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Can You Terminate an Employee if They Have an Illness?

The general protections provisions of the Fair Work Act 2009 (“the Act”) aim to protect workplace rights and freedom of association and to provide protection from workplace discrimination. Under the general protections provisions of the Act, a person (such as an employer) must not take any adverse action against another person (such as an employee) because the other person has a workplace right, has exercised a workplace right, or proposes to exercise such a right.

An employer must not dismiss an employee because the employee is temporarily absent from work because of illness or injury.  If a person believes they have been dismissed and alleges that their dismissal was in contravention of the general protections provisions of the Act, they can apply to the Fair Work Commission (“FWC”) to deal with the dismissal. An employee may claim a breach of the general protections provisions if he or she is dismissed and can show that the dismissal was because he or she had taken temporary leave due to illness.

Temporary absence due to illness or injury

An employer must not dismiss an employee because they have been temporarily absent from work because of illness or injury if:

  • they have a doctor’s certificate;
  • they are on paid sick leave or they have had less than three months unpaid sick leave in the last year; and
  • general protections applications concerning dismissal must be made within 21 days of the dismissal taking effect.

Valid Reason for Termination?

A Contract of employment may be validly terminated on the basis of an employee’s illness when that illness has demonstrated an adverse impact on the employee to perform the inherent requirements of their job.

If the employee demonstrates they are able to perform the duties and responsibilities of their job, even after a period of absence from work, a termination of employment will not be valid and will be harsh and unreasonable (Cooper v Balfours Bakery Pty Ltd [2011] FWA 4595).

In Smith and others v Moore Paragon Australia Ltd the Federal Court stated, “the traditional view was that when an employee is so incapacitated by illness  or injury that he or she cannot work, at least in the longer term, the contract may be frustrated and thus terminated by operation of law and not at the initiative of the employer.”

In Marshall v. Harland & Wolff Ltd[1972] 1 WLR 899 , Donaldson J stated “the greater the degree of incapacity and the longer the period over which it has persisted and is likely to persist, the more likely it is that the relationship has been destroyed.”

Overall this area of law is complex and legal advice from an employment law solicitor is recommended.

If you or believe that you may have been unfairly terminated, please do not hesitate to contact our Melbourne Office on (03) 9600 2577 or our Sydney Office on (02) 9251 6699.