Medical Board Out Art & Science Talk

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Employers may have to deal with situations concerning
employees who are incapacitated due to a medical illness or
disability thus preventing them from carrying out their job
functions. If the employee’s medical condition is severe enough
with little prospects of recovery, the employer may feel like they
have no choice but to
TERMINATE THE EMPLOYEE ON MEDICAL GROUNDS.
THE PROCESS IN WHICH THIS IS DONE IS COMMONLY
KNOWN AS “MEDICAL BOARD OUT”
INTRODUCTION

A situation where an employer has no other choice but to
terminate the services of an employee who is medically unfit or
incapable to perform his duties any longer due to a medical
condition.
However, this requires the employer to have conducted a
thorough medical examination and certified by a medical
professional to validate that the employee is incapable of
performing his duties any longer.
DEFINITION OF MEDICAL BOARD
OUT

The Employment Law has two provisions:
Provision 1: Sick/Medical Leave
Below 2 years of service: 14 days of medical leave
Between 2-5 years of service: 18 days of medical leave
Above 5 years of service: 22 days of medical leave
Provision 2: Hospitalization Leave
Up to 60 days of medical leave due to hospitalization, as certified
by the medical professional
WHAT DOES THE LAW PROVIDE
FOR EMPLOYEES WHO ARE ILL?

ASIDE FROM THE STANDARD SICK LEAVE AND HOSPITALIZATION
LEAVE,
The law does not set a minimum requirement for a medical board out procedure.
There is no requirement for the employer to put the employee on no-pay leave or
half pay sick leave for a few months prior to the termination on medical grounds.
The medical board out procedure would therefore be in accordance with the
contract i.e. provisions in the employment contract or in the company’s policies
and procedures.
A formal medical board out policy and procedure, if adopted and followed
consistently, could assist an employer in demonstrating that the termination was
not capricious.
The balance between having a productive workforce and compassion is key.
OTHER PROVISIONS?

Most multinational and large companies have a provision called “Prolonged
Illness Leave” due to critical illness or industrial accidents as follows:
First 3 months: With Full Salary
Next 3 months: With Half Salary
Next 3-6 months: Treated as Unpaid Leave
(This is a common practice, the details of the provision may vary from one Company to
another)
Thereafter, with the confirmation of the medical condition by a professional
medical practitioner, the Company reserves the right to terminate the
employment of the employee, due to his incapacity to perform his duties.
GOOD PRACTICES BY COMPANIES

While the law recognizes that employers cannot be expected to
go on unreasonable lengths to accommodate an employee who is
unable to carry out their job, it does not mean that employers can
simply axe employees on a whim, as there are requirements and
standards to meet before medically boarding out any employee.
The primary question to be asked when faced with a medically ill
or disabled employee is usually:
“whether, in all the circumstances, can the employer be expected to wait any
longer and if so for how much longer?”
QUICK PREVIEW OF WHAT THE
LAW SAYS

In Malaysia, employers can only terminate an employee when the illness or disability
suffered has severely crippled their ability to perform their designated tasks, and recovery is
unlikely. An employer must take into account several factors before contemplating
on termination on medical grounds. The factors to be considered include (but are not
necessarily limited to):
• The nature of the employee’s illness;
• The likely length of the employee’s absence during the recovery period;
• The nature and functions of the employee’s job;
• The likelihood of the illness/disability recurring or some other illness arising;
• The length of various absences and the spaces of good health between them;
• The need for the employer to employ another employee to get the work done;
• The impact of absences by the ill employee on other employees;
• Whether the employee is able to be re-designated, or perform other functions,
performance of which would not be impeded by the illness;
• Whether the employee has been appraised for the difficult situation the Company is
faced with in respect of his medical condition.
KEY FACTORS FOR
CONSIDERATION

An employer must therefore ensure that it has thoroughly contemplated the
circumstances surrounding the illness or disability. The employer must show
that based on the information gathered, a dismissal on medical grounds would
be just.
An example can be seen in the case of MHS Aviation Sdn Bhd v Zainol
Akmar Mohd Noor [2001] 2 MELR 133 whereby the company had
dismissed its employee after he was diagnosed with acute inferior and
posterior myocardial infarction.
The Court however held that the termination was unfair as the company had
not made any enquiries on the illness suffered by the employee and merely
issued the termination notice based on the assumption that the illness was
permanent in nature.
CASE STUDY 1

Gopalakrishnan Vasu Pillai v Goodyear Malaysia Berhad is a good starting point when
considering the position of an employee who has a long term medical condition with little
prospect of recovery. The Claimant, who was a master technician, suffered from a recurrent
right knee injury. After numerous medical examinations , the doctors recommended that the
Claimant be given light duties. The company was however, unable to accede to the
Claimant’s request as its operations involved using heavy machinery. The company, whilst
accepting that the Claimant had been an excellent worker, medically boarded him out due to
the knee injury and the long periods of medical leave that had been taken. The Claimant,
however, contended that his dismissal had been unjust as he had not been offered or
recommended alternative employment in the company.
In handing down an award in favour of the company, the Industrial Court referred to the
English authority of Spencer v Paragon Wallpapers Ltd2 wherein it was stated,
“Every case depends on its own circumstances. The basic question which has to be determined in every case
is whether, in all the circumstances, the employer can be expected to wait any longer and if so, how much
longer?” And he added that the relevant circumstances include “the nature of the illness, the likely length
of the continuing absence, the need of the employers to have the work done, which the employee was engaged
to do.”
CASE STUDY 2

In arriving at the conclusion that the dismissal was justified, the Industrial Court in
Goodyear Malaysia Berhad considered the following issues:
• Did the medical reports state that the Claimant will recover and return to work
normally;
• The number of days the Claimant had been on medical leave;
• Did the company foresee that the Claimant will be bound to take many more days of
medical leave which will inevitably affect the productivity and profits of the company.
The Industrial Court in Goodyear Malaysia Berhad also acknowledged the fact that the
company, just like any other companies, was incorporated to carry on business with a view
to profit and was not a charitable organization or a welfare home.
According to the English case of Lynock v Cereal Packaging Ltd3,
“The approach of an employer in this situation is, in our view, one to be based on those three words which
we used earlier in our judgement – sympathy, understanding and compassion.”
CONT; CASE STUDY 2

Lynock goes on to state that one should look at the entire historical background
as the mere fact that a workman is fit at the time of his dismissal does not make
his dismissal an unfair dismissal. The case further states that a company in
reaching what must inevitably be a difficult decision, should among other things,
also look into the following factors:
• the nature of the illness;
• the likelihood of recurring or some other illness arising;
• the length of the various absences and the spaces of good health between
them;
• the need of the employer to get the work done by the particular employee;
• the impact of the absences on others who work with the employee;
• whether the Claimant has been appraised of the difficult situation which the
company is faced with in respect of his medical condition.
CASE REFERENCE

Kempas Edible Oil vs Abu Bakar bin Talib
The Claimant, sometime in 2000, had been diagnosed with a sleep/anxiety disorder. Subsequently in
August 2001, the Claimant had been diagnosed to be suffering from dysthymia with narcolepsy.
Despite the medical attention which the Claimant had been receiving, his medical condition continued
to deteriorate, to the extent that the Company then tried to determine if he could be medically boarded
out pursuant to the provisions of the insurance policy which the Company had taken out for the benefit
of all its executive employees. The insurance underwriters, had, however, on two separate occasions
rejected the Company’s application for the Claimant to be medically boarded out. In 2002, the Claimant
had been on paid medical leave for 87 days. In 2003, the Claimant never came in to work at all.
The Claimant had in fact been on paid medical leave from 1 October 2002 till the date he was
dismissed, on 11 September 2003. In view of the fact that the Claimant was unable to perform his work
due to his medical condition, the Company terminated his employment on medical grounds.
The Industrial Court concluded that since the Claimant was unable to perform his duties any longer
because of his illness, the contract of employment had therefore become frustrated.
CASE STUDY 3

I was hospitalized about 4 months back. I almost had kidney failure,
which resulted in my blood sugar level increasing and experiencing nerve
damage to my feet. Although the condition of my kidney and blood sugar are
in control, the damage to my feet appears to be permanent. I have concerns
driving as I experience pain on both feet; as a result, I don't sleep well at
nights. I have noticed too that now I'm less mobile, preferring to be seated
due to my recent development.
I would like to check if this condition can be deemed as permanent illness and
therefore allow me to ask my company for a board out. Upon checking with
my HR Manager, the company does pay for board out cases. What would be
the recommended steps I should proceed to make a determination to pursue
this option?
CASE SCENARIO – FOR
DISCUSSION

EMPLOYEE WITH HIV/AIDS
THE stigma of being a HIV patient and the discrimination against them in employment
remains a pressing problem in Malaysia. However, some multinational companies should be
applauded as they have strict laws that forbid stigmatization and discrimination.
The Human Resources Ministry's Department of Occupational Safety and Heath has a
Code of Practice on Prevention and Management of HIV/AIDS at the workplace. It places
emphasis on the employer's responsibility to be non-judgmental and to have in place non-
discriminatory policies for HIV-positive employees.
They should have the right to continue working as long as they are able to and do not pose
any danger to themselves, their co-workers and other individuals at work.
The procedure for termination of employment on medical grounds for them should be the
same as for any other diseases.

Disciplinary action should be taken against any employer who discriminates
against or stigmatizes HIV-positive employees. However, many employers are
oblivious to this code of practice.
Many companies mandate pre-employment HIV blood-testing as a
prerequisite before gaining employment. Some doctors are caught in an ethical
dilemma between divulging the HIV results to the employer, employee, or
both.
CONT; HIV/AIDS

ILO’S STATEMENT
An International Labour Organisation study released recently reveals
that people living with HIV who are employed are almost 40 per cent
more likely to stick to HIV treatment than those without a job.
Studies also reveal that treatment reduces the risk of a HIV-infected
person transmitting the infection to another by as much as 96 per cent.
Stigma and discrimination undermines prevention, treatment and care
of people living with HIV and AIDS. These patients become
reclusive, and are discouraged from informing their spouses or
partners. Their opportunity for employment is curtailed.

• To provide support to the physically unfit employee in terms of obtaining
necessary assistance for sustenance and to facilitate lifestyle adjustments.
Permanent Disablement Benefit by SOCSO
Employees with permanent disability due to employment injury may claim for the
Permanent Disablement Benefit after the last day of their temporary disablement
diagnosis; provided, the permanent disablement has been confirmed by the
following authorities:
i. Medical Board
ii. Specialist Medical Board (for Occupational Diseases)
iii. Medical Appeal Board (if the insured person or SOCSO is not satisfied with
the diagnosis by the Medical Board)
EMPLOYER’S RESPONSIBILITY IN
EMPLOYEE MEDICAL CASE

Assessment and Payment:
Claims will be referred to the Medical Board for permanent disability
assessment.
1) If the assessment does not exceed 20%, payment can be made in a lump
sum.
2) If the assessment exceeds 20%, the employee is given an option to
commute 1/5 of daily rate of the benefit into a lump sum payment, while
the balance will be paid monthly for life.
However, the option of lump sum payment is subjected to the aggregate loss
of earning capacity as a replacement to any lump sum payment not exceeding
20%, if claims were previously made by the insured person
EMPLOYEE MEDICAL CASE (CONT’D)

Rate of Payment:
1) The daily rate is based on 90% of assumed average daily wage of the insured person;
calculated as one-thirtieth (1/30) of the assumed average monthly wages for the
insured person
The assumed average monthly wage is equivalent to the sum of the assumed monthly
wages per month for which contributions of the first or second category have been
paid or were payable during the continuous period of 6 months immediately preceding
the month in which the employment injury occurred, divided by the number of
months for which such contributions were so paid or payable
2) Daily rate of Permanent Disablement Benefit:
Minimum of RM30.00 per day (w.e.f. 1January 2014)
Maximum RM118.50 per day

How to claim?
Application for permanent disablement benefit must be made in
writing through SOCSO office with the following documents:
1. Application letter
2. Photocopy Of Identification Card
3. Latest Medical Report

STEPS TO BE TAKEN IN A
MEDICAL BOARD OUT SITUATION
Step 1:
The HR department together with the employee’s superior will make an initial
assessment on whether the employee is able to perform his/her work.
Once it has been established that the employee is unable to perform the work,
the following three steps will apply:
Step 2:
The company will go about determining the extent the employee’s disability is
hampering his/her ability to perform the job. This will normally involve:
a) Discussions with the employee;
b) Discussions with the employee’s immediate superior and departmental
head;
c) Interviews and/or medical reports obtained by doctors treating the
employee. The company also has the right to require the employee to go to
another medical specialist in seeking an independent medical opinion of the
employee’s medical condition.

STEPS TO BE TAKEN IN A
MEDICAL BOARD OUT SITUATION
Step 3:
The company will then take steps to inquire into ways that it can adapt the
work’s circumstances to accommodate the employee’s disability. If this cannot
be achieved, the company will then explore to what extent it can adapt the
employee’s work duties. This will normally involve exploring means such as
placing the employee in a different job scope more accommodating to his
disabilities (within his current department) or reducing / reorganising the
employee’s work hours.
Step 4:
The company will then enquire whether there is any suitable work within the
company for the employee. This will involve the company considering
alternatives such as vacancies existing within the company that are more
suitable for the employee.
If no alternatives can be found to accommodate the employee at this stage, the
company will commence medical board-out procedures.

Medical Board Out Art & Science Talk

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