Termination Due to Prolonged Illness

Integrity, Reliance & Relationship
Rajeswari Karupiah & Co.
From Employment Due To
Prolonged Illness
MEDICAL BOARD OUT

• Employment relationship may be terminated on
medical grounds e.g. due to prolonged illness of an
employee
• Issue – whether such termination tantamount to a
dismissal without just cause or excuse (Section 20
Industrial Relations Act 1967)
• Employment Act 1955 (“EA”) has no provisions for
employees who may be suffering from prolonged
illness
Introduction

• Section 60F of the EA deals only with sick leave
/hospitalization leave
• Thus, the employer must - in respect of prolonged
illness - adhere to the procedure outlined in the
collective agreement, terms of employment or
employee handbook
• In the absence of any such procedure, the employer
is inclined to look at the past practice in his
establishment or Group Company
EA 1955

• In absence of written procedure or past practice, the
employer is advised to apply reasonable standards,
fairness and compassion
• Medical leave should be granted to enable an
employee on account of serious or prolonged
illnesses.
• Even if the employment contract makes no
stipulation to that effect.
Clear written policy is however recommended.
General

1. PROLONGED ILLNESS CLAUSE
• 1.1 An employee who is certified by the Company’s panel
doctor or an appropriate Government Hospital Authority to
be mentally unsound, or suffering from illness requiring
prolonged treatment such as tuberculosis, cancer, leukaemia,
cerebral thrombosis, paralysis, or injury arising from an
accident shall, upon confirmation of such illness or injury by
the Company’s panel doctor and who has served a minimum
of twelve (12) months with the Company, will be granted up
to a maximum of three months’ leave on full pay, a further 3
months consecutive leave on half-pay and a further 6
months’ leave without pay.
Written Policy

PROLONGED ILNESS CLAUSE…cont.
• 1.2 Prolonged illness leave shall be granted on the
condition that the employee undergoes all the necessary
treatment as required by the Company’s panel doctor or
Government Hospital Authority.
• 1.3 In cases where early prognosis certified by the
Company approved clinics/hospital indicates six (6) months
or more of prolonged illness, the employee may, at his
option elect to resign from the services of the Company. In
such cases the Company has the discretion to pay in one (1)
lump sum the employee’s entitlements to prolonged illness
leave.
Written Policy

2. Medical Boarding Out
2.1 If the employee is unable to perform his duties
after a prolonged medical leave, the Company shall
consider medically boarding out of the employee.
2.2 In making the decision, the Company shall
consider the recommendation from the Company’s
approved clinic/ government hospital or specialists.
Written Policy

• It is always prudent to obtain medical report from a
medical practitioner (including a second opinion in
case of uncertainty) before making the decision to
medically board out an employee
• A conclusive medical report on the employee’s
medical condition and/or ability to perform his
duties is of paramount importance
• The employee must be informed of the reasons as
to why the employer intends to refer the employee
for a medical examination
Medical Report

• The employer may on medical grounds, consider
making adjustments to the job content of the
employee, transferring him to another position that
he is capable of handling or creating special jobs on
lower pay, with the consent of the employee.
• Any change of position or the terms of employment
without the employee’s consent may amount to a
fundamental breach of the contract of employment
– Constructive Dismissal
What If The Employee Produces
A Light Duty Certificate?

1. Obtain medical advice/report
2. If the medical report points to the employee’s
inability to continue to perform his usual functions
and duties in the company, then the company may
be justified in medically boarding him out
3. The employee must be notified of the employer’s
decision to medically board him out
4. Employer may assist the employee to contact
SOCSO to find out eligibility to make a claim.
How To Medically Board Out An Employee

Employees’ Social Security Act 1969 (SOCSO 1969)
 Section 32 (Determination of question of invalidity or
disablement)
Any question of invalidity or disablement shall
be solely determined by SOCSO’s medical
board.

Employees’ Social Security Act 1969 (SOCSO 1969)
 Section 33 (References to medical boards and appeals
to appellate medical board)
 Questions of invalidity pension or permanent
disablement benefit shall be referred to a medical
board for determination.
 If the insured person is not satisfied with the
decision of the medical board he may appeal to the
SOCSO’s appellate medical board for review
 Further appeal under Section 83 (To Social
Security Appellate Board

Termination benefits are payable in accordance with
years of service for those under EA 1955 (*and those
not under the EA 1955).
[Employment (Termination and Lay-Off Benefits)
Regulations 1980 – Regulation 6]
Service Length Every year
Less than 2 years - 10 days’ wages
2 to 5 years – 15 days’ wages
More than 5 years – 20 days wages

• CAUTION:
 Not every prolonged illness could tantamount to
frustration of the employment contract and thereby
constitute just cause or excuse for termination of the
employee’s employment.
Understanding the Doctrine Of Frustration, that
enables the employer to bring a contract of
employment to an end based on prolonged illness is
necessary
Whether Prolonged Illness Gives Rise To
Frustration Of The Employment Contract

• What is Frustration of contract?
 Harvey on Industrial Relations And Employment Law
(Butterworths Series) [referred to in MHS Aviation Sdn
Bhd v Zainol Akmar Mohd Noor [2001] 2 ILR 336]

“One instance of termination by operation of law is the
doctrine of frustration: where, without the fault of either
party, some supervening event occurs which was not
reasonably foreseeable at the time when the contract was
made and which renders further performance of the contract
either totally impossible or something radically different
from what the parties bargained for, then the contract is
forthwith discharged by operation of law. Typical instances
of frustration of the contract are (subject always to the terms
of the contract, expressed or implied) death or serious illness
or injury of an individual party to the contract, a change in
the law, or war.”

Harvey further states that:
“Absence for ill health may take the form either of
persistent brief absences over a long period of time,
or a single long absence from work. In the latter
situation it may exceptionally be the case that the
contract is frustrated. Where this is the case there is
in law no dismissal and therefore the employee’s
claim for unfair dismissal is bound to fail.”

MHS Aviation Case…
The issue in dispute was the termination of the
Claimant’s services as a helicopter pilot w.e.f Sept
1998 pursuant to the Claimant suffering a heart
attack whilst flying. The Claimant underwent
various tests and was on medical leave. The medical
report stated as follows:
“He is currently on medical leave and no flying
duties for six to nine months with effect from April
1998 and a reassessment of his flying status after this
period…”

The company terminated the claimant’s services by
giving him three (3) months notice. The termination
letter also stated that:
“In the event that during any period of the three (3)
months notice you regain your licence, the notice
shall be withdrawn…”

Held :
(i) The company’s termination amounted to a
qualified termination as it was dependent
on the claimant’s medical condition i.e. that his
termination would only be effective if he failed to
regain his license within three months, which
would have the effect of discharging the contract
due to frustration. Furthermore, the claimant
could not regain his license within three months
as he had been grounded from six to nine
months.

Held :
(ii) The plea of frustration did not apply in this
case as it would only apply when there is a non-
foreseeable occurrence of a supervening event
that would render further performance of the
contract impossible. Such events are never
catered for in the contract hence frustration
occurs outside the ambit of the contract.

Held:
(iii) The company had not weighed the situation
properly between the employer’s need for the
work to be done and the employee’s need for
time in which to recover his health. It had
unilaterally and capriciously issued the
termination letter with a preconceived mind that
the claimant’s medical incapacity was likely to be
permanent.

• East Lindsey District Council v Daubney [1977] IRLR
181; [1977] ICR 566
“…before an employee is dismissed on the ground of
ill health it is necessary that he should be consulted and
the matter discussed with him … .
… there are many possibilities. Only one thing is certain,
and that is that if the employee is not consulted, and given
an opportunity to state his case, an injustice may be done…
.”

In East Lindsey’s case, it was further held that:
“While employers cannot be expected to be, nor is
it desirable that they should set themselves up as
medical experts, the decision to dismiss is not a
medical question, but a question to be answered by
the employers in the light of the available medical
advice … .”

The crucial thing in the frustration of a contract of
employment is not the employee’s period of
absence from service, but rather the fact that there
now exist circumstances which would not allow the
contract to subsist.

Zainon Suppian Suppiah v Universiti Malaya
[2008] 7 CLJ 408
Facts: Plaintiff was a bus driver since 1963 and was diagnosed
with mental illness in 1982. In 1983, the employer
compelled him to return to work and dismissed him when
he failed to do so. After recovering from his illness in 1997,
the Plaintiff filed for a declaration that his dismissal had been
unlawful.
Note: Limitation Act 1953 did not apply in this case due to the
Plaintiff’s incapacity
Held: At the date of dismissal, the Plaintiff was not able to
think rationally and carry out his duties as normal. In his
state, the Plaintiff did not know that he was committing a
wrong.
Is Prolonged Illness Sufficient Ground
For Dismissal

Zainon Suppian Suppiah v Universiti Malaya
[2008] 7 CLJ 408
High Court further held that “to dismiss the plaintiff
for being absent from work when he was still
suffering from paranoid schizophrenia would in my
view be exceptionally harsh and unfair and highly
unjustified having regard to the fact that the
defendant, being an institution of higher learning, is
expected to be considerate, fair and
compassionate”.
Is Prolonged Illness Sufficient Ground
For Dismissal

Penang Parkroyal Hotel v. Norzaidi Sabri [2004] 2 ILR 486
Industrial Court:- …the claimant had shown a good reason
for his absence, in that during the time of his absence he
was suffering from an illness and sought medical aid from a
‘bomoh’ (‘traditional healer’).
The Court held that what the company should have done
was to visit the claimant at his house to give moral support
and at the same time to see the claimant’s condition, which
it was aware of (As the Claimant’s wife & sister had called
the Company to inform that he could not walk). In
conclusion, the Court held that the claimant’s dismissal
due to absence from work was without just cause or
excuse.
Is Absence Due To Illness Sufficient
Ground For Dismissal?

Ahmad Pazli Mohamed v. Petronas Gas Berhad
[2015] 4 ILR 50
Claimant (Employee) was absent on multiple occasions due
to his health conditions (vertigo attacks). The Company was
aware of the Claimant’s pre-existing health issue and that his
prolonged illness was the cause of his absence from work.
Held: The basic obligation of workman is to be present at his
employer’s workplace to render services that he had
contracted for. If he is on medical leave he has to inform his
employer and submit his MC, which the workman failed to
do.
Reasonable for the employer to terminate the employee
from service.
Is Absence Due To Illness Sufficient
Ground For Dismissal?

Azhar Victor v Malaysian Airlines System [2012] 8
CLJ 563
Facts: Employee was learning management services
manager before retiring after 34 years of service. He
was suffering a neurological condition called
cerebellar ataxia. His condition worsened 1 year
before retirement due to a fall at work place, and
was on medical leave for 2.5 months.
Medical board was not convened to investigate his
condition despite appeals. Thus, employee deprived
of opportunity to be medically boarded out. Further
his application for MSS (offered by the Company to
all its employees) was rejected.
Is Prolonged Illness Valid Ground
For Medical Board Out

CLJ 563
Facts Continued: Instead the Company asked the
Employee to recuperate at home until his
retirement. Even though the Employee produced
medical experts’ report that he was unfit to work
and was qualified to be MBO;
Employee filed a suit for special damages to the
amount of RM443,567.42 being the gratuity he
would have received for MBO as per Article 35 of
the Company’s Collective Agreement with the MAS
Managerial Staff association.

CLJ 563
Company argued that MBO is at its discretion &
prerogative
HC ordered the Company to convene a medical board as
per the Company’s MOU with the Union - to enquire into
the fitness of the employee to continue in employment or if
he should be in alternate employment, and if he is found to
be unfit due to his medical ailments by the medical board,
then he should be recommended for Medical Board Out.
High Court found the decision to not refer the employee to
medical board was unfair, unjust & unreasonable.

Abdullah Abdul Rahman v Continental Tyre
Malaysia Sdn Bhd [2015] 4 ILR 512
Facts: Claimant met with an accident whilst on duty and
injured his back. This was upon the Claimant’s 20 years of
service with the Company. The Claimant was on extended
medical leave (7 weeks) when he was terminated on the basis
of medical board out.
The Company terminated the Claimant’s service based on the
opinion from an orthopedic specialist that he wont be able to
do heavy manual task that involves lifting/carrying heavy
objects (his job required heavy lifting 20-25 times a day)
Whether prolonged illness gives rise to
frustration of the employment contract

Malaysia Sdn Bhd [2015] 4 ILR 512
Facts: Claimant contended that he was still on medical
leave due to the workplace accident. That his
operation was due in a few months. Further the
Company did not attempt to offer him alternate
employment or a lower position.
Whether prolonged illness gives rise to
frustration of the employment contract

..cont.
Held: The Claimant’s contract of
employment was frustrated by his medical
condition. Illness that interferes with the
proper performance of the contract may
operate to determine the employment
contract.
Therefore the Company’s action in
terminating the service of the Claimant was
with just cause/excuse.

Thank You All
rajeswari@rajeslawyer.com

Termination Due to Prolonged Illness

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