16 February 2012 Terminating employees on sick leave – can be a recipe for disaster.

By Warwick Ryan, Partner and Nathan Huynh, Law Clerk

One of the biggest issues for an employer is dealing with underperforming staff members who abuse their sick leave entitlements or access their sick leave for a stress claim immediately ensuing disciplinarily meeting.

Whilst an employer is not to be prevented from terminating an employee whilst on sick leave if the termination is attributed to performance-based or other lawful reasons, it leaves the employer exposed to a claim.  In the event that an employee then lodges a general protections (unlawful termination) claim the onus will be on the employer to prove that the dismissal was not associated with the employee taking sick leave (or other unlawful reasons).

What often happens is that an employer sees an underperforming employee and, whilst frustrated does not take disciplinary action against them because of challenging demands of operating the business.  The employee will then take their fourth instalment of sick leave at an inconvenient time, which drives the employer to distraction feeling that they are being taken advantage of, they move rapidly (often too rapidly) to dismiss them.

The case of Kavassilas v Migration Training Australia Pty Ltd [2012] FMCA 22, was a good example of thisKavassilas ('the applicant') was dismissed by her employer, Migration Training Australia ('MTA'), after taking two days of sick leave (which she was entitled to under her contract).  The applicant informed MTA that she would provide a medical certificate upon returning to work.  However before she returned to work, she received a letter from MTA terminating her employment.

The letter attributed her dismissal to several performance based-reasons including:

  • Failure to carry out her duties in a satisfactory manner
  • Disrupting the activities of the company, resulting in the loss of income
  • Harassment and bullying of fellow staff members
  • Failure to diligently and consistently apply herself to the discharge of her duties
  • Failure to keep the directors of the group of companies aware of her absences from work

However under cross-examination, the evidence given by MTA's directors was highly contradictory and did not justify any of the above reasons.  MTA's directors also acknowledged that they had knowledge that the applicant was on sick leave and was going to produce a medical certificate upon return.

Federal Magistrate Smith was of the belief that the true reasons for termination were "impulsive and irrational" and that her dismissal was "triggered by her absence from work".

FWA found that the termination of the applicant contravened s352 of the Fair Work Act, which protects employees from dismissal whilst on sick leave because of illness or injuries prescribed by the Fair Work Regulations.

It was also noted that MTA may have held an incorrect view that an employee can could be terminated whilst absent on sick leave at any time until a medical certificate was actually submitted.

Although the regulations require that a medical certificate be produced within 24 hours of the start of the leave, an employee may take a longer period of time provided it is "reasonable in the circumstances".  This reaffirms the intent of the Fair Work Act on protecting employees against dismissal in relation to an employee's exercise of rights to take sick leave.

What does this mean for employers?  It means that employers must take extreme caution when dismissing employees who are currently taking sick leave.  If an employer is found to have contravened s352, they will be liable for the payment of wages and compensation.

There is also a presumption that if an employee has been dismissed whilst taking sick leave, the dismissal was undertaken due to the fact that the employee was on sick leave.  In disproving this presumption, employers must have clear evidence showing that the dismissal was not connected to the employee taking leave, and that there was no unlawful motivation for the dismissal.  The authorities to this point highlight that proving that someone was not entitled to take sick leave verges on the impossible.

It is our view that disciplinary processes should never touch on issues of absenteeism, as the law is weighed against so heavily against the employer on this issue there is often a connection between absenteeism and poor performance.  We strongly recommend that employers focus on the poor performance and make sure that all such disciplinary meetings are followed up by a warning memo or letter.

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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