It is a common misconception that employers must indefinitely pause a misconduct or performance management process when an employee becomes unwell and takes personal leave in the midst of the process. It does become a more complex exercise but there are options to progress the process depending on the circumstance.
The Fair Work Act 2009 (Cth) prohibits dismissing an employee who is temporarily absent from work due to illness or injury, where the dismissal is because of that absence. That does not always mean that an employee is immune from dismissal.
Managing ill and injured employees in the workforce can be difficult. An employer must often balance a number of objectives: complying with obligations under the Fair Work Act 2009 (Cth) (FW Act), anti-discrimination laws and industrial instruments; empathy for the employee who is unwell; and fulfilling the employer’s operational requirements to keep its business running.
The matter is further complicated where an employee seeks to take personal leave during a disciplinary action process such as the process to put allegations of misconduct or serious misconduct against the employee, or a process to manage unsatisfactory performance. Employers may be left wondering whether an employee is genuinely unwell and unfit for work, or whether the employee is simply seeking to delay the disciplinary action.
There is no universal statutory prohibition on dismissing an employee while they are on personal leave. However, an employer who chooses to do so must be aware of their obligations and of the risks involved. In this article, we set out key considerations for employers with respect to dismissing an employee who is on personal leave.
General Protections
The FW Act prohibition on terminating an employee because they are temporarily absent due to illness or injury falls within the FW Act’s ‘General Protections’ framework. That framework aims to protect workplace rights, including the right to take personal leave when an employee is unwell. An employer breaches this provision where they are aware that an employee was absent from work because of an illness or injury, and terminates the employee’s employment because of that illness, injury or absence.
The Full Court of the Federal Court has held, in Khiani v Australian Bureau of Statistics [2011] FCAFC 109, that this prohibition does not stand to prevent an employer from dismissing an employee while the employee is absent on personal leave. Where the employee may be dismissed for another valid reason ‘it is not to the point that the decision to dismiss happens to be made while the employee is on leave’.
Therefore, an employer may not contravene section 352 of the Act where it can demonstrate that the employee was validly dismissed for a reason other than their absence from work while sick. This may be due to a pre-existing performance or misconduct issue, or because they are unable to fulfil the inherent requirements of their role (ie. do not have capacity).
Procedural fairness and unfair dismissal
Where an employer has a valid reason to dismiss an employee who is on personal leave, such as the employee’s misconduct, underperformance, or inability to fulfil the inherent requirements of the position, the employer must still ensure it follows a fair process. A failure to undertake a proper, fair and reasonable dismissal process may result in the employee succeeding in a claim for unfair dismissal.
In determining whether a dismissal was unfair, the Fair Work Commission will consider whether the dismissal was ‘harsh, unjust or unreasonable’. This includes considering whether there was a valid reason for the dismissal and whether the employee was provided with a fair opportunity to respond to the employer’s concerns (referred to as ‘procedural fairness’).
In the Fair Work Commission’s decision in Dana Emery v Cutlers The Law Firm [2015] FWC 52, an employer who dismissed an employee while she was absent for three days due to illness was found to have failed to comply with procedural fairness obligations. Although the employee had advised that she had an appointment to see her doctor and would soon provide a date for her return to work, the employer dismissed the employee by telephone while she remained on leave. The Commission found that there was no reasonable basis for failing to wait at least one more day or until such time as the employer could meet with the employee personally to provide her with an opportunity to respond.
This case, and others like it, are a helpful reminder of the importance of ensuring a procedurally fair dismissal process, particularly in light of the additional complexities that arise when an employee is on personal leave at the time of the dismissal.
While it can be harder to provide an employee with a genuine opportunity to respond to concerns where the employee is absent from work on personal leave, it is not impossible. In these circumstances, an employer should carefully consider factors such as:
- whether the employee has capacity to engage in the matter, assessed on a case-by-case basis and with regard to any available medical evidence;
- whether the employee has nominated a representative, such as a union officer, lawyer, or family member to receive correspondence on their behalf;
- whether the dismissal can be held off until the employee is well enough to return to work; and
- whether any timeframes provided to the employee for responding to concerns are reasonable within the circumstances.
Carefully considering these factors, and documenting any decisions made, will be key to defending a claim of unfair dismissal.
When is an absence no longer temporary?
Importantly, section 352 of the FW Act only prevents dismissal on the basis of an employee’s absence due to illness or injury where that absence is temporary. An employee will not be protected by this provision if their absence extends for more than three months (either in a single absence, or as a total of absences within a 12 month period).
The exceptions to section 352 allow for an employer to dismiss an employee who has expended their paid leave entitlements and has been absent from work for an extended and unpaid period, on the basis that they are unable to fulfil the inherent requirements of their role.
However, care must still be taken to mitigate risk and ensure an employer’s obligations are met. This includes having regard to any available medical evidence about the employee’s prognosis, whether the employee can return to work if reasonable adjustments are made or the employee is redeployed to an alternative role, and whether it is possible to keep the job open with a temporary replacement. It is crucial that employers understand and satisfy their obligations under anti-discrimination legislation, including in relation to disability or long term illness.
Managing this obligation alongside a disciplinary process can be tricky. It will be important to ensure that the reason for the disciplinary action is not because of the absence (or illness or injury)).
The case of Manojkumar Pradhan v Amcor Flexibles (Australia) Pty Ltd [2021] FWC 6125, was a timely reminder that an employer who hastens to move to termination after the closure of a workers’ compensation claim may fall foul of the FW Act. That case did not involve an ongoing disciplinary process but rather one of a termination due to an employer’s view that the employee couldn’t perform the inherent requirements of the role in the future. In that case, Amcor terminated the employee after his workers’ compensation claim period had ceased and about a month after exhausting paid leave entitlements. Amcor asked the employee to provide medical information to show that he could return to his full duties but the employee was unable to. Amcor believed it could terminate the employee’s employment due to incapacity but the Commission disagreed. It found that Amcor had dropped the employee ‘like a hot potato’ after his claim period and by not waiting for three months after he had exhausted his paid leave, had effectively terminated his employment because of his temporary absence, not because of his incapacity to return to his full duties.
How we can help
At Moores, our Workplace Relations team is well-equipped to guide employers through tricky situations in the workplace. Get in touch with the Workplace Relations team at Moores if you or your organisation would benefit from our team’s support and advice.
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