedings. The tribunal also wrongly concluded that there was no improper conduct. For further details please see our Spotlight post.

If you would like further information on any of the topics discussed in this article, please contact a member of our Employment, Pensions and Immigration team who will be happy to help.

If you would like to stay up to date with all of the Employment Rights Act 2025 developments, follow our LinkedIn page where we post our ERA Watch series and visit our Employment Rights Act 2025 Hub.