Dismissing An Employee Due To Mental Health


If an employee’s mental health is impacting their performance, the employer can take action to try to address the situation. In some cases, this may result in terminating the employee’s contract of employment. But the employer has to ensure they follow a fair process in deciding to dismiss an employee due to mental illness, or they risk exposure to costly tribunal claims.

The following guide for employers looks in detail at the complex legal issue of terminating the employment of an individual with mental health issues — from the employee’s rights to the employer’s obligations — and the consequences for an employer of falling foul of the law.


Dismissal due to mental illness: employee rights 

In the UK, all employees with 2 years’ continuous service or more have the right not to be unfairly dismissed. This essentially means that if the employer wishes to bring the contract of employment of a qualifying employee to an end, they must be able to provide a potentially fair reason for dismissal. This can include the employee’s inability to do their job for mental health reasons, on grounds of capability, although the employer must still act reasonably in treating medical incapacity as a sufficient basis upon which to justify dismissal.

The employer must also follow a full and fair procedure, providing the employee with an opportunity to address any capability issues, with sufficient time to recover.

In circumstances where the employee’s mental health issues amount to a disability — where they have a psychological impairment that has a substantial and long-term adverse effect on their ability to do normal daily activities — the employee is entitled to reasonable adjustments to be made to minimise any disadvantage arising from that disability when doing their job.

Equally, all employees are entitled to work in an environment where risks to their health, safety and welfare, including their mental and emotional wellbeing, are adequately controlled. This means that if the employee’s mental health issues have been either caused or exacerbated by work-related stress, steps must be taken to create a safe working environment.

Common mental health issues can include symptoms of depression and anxiety, whilst less common ones include conditions such as bipolar disorder and schizophrenia. Depending on their severity, any of these or other mental health issues can seriously impact an individual’s ability to do their job. Even stress — which isn’t strictly classed as a medical condition — can still have a significant effect on an employee’s wellbeing and, in turn, their performance and attendance levels at work.


Employer obligations when terminating an employee with mental health issues 

An employee can be fairly dismissed on grounds of capability if they have serious mental health issues making it impossible for them to do their job, or to do their job properly. It may also be fair to dismiss an employee for ‘some other substantial reason’, if any recurring sickness absence is having a negative impact on the employer’s business.

However, where the employee’s condition amounts to a disability, the employer is under a statutory duty to make reasonable adjustments to either remove or reduce any disadvantage suffered by that individual when compared with a non-disabled employee. Reasonable adjustments could include things like altered hours, amended duties or even workplace adaptations, although what’s ‘reasonable’ will all depend on the facts of each case. The employer will need to explore all possible options and consider any employee requests. They will then need to make an informed decision based on the cost of any adjustments, the practicalities involved, whether there are sufficient resources to fund these adjustments, and whether the adjustments will be effective in overcoming or reducing the disadvantage.

However, in the context of mental health issues, there are often a number of cost-free or low-cost adjustments that can be easily made that will still make a significant difference to an employee’s overall wellbeing. These can include, for example, flexible working arrangements, a reduced workload, the provision of a quiet rest area or a change of workstation, either to a more secluded or sociable area, depending on the individual’s personal preference. Many organisations are now appointing mental health first aiders to ensure mental wellbeing is managed as a day to day concern.

Even if the employee is not suffering from a long-term mental health condition that amounts to a disability, the employer should still undertake a risk assessment to ensure that the employee’s symptoms have not been caused or exacerbated by any issues arising at work.

Work-related stress is widely recognised in the UK as a serious health and safety matter, where employers are duty bound to handle this issue like any other workplace hazard. This means that employers must provide their employees with a safe and stress-free place of work, where appropriate measures must be taken to control any risk factors identified, for example, a heavy workload, long hours, or a lack of supervision or support.


Fair dismissal process to terminate employment due to mental health 

Even though mental health issues can constitute a potentially fair reason for dismissal by reason of incapability — in the same way as incapacitating physical health issues — the employer must still act reasonably in all the circumstances ‘and’ follow a fair procedure.

There’s no statutory definition of ‘reasonableness’, but the employer must carry out a full and fair investigation into all the facts and any circumstances surrounding a capability issue due to mental ill health before dismissing an employee. Having conducted a thorough investigation, to justify dismissal, the employer must hold a reasonable belief of serious incapability, with reasonable grounds to support that belief. Ultimately, any decision to dismiss must fall within a range of reasonable responses available to the employer, taking into account things like the employee’s ability to perform their job role, the length of any ongoing or recurring sickness absence, the level of disruption to the business and the likelihood of recovery.

A fair capability procedure should therefore involve:

  • conducting a thorough investigation into the employee’s mental health condition, including assessing any fit notes provided by the employee’s GP
  • obtaining an up-to-date medical opinion from the employee’s GP or other medical practitioner to establish a prognosis and the nature of any treatment that may assist
  • where necessary, obtaining an assessment by an occupational health specialist to report on what adjustments can be made in the context of the employee’s role
  • providing the employee with an opportunity to obtain any further expert medical opinion in rebuttal of any other reports
  • exploring all possible options with the employee to support them in their job, such as flexible working, amended duties or adapting the workplace
  • listening to the employee’s suggestions as to what might help and, where reasonable, putting these ideas into place to see if they make a difference
  • where applicable, providing the employee with sufficient time to prove their capability to do their job with reasonable adjustments in place.


Legal risks of mental health dimissals

There are a number of legal risks associated with dismissal due to mental health issues.

Provided the employee has 2 years’ continuous service, any failure to follow a fair procedure, or to act reasonably in all the circumstances, could result in a finding by an employment tribunal of unfair dismissal for which the employer will be ordered to pay the employee damages. The employer could also be ordered to reinstate the employee in their previous job role, or to re-employ that individual in a different role within their organisation.

In cases where the mental health condition suffered by the employee amounts to a disability, any dismissal could potentially be deemed by a tribunal as automatically unfair. This is a legal right that arises from day one of employment, so the employee would not need to satisfy any qualifying service requirement. A decision to dismiss due to mental health issues could also amount to unlawful disability discrimination for which any award of damages is uncapped.

Separately, a failure to make reasonable adjustments to alleviate any disadvantage arising from a mental health disability, can again amount to unlawful discrimination. If the employee cannot do their job because there are no reasonable adjustments that can be made to either their working conditions or working environment, it may be fair for the employer to dismiss them, even if they’re disabled. However, the onus of proof will be on the employer to show why they were unable to reduce or remove any disadvantage suffered.

Finally, the employer must not breach its’ statutory obligation to ensure, so far as is reasonably practicable, the health, safety and welfare of its employees. In the event of breach, compensation can be sought through the civil courts for any personal injury sustained, including psychological symptoms amounting to a recognised psychiatric disorder.


Best practice guidance for employers 

Given that cases of mental health incapacity are fraught with legal risk, the following best practice tips can help employers to avoid falling foul of the law:

Mental health issues can be extremely complex where symptoms, for example, from depression and anxiety, can impact individuals very differently. It’s important for employers not to make generalisations, but to try to understand the particular impact on an employee and what steps can be taken to support them. The type of adjustments that may work for one sufferer may not necessarily work for another, where the individual in question is often best placed to explain what they need, and for the employer to act on any requests.

Where the employee is unable to suggest any steps that can be taken to support them, funding the cost of an independent occupational health assessment is likely to be money well spent. This is certainly more cost effective than defending a premature and potentially unfair decision to dismiss. Provided suitable recommendations can be made and implemented to help the employee get back on track, this will also lead to savings on any recruitment costs to replace the employee if a dismissal decision had instead been made.

Where reasonable adjustments are made, a clear written record should be retained of these. Regular reviews should also be undertaken of any adjustments to ensure that these remain effective, where the employee is both able to cope and to do their job to the required standard. If there are no reasonable adjustments that can be made, an explanation must be given to the employee before terminating their employment. Again, this decision-making process must be fully documented, for example, where the reason for refusing any adjustment is due to the lack of resources available or insurmountable impracticalities.

If the employee is absent on sick leave due to mental health issues, before embarking on any capability procedure or making a decision to dismiss, this may mean waiting for them to be well enough to attend a meeting or, at the very least, provide a written response. The employer must also give the employee reasonable time to recover from their mental health condition, and conclude any course of treatment, before reaching any final decision.

Employers should only ever consider dismissal as a measure of last resort, after exploring all other possible options to support the employee in their job role. To minimise any exposure to legal proceedings, it’s also always best to seek expert legal advice from an employment law specialist prior to dismissing an employee due to mental health issues. As every case is unique, much will depend on the circumstances involved, from the nature and extent of the employee’s condition to the type of business and resources available to the employer.


Need assistance?

Our HR and employment law specialists advise and guide employers on how to approach dismissals, including those concerning complex issues such as mental health and disabilities. To minimise legal risks while protecting your business’ commercial interests, speak to our experts today.


Dismissal due to mental illness FAQs

Can you terminate an employee with mental health issues?

An employer can fairly dismiss an employee on the grounds of incapacity, provided they follow a fair capability process and, where mental health issues amount to a disability, consider what reasonable adjustments can be made before deciding on dismissal.

Can I be sacked for mental health issues UK?

It may be lawful for someone to be sacked for mental health issues if they’re no longer able to do their job properly because of this, and there are no reasonable adjustments that can be made to remove any disadvantage.

What are my rights as an employee with mental illness?

Your employer is under a statutory duty to ensure your health, safety and welfare at work, including your mental wellbeing. They are also under a duty to make reasonable adjustments where any mental illness amounts to a disability.

Last updated: 27 November 2021


Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.

She is a recognised by Legal 500 and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.

Anne is an active public speaker, immigration commentator, and immigration policy contributor and regularly hosts training sessions for employers and HR professionals

About DavidsonMorris

As employer solutions lawyers, DavidsonMorris offers a complete and cost-effective capability to meet employers’ needs across UK immigration and employment law, HR and global mobility.

Led by Anne Morris, one of the UK’s preeminent immigration lawyers, and with rankings in The Legal 500 and Chambers & Partners, we’re a multi-disciplinary team helping organisations to meet their people objectives, while reducing legal risk and nurturing workforce relations.

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