Think twice before dis­miss­ing employ­ees on Work­ers’ Compensation 

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.