How do you handle employee illness and incapacity?

Employers are now gradually winding down their operations in preparation for a (well-deserved) Christmas break. The break gives employers and employees an opportunity to reflect on the year. For some employers, they may encounter a situation where their employees, after reflecting on their employment over the break, decide to look for ‘greener pastures’. Illness might become an issue.

Before they leave, they may use up their personal leave entitlements (which is not paid out on termination) which can be a substantial figure after many years of service. Of course, they may also be genuinely ill or injured and require a prolonged period on personal leave. This article is intended to explore two (2) recent decisions of the Fair Work Commission (the Commission) where dismissal, involving incapacity, was discussed.

What happened?

The employer in the first decision[1] faced a situation where an employee left a meeting (discussing performance and conduct issues) and commenced stress related personal leave. The employer refused to believe the employee’s assertions that she was genuinely unwell. Instead, the employer adopted the view she had taken the leave as “retaliation” for the meeting, intended to cause disruption to the employer’s business during its transition to working-from-home.

The Commission took a very dim view of the employer’s conduct. In practical terms, the employer made a conclusion as to the medical condition of the employee despite having no relevant qualifications. Strong comments were made by the Commission which stated “I find [the employer’s] views on [the employee’s] absence from the workplace on the afternoon of 18 March and then all of 19 and 20 March 2020 to be astounding. He is not a doctor, yet he considered that she was retaliating against him. He had no regard for the medical certificate obtained by her, issued by a medical practitioner”.

It is clear from the first decision employers who are presented with medical evidence by an employee have no right to question the validity of the medical opinion. Accordingly, if an employee takes unusual amounts of personal leave following the Christmas break, it would not be reasonable for an employer to assume the employee is ‘cashing out’ their personal leave without some medical evidence to support their assertions.

The employer in the second decision[2] faced a situation where an employee had been absent from work for about fifteen (15) months. The employer was concerned the employee would not be in a position to return to work, in any capacity, and proposed terminating his employment because of incapacity. Complicating the matter was the fact the employee had made a number of grievances and complaints to the employer. The Commission dismissed these grievances (which were the subject of an earlier general protections application) and observed “not even the wisdom of King Solomon would have convinced him his grievances were, for the most part, without substance”.

Usefully, the Commission clarified the circumstances where a dismissal on the basis of capacity may be considered valid for the purposes of an unfair dismissal application. It was noted at paragraph 46:

1. At the time of the [employee’s] dismissal, was he fit to [return to work]?

and

2. Was there any reasonable basis for the [employer] to believe he would ever be fit to [return to work]?

The medical evidence was clear and consistent in the decision – the medical evidence accessible by the employer indicated the employee was suffering from a psychological condition which prevented him from returning to work in any capacity. The matter was also procedurally fair. The employee was given an opportunity to respond to the assertion he had no capacity by providing medical evidence to the contrary. He did not avail himself of this opportunity.

Summary of the key differences between the two decisions

In the first decision, the Commission awarded the employee the maximum compensation of six (6) months. An award of maximum compensation is very rare. We are of the view the employer’s credibility may have been detrimentally affected by their decision to draw medical conclusions without supporting evidence. This would undoubtedly have materially affected the Commission’s assessment of their version of events.

In the second decision, the application was dismissed. The employer had a valid reason (incapacity), supported by medical evidence which was uncontested. The medical evidence was put to the employee for his response. A response was received (albeit the medical evidence was unchallenged). The employer was spared the pain of being required to pay compensation.

Our top tips for employers

Tip One – Never make assumptions

  • It is easy to get caught in the ‘heat of the moment’ when an employee is taking excessive personal leave. The employee’s work must be covered and it is an expense.
  • Nonetheless, always remain objective when an employee takes personal leave. Never conclude their personal leave is dishonest without supporting medical evidence.
  • Never challenge the opinion of a qualified medical practitioner unless you have sought or obtained medical evidence contradicting their opinion.
  • A conclusion by a medical practitioner that an employee has no capacity to work is not final. An employer must still ensure an employee is afforded procedural fairness and provided an opportunity to respond to their proposed dismissal for reasons of incapacity.

Tip Two – Understand your rights

  • Employers may be able to request further medical evidence from an employee.
  • An employer has a right under section 107 of the Fair Work Act 2009 (Cth) to request ‘evidence that would satisfy a reasonable person’ that personal leave is being taken because of a personal illness or injury (or that of their family or household members).
  • An employer has an obligation under the Work Health and Safety Act 2011 (QLD) (WHS Act) to ensure the health and safety of its employees. As part of this obligation, the employer can issue instructions or directions to employees to assist with their compliance.
  • This may well involve directing an employee to obtain satisfactory medical evidence clearing or rejecting a return-to-work plan.

Tip Three – Make use of independent medical examinations

  • Employers may wish to draft a right to direct an employee to attend an independent medical examination into their employment contracts.
  • If no contractual right exists, it may still be reasonable and lawful to direct an employee to attend an independent medical examination on the basis it would be consistent with an employer’s obligation under the WHS Act.

In the first decision, the employer had self-represented themselves. Despite saving legal costs, they paid the price at final hearing. It is important to properly manage an employee taking personal leave. Failure to do so may lead to risks of general protections or discrimination claims.   

If you are an employer currently dealing with an employee who has taken a prolonged period of personal leave or find yourself in that situation in January or February 2021, feel free to give us a call on +61 (07) 3876 5111 to arrange a time to speak with one of our lawyers for an obligation free consultation.

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About the Authors

Written by

Written By

Jonathan Mamaril

Director

NB Lawyers – Lawyers for Employers

jonathanm@nb-lawyers.com.au

+61 (07) 3876 5111

Assisted By

Dan Chen

Lawyer

NB Lawyers – Lawyers for Employers

danc@nb-lawyers.com.au  

+61 (07) 3876 5111

Jonathan Mamaril leads a team of handpicked experts in the areas of employment law and commercial law at NB Lawyers – Lawyers for Employers who focus on educating clients to avoid headaches, provide advice on issues before they fester and when action needs to be taken and there is a problem mitigate risk and liability. With a core value of helping first and providing practical advice, Jonathan is a sought after advisor to a number of Employers and as a speaker for forums and seminars where his expertise is invaluable as a leader in this area as a lawyer for employers.

Dan Chen is a lawyer at NB Lawyers – Lawyers for Employers, and specialises in employment law. Dan is passionate about assisting business owners, small and large understand their obligations under Australia’s complex workplace relations system


[1] Paula Tracy v Ironbark Software Pty Ltd [2020] FWC 6601.

[2] Polgampola Abeyratna v Iron Mountain Australia Group Services Pty Limited [2020] FWC 6657.

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