One of the most challenging issues employers face is dealing with employees who are not well enough to perform their duties.

There sometimes comes a point where – when faced with an employee who has been on an extended period of sick leave - the employer considers the possibility of terminating the employment.

Such decisions are often far from straight-forward. Aside from the employer's wish to ensure that they are "doing the right thing" by their employee, there are also the legal risks associated with termination of employment involving an injured or unwell employee.

Matters are especially complicated where the employee's unfitness for work is due to mental health issues which may have been caused, or exacerbated by the work environment.

The recent decision of [2018] FWC 3767 provides some guidance on how the Fair Work Commission approaches such issues in the context of a claim for unfair dismissal.

The background to the case was the employee had been employed by Rogerseller since 2002, most recently in the role of Concierge Delivery Specialist.

IIn 2017 there began to be issues in the workplace and two of the employee's colleagues made complaints about her "behaving in a negative manner".

Concurrently to this, the employee made a complaint about "bullying behaviour" by some of her co-workers.

Rogerseller investigated the employee's complaint and came to the view that it was unsubstantiated. This was communicated to the employee in a meeting on 16 February 2017. The meeting became heated and the following day the employee left work early due to illness. She did not return to work until 6 March 2017.

On the day of her return to work, Rogerseller held a meeting with the employee and advised her for the first time of the complaints made by her two colleagues, as well as notifying her about a complaint made by a customer and other "performance concerns". In the meeting the employee was issued with a formal written warning.

Shortly thereafter the employee commenced a further period of sickness absence for which successive medical certificates were obtained. The certificates stated her diagnosis was "Workplace harassment causing anxiety symptoms and reduced mood". Her capacity for work was stated to be "No capacity for work until workplace conflict is resolved".

During her absence the employee made a claim for workers compensation on 14 March 2017, but the claim was refused by Rogerseller's insurer.

Thereafter correspondence was entered into between Rogerseller and the employee's representatives.

The employee subsequently was subject to a number of medical examinations to assess her fitness for work.

On 29 November 2017 a Consultant Psychiatrist (Dr Cohen) certified the employee as "permanently unfit for her usual job" and "not fit to return to work at Rogerseller."

On 4 December 2017 Rogerseller wrote to the employee advising that it was considering terminating her employment because she was not able to fulfil the inherent requirements of her role and inviting her to respond by 14 December 2017.

The employee's representative replied by letter of 14 December 2017. The reply included a statement that the employee "was unable to return to her substantive position".

Rogerseller ultimately terminated the employee's employment on 18 December 2017.

The employee subsequently brought a claim for unfair dismissal in the Fair Work Commission on grounds including "because it followed a period of unrelenting harassment and intimidation and was procedurally unsound".

In considering the matter, Commissioner McKinnon recalled previous caselaw and confirmed that when an employer relies upon incapacity to perform the inherent requirements of an employee's position as the ground for dismissal, it is the substantive position that must be considered and not some modified, restricted duties or temporary alternative position.

In assessing the evidence on the employee's capacity to perform her role, the Commission had this to say:

[36] The evidence establishes that at the time of dismissal, [the employee] was able to physically perform the inherent requirements of her role. Her own evidence, which I accept, was that she was physically fit, participating in yoga and a range of other non-work activities.

[37] However, the evidence also establishes that at the time of dismissal, [the employee] was suffering from a psychological condition which prevented her return to work at Rogerseller. Dr Cohen identified the prospect of her returning to work at Rogerseller as a key stressor for her condition and one which was likely to cause 'relapse'. The obvious difficulty for [the employee] was that returning to work was a necessary step for her to undertake her role and all of its inherent requirements. There is no evidence the role could have been performed anywhere other than at Rogerseller's premises, or without interacting with its key management and sales staff. On balance, I am satisfied that at the time of dismissal, [the employee] did not have the capacity to perform the inherent requirements of her role as a Concierge Delivery Specialist because her psychological condition prevented her return to work at Rogerseller at all.

Accordingly the Commissioner found that there had been a valid reason to terminate the employee's employment.

The Commissioner did not find any material defects in the procedure used to effect the dismissal (noting that the employee had been notified for the reason for dismissal and given an opportunity to respond).

Ultimately, therefore, the Commission found that the employee had not been unfairly dismissed.

Interestingly, the Commissioner's decision on the fairness/unfairness of the dismissal did not appear to be impacted by the fact that the employee's unfitness to work may have been triggered by a "chain of events she considered harassment and intimidation". The Commissioner put it this way:

49] A significant feature of this case from [the employee's] perspective was that she was able to perform the inherent requirements of her role until February 2017, when a chain of events she considered harassment and intimidation triggered the deterioration of her health. There is some evidence to support that concern, having regard to the apparent manner in which the various complaints by and against [the employee] were handled in February and March 2017 and I do not doubt that 2017 was a difficult year for [the employee]. [....]

[50] [...] The events of February and March 2017 were ultimately not what brought about the end of [the employee's] employment. As a result, it is not necessary to make findings about the substance of complaints made or related processes or even whether the performance management process was reasonable. There is no evidence that any of those matters were operative factors in the dismissal and I am not satisfied that they were.

The case is also a useful reminder to employers of the importance of obtaining a clear medical opinion when taking decisions relating to an employee's capacity to perform work. In this case the medical evidence included an unequivocal statement that the employee was "permanently unfit for her usual job".

In circumstances where the employee is given an opportunity to, but does not dispute, any such finding (by, for example, providing a contradictory medical opinion), an employer will generally be in a strong position to dismiss without significant risk of a finding of unfair dismissal.

Where the medical evidence is less clear cut – perhaps where there is a suggestion that the employee will be fit to perform their role at some point in the future – the risks to an employer who terminates employment will be much greater.

For further information please contact:

Simon Obee, Senior Associate
Phone: + 61 2 9233 5544

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.