Most employers know a successful unfair dismissal claim can be avoided if they have a valid reason for the dismissal and they can prove they have followed a procedurally fair process.

But what process should an employer follow when it seeks to dismiss an employee who has been absent from work because of prolonged illness or injury?

Termination of employment due to an employee's illness or incapacity can be a very difficult area, particularly as an employee in this circumstance may be protected by unfair dismissal legislation, workers compensation laws, anti-discrimination laws, or disability discrimination laws.

Under the Fair Work Act an employee is protected from dismissal when temporarily absent due to illness or injury unless the employee's absence on unpaid personal/carer's leave extends for more than 3 months, or total absences of 3 months within a 12 month period.

Many State and Territory workers compensation laws also prohibit the termination of an employee's employment by the employer within a specified period of time where the sole or primary reason for the dismissal is because of the employee's absence on workers compensation. The 'specified period' can range from 6 months (under NSW law), to 12 months (under Queensland law), or indefinitely (under South Australian law where the employer employs 10 or more employees).

Alternatively, an employee who is dismissed because of illness or incapacity may make a claim under relevant disability discrimination law.

Where the illness or incapacity is not connected to employment and therefore not covered by workers compensation, the employer is entitled to terminate employment on the ground that there is a valid reason related to the employee's capacity.

WHAT IS A VALID REASON FOR TERMINATION?

An employee's employment may be validly terminated on the basis of the employee's illness or incapacity when it can be demonstrated that this has an adverse impact on the employee's ability to perform the inherent requirements of their job. In making decisions around this an employer may be required to show that they made reasonable adjustments to the role.

However if the employee can demonstrate they are able to perform the duties and responsibilities of their job, even after a period of absence from work, a termination of employment will be considered harsh and unreasonable (Cooper v Balfours Bakery Pty Ltd).

Employers must also be conscious of their OHS obligations to employees who have been on long-term absence because of illness. Whilst an employer is entitled to a reasonable amount of information which will enable it to ensure that the employee is capable of returning to work, it must ensure that any direction to the employee to provide the relevant medical information is a reasonable and lawful direction.

In a recent FWA case, Chetcuti v Coles Group Supply Chain Pty Ltd, an injured NSW worker was terminated after he stopped providing medical information to his employer. Although the employee had given his employer a signed consent form for his doctor to disclose medical information to his employer, he had not personally provided his employer with any medical information.

The employer terminated the employee for misconduct for not complying with its directions to supply it with information. However FWA found that the employee was not guilty of any misconduct as he had supplied his employer with a consent form allowing it to obtain the information directly from his doctor.

As such FWA found the termination was harsh, unjust and unreasonable and the worker was reinstated.

IMPLICATIONS

  • It is recommended that an employer have solid evidence of the employee's incapacity to work (such as independent medical assessments) as a basis for any decision making around injured and ill employees.
  • It is also advisable to consult with the employee, particularly a long-serving employee, about the situation, and examine the feasibility of transferring the employee to a job that is less physically demanding, or modifying the existing job.

When in doubt, seek expert legal and/or medical advice before making a decision, as cases involving injury or incapacity are often costly and lengthy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.