11 July 2012 Think twice before dismissing employees on Workers' Compensation

By Warwick Ryan, Partner and Nathan Huynh, Law Clerk

In Brief

Employers seeking to terminate an employee on Workers' Compensation within the probationary period should take note of a recent decision of Fair Work Australia which clarifies how an employee's period of continuous service is calculated, and highlights the legal obstacles involved in terminating their employment.  

How frustrating is it when an employee starts with you and within the space of a month is on workers compensation? It can be very difficult not to let that tarnish your view of the employee. What can be even more frustrating is if the employee remains on workers compensation for much of the minimum employment period (i.e. probation period) and you do not get the opportunity to properly access their performance. To complicate things even further if someone is on workers compensation there are a range of legal obstacles to terminating their employment.

The case of WorkPac Pty Ltd v M Bambach [2012] FWAFB 3206 reflects the above situation. Bambach ('the Respondent') was engaged by WorkPac ('the Appellant') as a casual employee from 7 March 2010. On 1 June 2010, the Respondent was injured at work and was subsequently on Workers' Compensation until 23 September 2011, where the Respondent was certified to resume his pre-injury duties (and advised the Appellant of this).

On 17 October 2011, the Respondent received an Employment Separation Certificate, stating that his employment had ceased on 24 September 2011 due to his 'unsuitability for this type of work'. The Respondent subsequently lodged an unfair dismissal claim with FWA.

At first instance, FWA rejected the argument that the Respondent had only completed 2.5 months of continuous service (and was therefore not protected from unfair dismissal). This decision was appealed to the FWA Full Bench, and subsequently upheld.

The Bench held that absences whilst on Workers' Compensation do not break an employee's continuous period of service, because Workers' Compensation payments are pursuant to a legal obligation imposed on employers. Consequently an employee cannot be considered as taking an 'unpaid authorised absence'.

Furthermore, note that the Workers' Compensation Act provides injured workers with protection against the termination of their employment within 6 months of injury.

What does this mean for employers?

An employer's ability to terminate an unsuitable employee has been significantly reduced. There is no guaranteed way of avoiding this situation however here are some steps you can take:

  • Arrange a pre-employment examination for the employee;
  • Ensure you thoroughly reference-check the employee; and
  • Be cautious of employing any candidate with a pre-existing injury.  

Employers should therefore take extreme caution and seek professional advice to gain clarity as to whether an employee is protected under unfair dismissal laws.

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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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