Theatre manager with 18 years' service dismissed on capability grounds: disability and unfair dismissal claims fail
A theatre manager who was dismissed after two long periods of sickness absence lost her claims for unfair dismissal and disability discrimination, but won a small holiday pay award.
2 min read · Last updated 18 May 2026
Case details
Key facts
- The claimant was employed as a theatre manager from 6 October 2003 until 25 March 2022.
- She had two long periods of sickness absence due to work-related stress, PTSD, and psychosis.
- The respondent obtained an occupational health report stating she was unfit to return for 3-6 months.
- The claimant was dismissed by reason of capability (ill health) on 25 March 2022.
- The respondent failed to pay the correct amount for accrued but untaken annual leave on termination.
- All discrimination and unfair dismissal claims were dismissed; only the holiday pay claim succeeded.
Timeline
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Employment started
Claimant began working as Manager at the theatre, initially on a fixed-term basis.
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First sickness absence
Claimant signed off work due to work-related stress; remained off for 8 months.
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Phased return to work
Claimant returned to work on a reduced hours basis, gradually increasing hours.
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Fit note with adjustments
Claimant provided fit note indicating she needed support and adjustments; disclosed stress to trustees.
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Meeting with Ms Marshall
Ms Marshall questioned the claimant for two hours about running events; claimant found it intrusive and distressing.
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25 questions sent
Respondent sent a list of 25 detailed questions about the claimant's health, which she answered.
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Occupational health assessment
OH report concluded claimant was unfit to return for 3-6 months and likely disabled.
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Medical capability hearing
Claimant attended hearing; she indicated she could not afford reduced hours and did not dispute OH report.
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Dismissal
Claimant dismissed by reason of ill health (capability).
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Appeal hearing
Appeal heard by Alison Statham and Kate Moyce; appeal dismissed on 3 May 2022.
The legal issue
The tribunal had to decide whether the claimant was unfairly dismissed, discriminated against due to disability, entitled to a redundancy payment, and owed holiday pay. It also considered whether the respondent made reasonable adjustments and whether the dismissal was for capability or redundancy.
The outcome
The tribunal dismissed all claims except for a small holiday pay claim.
- The unfair dismissal claim failed because the employer genuinely believed the claimant was incapable of performing her duties due to ill health, and the process was reasonable for a small employer.
- The disability discrimination claims (direct, arising from disability, and failure to make reasonable adjustments) were dismissed because the employer did not know and could not reasonably be expected to know of the disability at the relevant time.
- The redundancy payment claim failed because the dismissal was for capability, not redundancy.
- The holiday pay claim succeeded: the employer failed to pay for three days of accrued but untaken annual leave.
Compensation: £229.32 (gross) for unpaid holiday pay.
Lessons & takeaways
- Long-serving employees are not automatically protected from capability dismissal if their ill health prevents them from performing their role.
- Small employers may be given more leeway in their procedures, provided they act reasonably and genuinely believe in the employee's incapability.
- Employers should ensure they have up-to-date medical evidence before dismissing on capability grounds, but a recent occupational health report can be sufficient.
- Employees who believe they have been dismissed for a different reason (e.g., redundancy) need to provide evidence to support that claim.
- Even if other claims fail, employees should check they have received all accrued holiday pay on termination.
A capability dismissal that passed the fairness test
This case shows that even a long-serving employee can be fairly dismissed on capability grounds if the employer has a genuine belief in their incapability and follows a reasonable process. The claimant, a theatre and community centre manager with 18 years' service, had two extended periods of sickness absence due to work-related stress, PTSD, and psychosis. After an occupational health report stated she was unfit to return for 3-6 months, the employer decided to dismiss her.
The tribunal accepted that the employer genuinely believed the claimant was no longer capable of performing her duties. It noted that the employer had obtained a medical report, held a capability hearing, and considered alternatives such as reduced hours. While the claimant argued that part-time working should have been discussed further, the tribunal found that the employer's actions were within the range of reasonable responses, particularly given that the respondent was a small organisation with limited resources.
What the employer did right
The employer's process was not perfect, but it was sufficient. It obtained an occupational health report that was only three weeks old at the time of dismissal. It held a hearing where the claimant could put forward her views. It considered the possibility of reduced hours, even though the claimant indicated she could not afford to work fewer hours. The appeal process, while not flawless, was also found to be reasonable.
The tribunal also noted that the employer did not know and could not reasonably be expected to know that the claimant was disabled under the Equality Act at the time of the dismissal. This was crucial in dismissing the disability discrimination claims.
Why the holiday pay claim succeeded
The only claim that succeeded was for unpaid holiday pay. The employer failed to pay for three days of accrued but untaken annual leave on termination. This is a common oversight and a reminder that employers must ensure they calculate and pay all outstanding holiday pay when an employee leaves.
Key takeaways for similar cases
This case illustrates that a capability dismissal can be fair even when the employee has a long service record. The key factors are: a genuine belief in incapability, up-to-date medical evidence, adequate consultation, and consideration of alternatives. Employees who believe they have been dismissed for a different reason, such as redundancy, need to provide evidence to support that claim. And finally, always check your final pay for any accrued holiday pay that may be owed.
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