Australia: Dismissal when on sick leave can be costly

Last Updated: 2 May 2012
Article by Andrew Cairns

The decision

The Federal Magistrates Court of Australia fined a company $20,000 and ordered that they pay in compensation $37,000 plus interest to an ex-employee as well as in excess of $57,000 in costs for dismissing her due to sick leave.

The background

Ms Kavassilas was a General Manager of a company, Migration Training Australia ('MTA'). She fell ill during her employment and took sick leave. Her sister notified MTA that Ms Kavassilas was unwell on both her first and second day of absence by telephone. She also informed the MTA that Ms Kavassilas would provide a medical certificate on her return.

Ms Kavassilas was sacked on her second day of absence. She was notified of her termination by way of letter delivered to her home. The dismissal took place before she had even had time to produce her medical certificate.

The findings

The Court found that the letter of termination was 'a cloak for [the] unexpressed true reasons' of the dismissal. The termination letter outlined reasons for the dismissal such as:

  • A failure to carry out duties in a manner satisfactory which has caused the MTA to incur a loss of income
  • Failure to keep directors (of MTA) aware of your absences
  • Failure to apply yourself diligently and consistently to your duties

The Court found that the reasons given in the letter were lacking in substance, in circumstances where MTA provided no reliable or clear evidence to support them.

The Court ruled that the real reason Ms Kavassilas' employment had been terminated was because of her temporary absence and that this was unlawful.

The Court noted that MTA had failed to satisfy that 'her temporary absence did not 'actuate' nor was it 'disassociated' from their decision to summarily dismiss her while she was absent from work.''

Remedy awarded

The MTA was found liable of contravening the provision of the Fair Work Act 2009 ('FWA') that an employer must not dismiss an employee because he / she is temporarily absent from work because of illness or injury.

The maximum penalty for this contravention is $33,000. His Honour imposed a penalty of $20,000 and said that 'when assessing the appropriate penalty – the amount arrived must be proportionate to the gravity of the unlawful conduct.'

The following factors are some amongst those his Honour considered when deciding the penalty included:

  • Nature and extent of conduct leading to the breaches
  • Nature and extent of any loss or damage sustained as a result of breaches
  • Whether or not the breaches were deliberated.

The Court ordered that MTA pay the penalty to Ms Kavassilas and noted 'the fact that [Ms Kavassilas ] was a senior manager does not alter the seriousness of a failure to ensure that the dismissal did not contravene an important statutory protection for all employees while on sick leave.'

The Court also awarded Ms Kavassilas compensation for the loss she suffered as a result of MTA's contravention. The amount awarded was $33,706.21 plus interest of $4,605.74. His Honour calculated the amount payable by calculating Ms Kavassilas ' full amount of lost wages plus superannuation entitlements from the date she was terminated to the date she commenced her new employment (this also included the lost one month notice entitlement). He then discounted that figure by 20% for 'uncertain but real contingencies that her employment may not have lasted that long.'

MTA were also ordered to pay half Ms Kavassilas' costs in the amount of about $57,351.96. His Honour was satisfied that MTA made a number of 'baseless assertions' which Ms Kavassilas was required to answer causing her to incur unnecessary legal costs.


This case demonstrates that the courts are willing to strictly enforce the provisions of the FWA. The courts are not reluctant to impose heavy penalties and award compensation where they are satisfied that employers have acted in breach of the FWA. It is also clear that, whilst unfair dismissal proceedings are a 'no costs jurisdiction' (costs are generally not awarded against unsuccessful parties), the Court will exercise it's discretion to order costs in circumstances where the Court is satisfied that the proceedings have been instituted vexatiously or without reasonable cause, there has been an unreasonable act or omission by one party which has caused the other party to incur costs or where a party unreasonably refused to participate in a matter before the Court.

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.

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