Australia: Managing a mentally ill employee brings its own unique challenges

Last Updated: 16 November 2013
Article by Michael Byrnes

Most Read Contributor in Australia, October 2017

Key Points:

When dealing with a mentally ill employee, an employer must balance various considerations and avoid assumptions, speculation and urban myth.

A recent decision of the Fair Work Commission has highlighted the significant challenges and risks facing employers when seeking to terminate employees suffering from mental illness.

In Applicantv Respondent [2013] FWC 7421, the Fair Work Commission found that a public hospital had unfairly dismissed an employee from his audio-typist position on the basis of his mental illness.

An employee's conduct causes concern

Following repeated complaints by other employees about what they described as the Applicant's "weird'' and "disturbing" emails, the Respondent's Employee Relations Manager met with the Applicant on 16 March 2013.

The Applicant was asked whether he would be willing to undertake a psychiatric assessment. This would determine what, if any, condition he suffered from, his capacity for work, and what steps, if any, he could take to safely return him to the workplace. The Applicant agreed.

Ten days later the Respondent received a copy of the independent medical report prepared by Associate Professor Doherty, which said the Applicant had a disorder of the mind – paranoid schizophrenia – for which he was neither seeing a psychiatrist nor taking medication.

According to Associate Professor Doherty, the Applicant had no current capacity for work, would be an unreliable and inconsistent worker and engage co-workers in mistaken beliefs about himself, and had a strong potential to be disruptive in the workplace.

Significantly, in answering the third question of his brief ("should any conditions be imposed on the worker to facilitate his return to work?") Associate Professor Doherty stated:

"In my opinion, your employee needs to be in psychiatric treatment... In my opinion your employee should provide a certificate by a treating psychiatrist certifying that he is fit to return to work before he so returns to work."

Two days later the Respondent terminated the Applicant's employment on the basis of the psychiatric report and his inappropriate emails to co-workers.

Was the termination harsh, unjust or unreasonable?

The Fair Work Commission said it was – and that there was no valid reason to sack the Applicant.

Crucially, Commissioner Ryan found that the Respondent on its own evidence ignored Associate Professor Doherty's advice on the Applicant's return to work:

"Associate Professor Peter J Doherty did not say that the Applicant had a permanent incapacity to perform work for the Respondent.

Rather, Associate Professor Peter J Doherty described the Applicant as not having a current capacity to work. "

The Applicant'sweird and disturbing emails were not a valid reason for dismissal either, as they were sent before the Respondent asked the Applicant be psychiatrically assessed. There was also no evidence they affected the health and safety of other employees:

"It would appear to be indefensible to dismiss an employee who has a mental disorder for conduct which occurred when the employee was unaware that he had a mental disorder and for which he had not yet received any treatment."

So what happens now to the Applicant?

The Fair Work Commission ordered the Applicant be reinstated with continuity of service and lost earnings. Commissioner Ryan stressed that, while reinstatement restored the employment relationship, it did not automatically mean that the Applicant immediately returned to the workplace.

Both the Applicant and the Respondent agreed that he suffered from a mental disorder (although not on what it actually was, with the Applicant contending it was Autism Spectrum Disorder, not paranoid schizophrenia).

Commissioner Ryan accordingly required the Applicant to get a clearance from a treating psychologist and a treating psychiatrist that he was fit to return to work before he could go back to the hospital and his job.

The challenge for employers with mentally ill employees

Managing employees with any illness or injury is often a vexed issue for employers, with competing considerations to be balanced, such as discrimination, adverse action or unfair dismissal.

Mental illness adds another layer of complexity. Not only is it a distressing and challenging medical problem which is often poorly understood, but it can be a difficult legal issue for employers, especially if its symptoms pose a perceived or actual risk to the health and safety of fellow employees, or the sufferer.

Employers should take a bespoke approach, fashioned to the individual employee's circumstances and based on cogent evidence, not assumptions, speculation and urban myth:

  • a current diagnosis is important but by no means determinative;
  • general "capacity assessments" will almost invariably not suffice; 
  • an expert prognosis, particularly one that specifically assesses the employee's future capacity to perform the inherent requirements of his or her position, is an important foundation upon which to base decisions on the management of the employee; and
  • employees must be given a reasonable time for treatment and their condition to improve.

If the employee's illness does not improve upon treatment, or the employee refuses to seek or continue treatment, then an employer can take steps that might lead to termination. Likewise, if an employee's behaviour raises a genuine risk or threat to others' welfare, then an employer must take steps to protect them, which could include termination. In taking any of these steps, however, the employer must not lose sight of the importance of making decisions based on evidence, not speculation or assumptions.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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