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Procedural deficiencies dismissing an employee on extended absence

Submitted on Thursday, 8th June 2017

The Fair Work Commission has criticised a large business for significant procedural deficiencies when dismissing an employee who took an extended absence from work because of a mental health issue. Despite the involvement of human resources, the leave was misconstrued as a refusal to work warranting dismissal.

Following a change of role, the employee was placed on a performance improvement plan as he had failed to meet key performance indicators. The improvement plan was temporarily suspended to afford the employee the opportunity to demonstrate his ability to perform under a new manager. Shortly thereafter it became clear the employee was experiencing mental health issues. As a result of these concerns, the employee was instructed to take sick leave. This was confirmed in writing and the employee was asked to complete a fit for work assessment including psychological testing.

The employee underwent the required assessment which concluded he was temporary unfit for his usual work under the supervision of his new manager.  The assessment suggested the business consider alternative supervision arrangements and facilitate the return to work as soon as possible.

The business implemented a return to work (RTW) plan which included a different supervisor, a different work location and different duties for a different business. The RTW plan did not include any key performance requirements.

At the beginning of the third week of the RTW plan the employee was transferred and required to perform duties for the Employer’s business.  These duties were still to be performed at the different location and were not subject to the supervision of the employee’s new manager.

The employee expressed on-going concerns in relation to the prospect of returning to work under the supervision of his new manager. In response to these concerns the employee was asked to leave the workplace.

After rejecting a deed of release engineered to bring the employee’s employment to an end, the employee expressed a desire for mediation with his new manager. Whilst initially there was preparedness, the business subsequently rejected the proposal and directed the employee back to his original role. The employee was required to work under a branch manager and it was specified key performance indicators would be integral to his RTW. The employee did not return and his doctor provided the business with a medical certificate indicating he was not fit to work.  

The employee lodged an unsuccessful workers compensation claim and remained on sick leave for a period exceeding three months. The business sent a letter indicating they were intending to make a decision about his ongoing employment and if he was medically unfit to perform his role his employment may be terminated.

The employee engaged a lawyer who asked on two occasions for an extension of time within which to provide medical and/or other evidence concerning the employee’s capacity.  The second request for an extension of time was denied and days later the business terminated the employee’s employment.

The termination of employment was communicated by way of an email.  The email noted the business had formed the view the employee had refused to work and perform a full range of duties for an extended period and as such the business was left with no option but to terminate his employment.

Commissioner Cambridge found the circumstances did not represent any established refusal to perform work but instead amounted to a confirmed incapacity to work.  Commission Cambridge found the dismissal harsh. He said in circumstances where an employee was suffering from a mental illness and was using doctors and lawyers to communicate it would have been reasonable for the employee to be afforded the opportunity to “show cause” as to why his employment should not be terminated “before the determination of any dismissal is made.” Commissioner Cambridge also took issue with the notice of termination being communicated by email, noting the employer might benefit from "reviewing its employee management practices to ensure that communication of any decision to dismiss is conveyed in a manner that is respectful, and maintains basic standards of human dignity".

This case highlights to employers the importance of ensuring a suitable process is adopted to afford employees the opportunity to “show cause” before a decision regarding dismissal is made. It also highlights the need to ensure all communications to employees are appropriate. Under current legislation, costly consequences await organisations found to be recruiting, managing or terminating staff incorrectly.

Attend our Managing Mental Health in the Workplace to provide your business with the tools to support people with mental health problems or  Managing Termination, Redundancy and Unfair Dismissals to increase your knowledge of counselling and discipline processes, and how to best manage an unfair dismissal claim.

Written by Rachael Hammond

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