Long-term sickness: when to start a capability process
Six weeks in, fourteen weeks in, twenty-six weeks in - what good SME practice looks like, and the costly mistakes we keep seeing.
"She has been off six weeks - can I let her go?"
This is the most common urgent question I get from SME owners. The honest answer is: not safely, and not yet. But there is plenty you should be doing, and most owners do none of it because they are afraid of getting it wrong.
Long-term sickness sits at the messy intersection of three legal duties: the duty to make reasonable adjustments under the Equality Act, the duty not to discriminate on disability grounds, and the duty to follow a fair capability process. Get any one of them wrong and you are looking at a tribunal you will lose.
Here is the structure I run clients through.
Weeks 1–4: keep in touch - gently
Keep a sensible, documented contact pattern. A short text or email once a week. Not a barrage. The aim is two-way: how are they, and is there anything you can do.
Mistakes I see:
- Going completely silent for fear of "harassment". The employee then feels abandoned and lawyers up.
- Calling daily for updates. This is harassment.
What good looks like: a weekly check-in, agreed at the outset. Brief, warm, written.
Weeks 4–12: get a clinical view
If absence reaches around four to six weeks with no obvious return date, you should be asking for a GP report or - better - an occupational health assessment. You need the employee's written consent under the Access to Medical Reports Act, and you should pay for the OH referral.
The OH report answers three questions you need to make decisions on:
- What is the underlying condition - and does it amount to a disability under the Equality Act?
- What is the likely return-to-work timeline?
- What reasonable adjustments would support return?
If the condition is or might be a disability, the reasonable-adjustments duty kicks in immediately. You cannot dismiss without first considering and (where reasonable) implementing adjustments.
Weeks 12–26: phased return or formal review
If the OH report supports return - typically within 4–8 weeks - you plan a phased return. Reduced hours, lighter duties, regular review points. Document everything. Pay in line with hours worked, but keep occupational sick pay where applicable.
If the OH report is pessimistic about return, you move into a formal capability process. This is not disciplinary. It is a structured set of meetings with documented warnings (informal → first warning → final warning → dismissal hearing), each with the right to be accompanied, each with reasonable notice, each with a right of appeal.
The key word is reasonableness. A tribunal will ask: did you wait long enough? Did you consider adjustments? Did you consult the employee? Did you consider alternative roles?
Beyond six months
By the time absence reaches six months with no realistic prospect of return, dismissal on capability grounds can be fair - but only if the process above has been followed honestly.
The single most common mistake I see: SMEs dismiss at six months with no OH report on file, no documented adjustments considered, and no formal capability meetings. They then lose the tribunal not because the dismissal was unfair in substance, but because the process was non-existent.
What "good" costs
For most SMEs, running a clean long-term sickness case from week one to a fair dismissal at month seven costs around £600–£1,200 in OH fees plus management time. The alternative - a tribunal claim, average award £15,000–£25,000 for unfair dismissal, plus legal fees - costs ten to twenty times that.
The process is not the enemy. The process is the insurance policy.