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Lawyer clarifies employee dismissal process

Emma Ryan
Emma Ryan
05 November 2018 4 minute readShare
Dismissing an employee

A senior lawyer has spoken out about the issues commonly associated with terminating an employee for illness and medical incapacity reasons.

Speaking at Thomson Reuters Australia’s Mental Health and Employment Law Conference, James Simpson, partner at KPMG Law, shared some insights on unfair dismissal legislation, particularly when it comes to the termination of an ill or injured employee, and highlighted where businesses often go wrong.

“Dismissal of an ill or injured employee, I would think, is actually the most challenging way to end the employment of an employee. Out of all of the different ways, whether its termination on notice, summary dismissal [or] redundancy, terminating an ill or injured employee is by far the hardest and most complex,” Mr Simpson said.

“It is of course imperative that employers have a valid reason to dismiss any injured or ill employee, however the existence of a valid reason will not of itself preclude the [Fair Work] Commission from forming a view that the dismissal was unfair.”

When dismissing an ill or injured employee, Mr Simpson explained that the commission considers, among other things, the following reasons for termination of employment:

• The employee was unable to perform the inherent requirements of the position;
• The employee failed to follow a lawful and reasonable direction of the employer;
• And/or the employee failed to comply with their obligations under a return to work management plan.

“The commission must be satisfied that the dismissal of an ill or injured employee was for a valid reason related to the employee’s capacity or conduct. The consideration of that capacity of conduct is not mutually exclusive and the ill or injured employee can be terminated for reasons that relate to both their capacity and their conduct,” he said.

“But issues can arise where the illness contributes to the employee’s conduct, and care needs to be taken in such circumstances to ensure that the impact of the illness is considered when determining whether the dismissal was an appropriate action in respect to each of the employees known.”

Mr Simpson added that under temporary absence provisions set out in Fair Work regulations, an employer must not dismiss an employee because they are temporarily absent from work due to an illness or injury.

“Temporary absence is defined under the regulations as either the employee being absent from work for a period of three months or less, or the total absences in a 12-month period is three months or less, or that the employee is on paid personal carer’s leave,” he said.

“It’s important to note that this [does not prohibit] an employer for dismissing an employee for other reasons within those periods, such as misconduct or poor performance.”

If an employee is absent from work from injury or illness for longer than three months, or for three months over a 12-month period, or they are not on paid leave, they will not be protected under those temporary absence provisions but they still may be protected by unfair dismissal provisions, according to Mr Simpson.

“That means that the period of time for which the employer must actually wait to see if the employee is actually going to be able to return back to their role may be significantly longer than those particular periods. In fact, it almost always is,” he added.

Ultimately, Mr Simpson explained that there are two different scenarios with respect to ill or injured employees.

“One is whether the person has a mental illness or condition that is not work-related and one that is,” he said.

“Employers must be aware that certain jurisdictions prohibit dismissing an employee with an accepted worker’s compensation claim who is partly or totally absent from work until a specified period of time has lapsed. And that, of course, is if the dismissal is related to the worker’s fitness to work as a result of the injury.

“The employer must be able to establish that they were not able to accommodate the ill or injured employee with their pre-injury role or other suitable employment.”

Further, Mr Simpson said the definition of a suitable employment varies across each workers compensation jurisdiction.

Generally, though, he noted that “people consider the nature of the employee's capacity pre-injury employment, the employee’s age, education, skills and work experience, the employee’s place of residence, medical assessments of the employee’s treating medical practitioner or an independent medical examination, provisions under relevant injury management plans or return to work plans, and finally the size and nature for range of work activities and the structure of the employee's organisation”.

Looking at the disability discrimination legislation from a federal perspective, noting that such policies can vary from state-to-state, Mr Simpson said “it is unlawful for an employer to terminate the employment of an employee due to employee's illness or injury”.

“This can be mental, physical, pre-existing, work or non-work related. The definition of disability also includes behaviour that is a symptom or manifestation of a disability,” he said.

“It is not unlawful to terminate the employment of an ill or injured employee due to a reason not associated with their disability, such as due to misconduct or poor performance. But care does need to be taken when the disability or manifestation of disability is the cause of the employee's misconduct or poor performance.

“While the employer’s usual processes from managing misconduct or poor performance should be applied to an employee who has a mental illness, consideration needs to be given to whether any adjustments need to be made to the misconduct or performance process to accommodate the employee's disability and enable them fair engagement.

“So depending on the seriousness of the misconduct or performance, it may be necessary to carefully consider whether reasonable adjustments could assist the employee to remedy their behaviour, actions or performance in the future.”

The Thomson Reuters Australia conference also heard from Herbert Smith Freehills special counsel Heidi Fairhall on the seven biggest errors employers make when having to conduct a workplace investigation.

Lawyer clarifies employee dismissal process
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Emma Ryan
Emma Ryan

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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