Most state and territory workers' compensation laws require an employer to keep a position open for an injured employee for a minimum specified period.

However, this can vary, so the relevant state or territory workers' compensation legislation should be consulted to establish the time period during which an injured employee’s position must be kept open.

 

Case study: termination of employment while on workers' compensation in NSW

A New South Wales-based employee was injured at work and has subsequently been undergoing a rehabilitation program. The employer’s workers' compensation insurance doctors have indicated it is still not possible to determine a return-to-work date for him in any capacity.

Senior management has decided if a return-to-work date (in whatever capacity) is not forthcoming within the next month, the company would prefer to terminate his employment.

Under the Workers Compensation Act 1987 [NSW] (Part 8), an employer of an injured worker who dismisses the worker is guilty of an offence if the worker is dismissed because the worker is not fit for employment as a result of the injury, and the worker is dismissed within six months after the worker first became unfit for employment.

There is also a mechanism under the WC Act that allows an employee to apply to the NSW Industrial Commission for an order for reinstatement if dismissed due to a compensable injury, provided the application is made within two years after the dismissal and the employee is fit to return to work.

 

Check the relevant workers' comp legislation

There are statutory obligations that protect an injured worker from dismissal. Commonwealth and state/territory legislation prohibit the dismissal of an employee by an employer in the workplace when the employee is absent from work due to personal illness or injury, including an absence on workers' compensation.

Protection from dismissal when an employee is absent on workers' compensation, is usually provided by the relevant state or territory workers' compensation law, while general protection from dismissal is provided by the Fair Work Act (FWAct). There may also be protections under the relevant Commonwealth, state, or territory equal opportunity law.

Dismissing or terminating an employee on workers' compensation may be cause for an unfair dismissal claim. If you’re unsure, seek advice from a workplace relations specialist.