Terminating an Employee with Mental Health Issues UK: Points to Note

Terminating an employee is never an easy decision, especially when mental health is involved. In the UK, the topic of terminating an employee with mental health issues is legally and ethically sensitive. Employers must walk a fine line between operational needs and their duty of care, ensuring compliance with employment laws and equality legislation.

In this article, we’ll explore how employers can navigate this complex issue practically and legally. We’ll cover everything from understanding legal obligations to real-world procedures and best practices for handling dismissals involving mental health challenges.

Understanding Mental Health in the Workplace

Mental Health as a Protected Characteristic

Under the Equality Act 2010, mental health conditions such as depression, anxiety disorders, bipolar disorder, PTSD, and others may be classed as a disability if they have a “substantial and long-term” negative effect on daily activities. This means:

• Employers must not discriminate based on mental health.

• Employees with qualifying conditions are protected from unfair dismissal.

• Employers must make reasonable adjustments.

Legal Framework: What Employers Need to Know

1. Equality Act 2010

Employers must not treat employees unfavourably due to a mental health condition that qualifies as a disability. This includes:

• Direct discrimination

• Indirect discrimination

• Discrimination arising from disability

• Failure to make reasonable adjustments

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2. Employment Rights Act 1996

Dismissal must be for a fair reason and carried out using a fair process. Ill-health (including mental health) can be a fair reason if:

• The condition prevents the employee from performing their duties

• All other reasonable steps, like adjustments or support, have been considered

3. Health and Safety at Work etc. Act 1974

Employers have a duty of care to protect employee health, including mental wellbeing. This includes:

• Conducting risk assessments

• Addressing work-related stress

• Providing appropriate support

When Is Termination Justifiable?

Terminating an employee with mental health issues in the UK is possible, but it must meet strict criteria. Here are acceptable justifications:

A. Capability (Medical Grounds)

The employee is no longer able to perform their role, even with reasonable adjustments, and there is no suitable alternative role available.

Key Steps:

• Gather medical evidence (GP, Occupational Health).

• Explore adjustments or redeployment options.

• Document everything.

B. Conduct

Mental health does not excuse misconduct, but may explain it. However, dismissing conduct without investigating the mental health aspect can be legally risky.

Example: If an employee is aggressive due to untreated PTSD, the employer must consider whether that behaviour stems from the condition.

C. Redundancy

If the role no longer exists or restructuring occurs, dismissal may be appropriate, but mental health status should not influence the decision. Discrimination law still applies.

Step-by-Step Guide to Managing Termination Risks

Step 1: Identify Early Warning Signs

Managers should be trained to spot mental health issues, such as:

• Frequent absences

• Changes in behaviour or performance

• Withdrawal from colleagues

• Unexplained irritability

Address concerns sensitively and promptly through regular check-ins.

Step 2: Initiate Occupational Health Involvement

Referral to Occupational Health (OH) is essential before any decisions are made. OH can:

• Assess whether the condition meets the definition of disability

• Advise on reasonable adjustments

• Forecast recovery or return-to-work timelines

Step 3: Consult the Employee

Hold a supportive welfare meeting with the employee. Let them share their experiences and discuss support options. Document the discussion and follow-up in writing.

Questions to explore:

• Have they seen a GP or mental health professional?

• Are they taking medication or undergoing therapy?

• Are work-related issues contributing to their condition?

Step 4: Consider Reasonable Adjustments

Before termination, you are legally required to explore reasonable adjustments, such as:

• Flexible hours

• Reduced workload

• Change of line manager

• Temporary remote work

• Time off for therapy or medical appointments

Failure to do so may lead to a disability discrimination claim.

Step 5: Review Absence Management and Return-to-Work Plans

If the employee is off sick:

• Maintain regular, non-intrusive contact.

• Create a return-to-work plan with gradual reintegration.

• Involve HR and OH in planning.

Prolonged absences (6+ months) may require formal capability hearings.

Step 6: Conduct a Capability Hearing

If all support measures have been exhausted:

• Invite the employee to a formal meeting (with a companion).

• Present medical evidence and business impact.

• Give the employee a chance to respond.

• Consider alternative roles.

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Dismissal should be a last resort and must be carefully documented.

Red Flags to Avoid

1. Skipping Occupational Health: Terminating without medical input is a red flag in tribunals.

2. No Documentation: Without written records of adjustments or meetings, your case weakens.

3. Making Assumptions: Don’t assume someone can’t work because of a mental health diagnosis.

4. Failing to Follow Policies: Always stick to internal absence or disciplinary policies.

5. Not Considering Redeployment: Ignoring alternative roles can look like unfair dismissal.

Case Law Examples

1. Dawson v. Rentokil Initial UK Ltd (2006)

An employee with depression was dismissed after a short absence. The employer failed to explore adjustments. The tribunal ruled in the employee’s favour.

2. BS v. Dundee City Council (2013)

The court ruled that absence duration is relevant, but employers must also consider:

• The employee’s prospects of returning

• Medical advice received

• Whether the employer’s procedures were fair

Practical Employer Checklist

Communicating Termination Compassionately

If termination becomes necessary:

• Be clear but compassionate in communication.

• Offer help with job transition or references.

• Provide a written explanation citing legal and business reasons.

• Reaffirm appreciation for their contributions.

How to Protect Your Organisation

1. Update Policies: Include mental health in sickness absence and EDI policies.

2. Provide Training: Line managers should receive training on mental health and legal risks.

3. Introduce a Mental Health Champion: Foster an open culture and peer support.

4. Use External Consultants: A third-party OH or HR consultant offers objective insight.

Potential Tribunal Risks

Common claims that may arise include:

• Unfair Dismissal (failure to follow fair process)

• Disability Discrimination (s.15 Equality Act 2010)

• Failure to Make Reasonable Adjustments

• Constructive Dismissal (if work made their health worse)

Tip: Employers who act transparently, seek medical advice, and make genuine efforts to help the employee will stand a better chance of defending their actions.

Conclusion

Terminating an employee with mental health issues in the UK is a highly sensitive and legally complex process. Employers must tread carefully, ensuring they balance business needs with compassion, fairness, and compliance.

By involving Occupational Health, making reasonable adjustments, following a fair process, and keeping detailed records, you can protect both your employees’ rights and your organisation from legal and reputational harm.

Mental health challenges are becoming more prevalent in UK workplaces. Your organisation’s ability to handle them with care and competence reflects your values—and your commitment to safe, supportive working environments.

Further Resources

• ACAS: Mental Health in the Workplace

• Mind: Resources for Employers

• HSE: Work-Related Stress and Mental Health