Responding to a sudden absence due to ill health in the midst of a performance management or misconduct process

It is a common misconception that employers are prohibited from dismissing an employee for unsatisfactory performance or misconduct where the employee is absent from work due to illness at the time the dismissal is to take effect. Issues of absence on personal leave (paid or unpaid) must be handled carefully, however, there are options to finalise your performance management or misconduct process.

Legislative framework

The Fair Work Act 2009 (Cth) (FW Act) prohibits dismissing an employee because the employee is temporarily absent from work because of a prescribed illness or injury. The regulations go on to provide that a temporary absence of three months or less (in a single period or single day absences over 12 months) is considered a prescribed illness or injury. The FW Act also prohibits an employer discriminating against an employee due to, amongst other attributes, a physical or mental disability (which can include a temporary impairment).

The unfair dismissal framework in the FW Act (applicable to some employees) also requires that an employee is afforded procedural fairness before a decision to dismiss them from employment.

Dealing with changing circumstances

Managing ill and injured employees in the workforce can be challenging. An employer must often balance a number of objectives: complying with obligations under the FW Act, anti-discrimination laws, workers’ compensation laws (if a claim is made) and industrial instruments; empathy for the employee who is unwell; and fulfilling the employer’s operational requirements to keep its organisation running.

The matter is further complicated where an employee seeks to take personal leave during a disciplinary action process (eg. a process to manage unsatisfactory performance or alleged misconduct, including a factual investigation being conducted ahead of misconduct allegations). 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 process or action.

There may be some circumstances where an employer can proceed with its disciplinary process but caution is always advised about proceeding too hastily due to risks, including:

  1. a claim of procedural unfairness actionable under the FW Act (unfair dismissal framework);
  2. an adverse action claim on the basis that the employer took disciplinary action because of the employee accessing their personal leave, not the subject of the disciplinary process;
  3. discrimination on the basis of a temporary impairment (under the FW Act and/or anti-discrimination legislation); and/or
  4. breach of employer policies that may require certain procedural steps to be taken where an employee in unable to participate in a disciplinary process (if applicable).

Therefore, additional steps are recommended for employers in most cases to mitigate the risks, and position the employer to better defend such a claim. An employee is not immune from having to communicate with their employer while on personal leave as it will be necessary to communicate about employment matters such as taking leave, notifications of changes in the workplace and/or temporary work arrangements. As such, an employee may not be able to refuse to communicate with an employer during personal leave.

An employer is however advised to ensure that approaches to communicate with an employee during personal leave have a reasonable basis and are actioned in a reasonable manner. An employer’s conduct has to comply with its safety obligations under relevant legislation and an employee may have a claim with respect to a ‘workplace injury’ that they allege arises because of the employer’s actions to engage with them while on personal leave.

At a minimum, during a disciplinary process interrupted by personal leave, an employer is recommended to:

  • provide a reasonable opportunity for an employee to reschedule a meeting (as part of the disciplinary process) if they are unwell. That does not mean an indefinite delay but a matter that requires judgment in the circumstances;
  • provide the employee with the opportunity to have additional supports and safeguards in the process (eg. assistance from a counsellor or doctor);
  • consider whether the process can be delayed to accommodate a temporary absence (within reason); and
  • seek independent advice if unsure about what to do.

Previous cases

Khiani v Australian Bureau of Statistics

The Full Court of the Federal Court held in Khiani v Australian Bureau of Statistics [2011] FCAFC 109, that the restriction on terminating an employee because of a temporary illness or injury 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” [26].

This case was an appeal of a decision of the Federal Court, in which the employee had made a General Protections claim after she was dismissed while on sick leave. Prior to the dismissal, the employee had been subject to a performance management plan, and issued a formal warning letter about her unsatisfactory performance. She had also failed to attend meetings with management, which were required by the performance management plan, and the employer subsequently determined that the employee had taken insufficient steps to address her underperformance.

Dana Emery v Cutlers The Law Firm

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. The employee was dismissed due to a workplace restructure, which would result in two part-time positions being replaced by one full-time position. The employer did not consider the employee to be a suitable candidate for the full-time position, and did not inform her of his restructure decision until he notified her of her termination.

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. Further, his failure to engage in consultation with the employee about the redundancy of her role was described as ‘a cruel and callous way to behave’ [37] and was a breach of his obligations under the applicable Award, notwithstanding that she was on leave when the decision was made.

Boyd v Glenvill Pty Ltd

In the Federal Circuit Court case of Boyd v Glenvill Pty Ltd [2021] FCCA 265, the employee took sick leave due to stress and anxiety arising in the course of his employment, which occurred over a matter of months, and was terminated during that period of sick leave. The employer denied allegations that the employee was dismissed because he took sick leave, or because the employee’s absence on sick leave may have impacted the business negatively.

Instead, they claimed that he was dismissed due to performance issues (including a lack of sales in a sales-driven role). However, the employer had failed to communicate any performance concerns to the employee, and subsequently failed to communicate the rationale for the dismissal. Ultimately, the employer was able to demonstrate that the decision to dismiss the employee was made prior to his sick leave and not because of it, although it was made for other prohibited reasons (including that he had raised a complaint about his employment).

While the case was ultimately decided on other grounds, it is an important reminder of the role of clear communication and documentation in effecting a decision to dismiss an employee, in order to demonstrate that the dismissal was for a valid reason and to comply with procedural fairness obligations.

Tips for case management

The case law is a helpful reminder of the importance of ensuring a procedurally fair disciplinary process, particularly in light of the additional complexities that arise when an employee is on personal leave.

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 any timeframes provided to the employee are reasonable within the circumstances;
  • 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 process can be delayed until the employee is able to participate; and
  • if multiple extensions have been provided, whether there is a likelihood that the employee will be able to participate in the foreseeable future.

Carefully considering these factors, and documenting any decisions made, will be key to defending a claim against the employer’s process and decision.

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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