The long term absence from a business of key personnel due to illness, injury or some other cause can cause major disruption to an employer’s operations. Extended absences make it difficult for employers to manage both their daily operations and plan for the future.

Many employers are unclear on their rights and obligations when it comes to managing long term absent employees. Of course, an employer may be quite happy to accommodate an employee’s extended absence from the business until they are ready and able to return to duties.

But at what point and in what circumstances is it lawful to terminate the employment of a long term absent employee and/or replace them in their position? The consequences for an employer getting it wrong may be costly and protracted employment litigation, so it’s worth taking a deep breath and carefully planning your management of this difficult situation.

The starting point is for management to be crystal clear on what the sources of their rights and obligations are when making critical decisions about an absent employee. This will involve consideration of:

(a) The terms of the absent employee’s contract of employment;

(b) Any applicable industrial instrument, such as an award or enterprise agreement; and

(c) Relevant statutes such as workers compensation legislation and the Fair Work Act 2009 (Cth) (“FW Act”).

Section 352 of the FW Act provides as follows:

 Temporary absence—illness or injury

An employer must not dismiss an employee because the employee is temporarily absent from work because of illness or injury of a kind prescribed by the regulations.

Clause 3.01 (1)-(3) of the Fair Work Regulations 2009 (“the Regulations”) provides that:

a prescribed illness or injury is where the employee provides a medical certificate for the illness or injury or a statutory declaration within 24 hours of the commencement of the illness or injury (or a reasonable time thereafter).

Clause 3.01 (5) of the Regulations provides that certain types of injury or illness are not prescribed if:

 (a)     either:

(i)         the employee’s absence extends for more than 3 months; or

(ii)        the total absences of the employee, within a 12 month period, have been more than 3 months (whether based on a single illness or injury or separate illnesses or injuries); and

 (b)     the employee is not on paid personal/carer’s leave (however described) for a purpose mentioned in paragraph 97(a) of the Act for the duration of the absence.

Message for Employers

Section 352 of the FW Act acts as a break on the early termination of employment of an absent employee by reason of their absence. If the employee is “temporarily absent” as defined by the Regulations, it will be unlawful to dismiss the employee because of that absence. To not be “temporarily absent”, the employee must have been off work and not in receipt of paid personal/carer’s leave for no less than 3 months in the preceding 12 months prior to termination (which may be one unbroken period or cumulatively a period of 3 months).

Do you notice that whether an employer contravenes section 352 of the FW Act comes down to the reason for the dismissal?

It should be stressed that there are a variety of other circumstances that may lawfully justify the dismissal of an employee who is temporarily absent as defined by the Regulations. These include: redundancy of the position, sale of business, and acts of the employee justifying summary dismissal such as serious misconduct.

But even after an injured or ill employee has exceeded 3 months’ off work on unpaid personal leave, it’s important to be able to establish that the employee is unfit for the inherent requirements of the position before moving to dismissal. This may be critical to mounting a defence to a claim by a dismissed employee that their dismissal was unlawfully discriminatory or unfair. For example, section 351 of the FW Act makes it unlawful to dismiss an employee because of the employee’s physical or mental disability unless the employee is unfit for the inherent requirements of the position.

In other words, the employer must still have a valid reason in fact for dismissing the employee, such as the employee being unfit for the inherent requirements of the position- it may also be necessary to consider whether the employee would be fit to do their job if reasonable adjustments were made.

In some cases, medical evidence may already be to hand to enable a proper and fair evaluation of the employee’s fitness for work to be made, for example, workers compensation medical reports and WorkCover certificates of capacity.

However, it may be necessary to invite the absent employee to submit medical evidence as to their capacity for work or to request or require the employee to attend a medical assessment arranged by the employer. NB: consideration must be given to ensuring the employer has the legal power to direct the employee’s attendance at a medical assessment.

Best practice is to provide the employee with a fair opportunity to show cause why their employment should not be terminated due to being unfit for the inherent requirements of the position, prior to the decision being taken.

And these are not the only considerations, by any means. As already noted, apart from the FW Act, there are other sources of law that inform the rights and obligations of both parties before the employment can lawfully come to an end. These may include:

  1. Contractual terms and employment policies that afford the employee protection or other benefits, such as income protection payments, in periods of absence from work;
  2. Clauses in an enterprise agreement that mandate the process to be followed in fitness for work situations; and
  3. Obligations under workers compensation legislation that prohibit dismissal of an injured worker within a prescribed period because of a work injury and positive obligations to cooperate in the rehabilitation of an injured worker.

Acting on the employment of a long term absent employee requires a careful consideration of the facts and the applicable laws and rules. WilliamsonLegal would welcome the opportunity to assist in guiding you through the process.