When is it safe to dismiss an ill or injured employee?

When an employee has been absent from work for an extended period of time, employers often find it difficult to balance their obligations to their ill or injured employee with the commercial realities of keeping an employee’s position vacant on a long-term basis. Although at times this may feel like an impossible balance to strike, a recent decision of the Fair Work Commission has exemplified when an employer had a valid reason to dismiss an employee in circumstances where they can no longer perform the inherent requirements of their role.

In Jack v Sigma Healthcare [2019] FWC 6364, Commissioner Cirkovic found that the decision of the Sigma Healthcare HR team to dismiss Miss Carley Jack, an employee who had been absent from work due to a non-work-related injury for approximately 16 months, was not unfair.

Miss Jack commenced employment with Sigma Healthcare (‘Sigma’) on 22 January 2013 and performed the role of ‘Storeperson’ in one of Sigma’s warehouses until she commenced personal leave on 6 October 2017 due to injuries, and subsequent mental illness, sustained in a non-work-related motor vehicle accident. Miss Jack’s role of Storeperson included duties such as picking and packing pharmaceutical goods, labelling boxes and operating forklifts. Both parties to the dispute agreed that the warehouse was “a busy workplace, there are vehicles back and forth” and “there were physical demands”.

Miss Jack’s employment was terminated by Sigma on 8 February 2019, following various procedural steps taken by Sigma.

In assessing whether Miss Jack had been unfairly dismissed Commissioner Cirkovic was firstly required to consider whether Sigma had a valid reason for dismissing Miss Jack, and secondly, whether the decision to dismiss Miss Jack was harsh, unjust or unreasonable in accordance with section 387 of the Fair Work Act 2009 (Cth) (‘the FW Act’).

Valid reason

As reiterated by Commissioner Cirkovic in her decision, for there to be a valid reason for dismissal, the reason must be related to capacity or conduct and be one that is ‘sound, defensible or well-founded’ and not ‘capricious, fanciful, spiteful or prejudiced’. Specifically, Commissioner Cirkovic adopted the approach of the Full Bench of the Fair Work Commission in Jetstar Airways Pty Limited v Neetson-Lemkes (‘Jetstar’), a case which considered the concept of valid reason in the context of employee capacity at the time of dismissal.

In Jetstar, the Full Bench concluded that 3 elements must be considered when determining whether to dismiss an employee based on capacity:

Was the employee capable of performing the inherent requirements of their role at the date of dismissal (importantly, evidence which comes to light after the dismissal can not be relied upon);
Would the employee be able to perform the inherent requirements of their role at some point in the future; and
Is there some reasonable adjustments which could be made to the employee’s role to accommodate any current or future incapacity?

In making her determination, Commissioner Cirkovic relied on the written medical evidence of Miss Jack’s treating medical practitioners, which Sigma had obtained as part of the dismissal process. There was no dispute between the parties in respect to elements 1 and 3; it was whether Miss jack would be fit to perform the inherent requirements of her role in the future which was in contention in this case.

Capacity at dismissal

There was no dispute between the parties in respect to Miss Jack’s inability to perform the inherent requirements of her role at the time of her dismissal. A letter from Miss Jack’s treating medical practitioner, dated 6 December 2018, stated (amongst other things): “I believe she cannot perform any duties at this stage”. A further certificate of capacity dated 16 January 2019, from Miss Jack’s treating psychiatrist recommended that Miss Jack “not work at the moment till the new assessment”.

Reasonable adjustments

Further, there was also no dispute in respect to element 3. Miss Jack conceded that Sigma considered modifying her duties but due to the nature of the workplace, “being high-paced with forklifts and machinery in the area which require high levels of concentration and awareness”, and her experience of depression, anxiety and PTSD, no adjustment would accommodate her current incapacity.

Fit in the future

It was the second element, whether there was adequate evidence that Miss Jack would be fit to perform the inherent requirements of her role in the future, which was in contention in the case. This may also be the question many employers struggle with when managing an employee with a long-term illness or injury.

In this case, Miss Jack was unable to point to any medical evidence that she would be fit for work in the future. Rather, Miss Jack’s treating psychologist recommended as part of a certificate of capacity that he “see her fortnightly for 2-3 months and reassess after that.” Commissioner Cirkovic found that, at best, this evidenced that if circumstances change Miss Jack may become fit for work at some point in the future. However, the lack of definitive evidence about future capacity, coupled with the fact that Miss Jack’s incapacity was long-standing, was enough to satisfy Commissioner Cirkovic that there was a valid reason for dismissing Miss Jack.

This, however, is not the end of the story, to defeat a claim for unfair dismissal, employers need to show that there was a valid reason for dismissal and that the dismissal was not harsh, unjust or unreasonable. This requires an assessment of whether procedural fairness was afforded to the employee.

Procedural fairness

In this case, Commissioner Cirkovic found the below to be evidence that Sigma afforded Miss Jack procedural fairness:

Miss Jack was notified of the reason Sigma was considering dismissal before she was dismissed. In a letter to Miss Jack dated 7 January 2019, Sigma stated that they were “seriously considering terminating [her] employment on the basis of [her] inability to perform the inherent requirements of the position.”
It was found that Miss Jack had an opportunity to respond to the reason Sigma was considering dismissal. Commissioner Cirkovic again referred to the above letter of 7 January 2019 and highlighted that as part of this communication Ms Jack was invited to provide further medical or other information, and invited Miss Jack to a formal meeting on 11 January to discuss the matter. This meeting was postponed several times at Miss Jack’s request. When this meeting took place, Sigma again asked Miss Jack if there was anything additional she wanted them to consider.
There was no unreasonable refusal to allow Miss Jack a support person at the meetings where her potential dismissal was discussed.

In light of the above, the Commission found that Sigma followed a procedurally fair process leading up to Miss Jack’s dismissal and therefore, ultimately found her dismissal was not unfair.

Other potential claims

It is important to note that Miss Jack was absent from work for approximately 16 months prior to her dismissal and that she had exhausted her entitlement to take paid personal/carer’s leave. Employers should be aware that under the general protections provisions of the FW Act it is unlawful to dismiss an employee because they are “temporarily absent from work because of illness or injury” (see section 352). The exact operation of the clause is complicated, but in basic terms, unless an employee has: (a) had at least three months absence (in any 12 month period); and (b) exhausted their paid personal/carer’s leave entitlement, a dismissal due to illness or injury will be unlawful.

Employees are not able to bring both a general protections and an unfair dismissal claim, they have to choose one or the other. In the present case, given the length of Miss Jack’s absence, unfair dismissal was the only option available to her.

Lessons for employers

In light of the above, if you have an ill or injured employee who has been absent from work for a long period of time, we recommend you consider the below before taking any steps towards dismissal:

Consider whether the employee is protected by the general protections provisions of the FW Act in respect to temporary absence outlined above. As mentioned above, the operation of section 352 can be complex, seek legal advice here if in doubt.
Obtain a medical report from the employee’s treating medical practitioner(s) which outlines the employee’s diagnosis and prognosis, focusing on the employee’s ability to perform the requirements of their role. Alternatively, you may direct the employee to an independent medical assessment to obtain this information.
Ensure you have permission from the employee for the medical practitioner to share medical information related to their employment with you.
The medical report should be drafted with reference to the employee’s current duties. When requesting the report, always ask that the medical practitioner suggest any reasonable adjustments which could be made to accommodate the employee’s incapacity.
We recommend the employer cover any additional costs associated with obtaining the medical report.
Once you obtain a relevant medical report, assess whether there is evidence that the employee can perform the inherent requirements of their role currently, whether they can perform these requirements in the future and whether any reasonable adjustments can be made to facilitate them doing so. Only if the answer to all these questions is “No” should you consider dismissal.
If the employee is not protected from dismissal by means of section 352, and you wish to terminate employment, ensure you follow a procedurally fair process leading up to dismissal including notifying the employee of the reason for dismissal is being considered and allowing them an opportunity to respond, including allowing them to provide any additional medical evidence they believe to be relevant.

The Sigma case sheds some light on how the Commission will view dismissals based on an employee’s capacity, particularly in respect to the definitive nature of the evidence required to show that an employee will be fit to perform the inherent requirements of their role in the future. However, navigating the processes surrounding a long-term ill or injured employee remains an extremely difficult task.

If you require assistance managing a long-term ill or injured employee and wish to have a confidential discussion with one of our lawyers about the next steps, please contact us.