01 Aug 2014

Terminating absent employees: What you need to know

By Saul Harben, Conor Fahey

Employers must seek detailed legal advice before taking action to dismiss an employee who has been absent from work for a prolonged period. 

Terminating an employee who has been absent from work for a long period can be a legal minefield for employers. In this article we look at how the relevant provisions of the Fair Work Act 2009 (Cth) (FWA) apply and the steps employers should take to minimise the risk of an adverse action claim.
General protection for temporary absence 

Within the general protections provisions of the FWA, section 352 provides that an employer must not dismiss an employee where the employee is temporarily absent from work because of an illness or injury of a kind prescribed by the Fair Work Regulations. 

In general terms, the Regulations stipulate that an illness or injury will be so prescribed if supported by:

  • a medical certificate;
  • a statutory declaration; or
  • ·other evidence which would satisfy a reasonable person.

The "three month exception" rule

The Regulations state that an illness or injury is not of a prescribed kind if an employee's absence:

(a)            extends for more than three months; or
(b)            where there are a total of absences exceeding three months in a 12 month period, and the employee is not accessing paid
                personal or carer’s leave or receiving workers compensation for the duration of that absence.

Put simply, an employer will not be in breach of section 352 of the FWA if they dismiss an employee who is not accessing personal leave or workers compensation, and the employee has been absent for longer than three months. This is the case even where the absence is supported by a medical certificate or a series of medical certificates.
Alternative claim under general protection provisions
However, section 352 does not operate to give an employer carte blanche to dismiss an employee who is absent from work for three months or longer due to illness or injury. In a recent Federal Circuit Court decision, an ill employee who was absent from work for longer than three months and subsequently dismissed was able to bring an alternative General Protection claim under section 351.
Section 351 is a discrimination provision which prohibits adverse action against an employee because of, among other things, the person's physical or mental disability.

In McGarva v Enghouse Australia Pty Ltd [2014] FCCA 1522 the applicant, who was dismissed after being absent for 10 months due to ongoing cancer treatment, was granted permission to proceed with a discrimination-based adverse action claim under section 351. This was despite the employer's argument that the employee was precluded from doing so by operation of section 352, having been absent for longer than three months beyond his personal leave entitlements.

The applicant alleged that the employer had taken adverse action against him by dismissing him because of his physical disability. The employer argued that it was entitled to dismiss the applicant because the dismissal was authorised under section 342(3) of the FWA, which states that adverse action does not include action which is authorised by or under the FWA.  It argued that section 352 and the relevant Regulations authorised the dismissal of long-term absentee employees so the dismissal could not be adverse action. 

In rejecting the employer's argument Judge Rolf Driver relevantly stated:

"…the mere fact that action — in this case, relevantly, a dismissal — may be authorised under s.352 of the Fair Work Act and the Regulations does not carry an implication for any claim under s.351 … A dismissal may be authorised due to the period of absence but it may still constitute an unlawful dismissal under Commonwealth or state anti-discrimination legislation. … Given [the employee] was absent for almost a year before his employment was terminated, his illness was not prescribed and falls outside the purview of s.352 of the Fair Work Act but that does not abrogate his rights under s.351 of the Fair Work Act… ".

This case serves to highlight that that the three month exception will not operate as a rule to allow employers to dismiss employees in such circumstances.  Employers will need to exercise caution and seek detailed legal advice regarding their obligations under the general protections provisions of the FWA before taking action to dismiss an employee who has been absent from work for a prolonged period. 
Inherent requirements of the position

Although a long-term absentee employee may be eligible to bring an adverse action claim under section 351, this provision includes an exception for action taken because of the inherent requirements of a position. 
In practice, this means an employer will not be in breach of this discrimination provision if they dismiss a long-term ill or injured employee because their illness or injury is so severe they are unable to fulfil the requirements of their position, or any other position, within the foreseeable future.

However, in order to mitigate any risk of a general protections claim, before an employer seeks to dismiss an employee for this reason, it is recommended that the employer confirm, by way of medical opinion, that the employee is in fact unable to fulfil the requirements of the position. 

This article was first published in HC Online, August 2014

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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 communication. Persons listed may not be admitted in all States and Territories.