Ill or injured employees: when is termination ‘valid’?

7 October 2019
Siobhan Mulcahy, Partner, Melbourne

In the recent decision of Jack v Sigma Healthcare T/A Sigma Healthcare [2019] FWC 6364 (13 September 2019) the Fair Work Commission (Commission) has determined that an employee who was dismissed by her employer, Sigma Healthcare (Sigma), after she sustained an injury outside of work and could no longer perform the inherent requirements her job, was ‘validly’ dismissed pursuant to the Fair Work Act 2009 (Cth) (Act).



In October 2017, after sustaining an injury in a non-work related motor vehicle accident, the employee took a period of personal leave, which extended until the termination of her employment in early 2019.

It was undisputed that the employee had no capacity to work during the six months immediately after her accident. Following this, however, between May 2018 and her termination, the employee produced various medical evidence that ranged from suggesting she could return to work on a modified basis, to suggesting she had no current capacity to work at all.

Sigma had left the employee’s position open for more than 12 months when, in January 2019, they had a teleconference with the employee. She was informed during the call that based on the evidence before Sigma, they could no longer keep “her job open”. The employee conceded during the conversation that she could “no longer prolong the inevitable” and “this will give me the time I need to concentrate on getting better.”

Later that day, Sigma sent the employee a letter confirming that her employment had been terminated on the grounds of her inability to perform the inherent requirements of her role. She was also advised that there were no other suitable positions available to her within the business.

Despite her earlier concessions, the employee then proceeded to lodge an unfair dismissal claim against Sigma alleging, among other things, that there was no relevant evidence to support Sigma’s position that she did not have capacity to perform the inherent requirements of her pre-injury role “either at the time or in the foreseeable future”.



When considering whether the reasons for the dismissal were valid pursuant to section 387(a) of the Act, the reason must be related to an employee’s capacity or conduct, the reason must be sound, defensible or well-founded, and the reason cannot be capricious, fanciful, spiteful or prejudiced’. In this case, Commissioner Cirkovic adopted the approach of the Full Bench of the Commission in Jetstar Airways Pty Limited v Neeteson-Lemkes and considered:

  1. whether the employee was capable of performing the inherent requirements of her role as at the date of dismissal;
  2. whether the employee would be able to perform the inherent requirements of her role at some time in the future; and
  3. whether there was some reasonable adjustment which could be made to her role to accommodate any current or future incapacity.

Commissioner Cirkovic was satisfied that at the time of termination, the employee was unable to perform the inherent requirements of her role based on the medical evidence which suggested she was suffering from a physical and mental incapacity.

It was then acknowledged that whilst modifications to the employee’s duties could be made to accommodate her physical condition, no adjustments could be made to appropriately accommodate her mental incapacity.

As a result, the dispute between the parties was therefore confined to the state of the evidence as to the employee’s future capacity to perform the inherent requirements of her role.

In considering this issue, particular weight was given to a letter dated 14 January 2019 from the employee’s treating physician, which emphasised her psychiatrist’s recommendation that she should be assessed again in two to three months. Commissioner Cirkovic held this was not a medical opinion that the employee would be fit for work in the future, but rather it merely expressed the opinion that the employee may become fit for work at some point in the future.



Whilst Commissioner Cirkovic sympathised with the employee’s situation and considered the community interest factor in assisting the rehabilitation and return to work of seriously injured or ill individuals, she ultimately held that the termination was fair particularly given the actions of Sigma who kept the employee’s position open for an extended period.

The decision implements the approach endorsed by the Full Bench of the Commission in CSL Limited T/A CSL Behring v Chris Papaioannou [2018] FWCFB 1005, who observed that the onus is on the Commission rather than the employer to:

“…consider and make findings as to whether, at the time of the dismissal, the applicant suffered from the alleged incapacity based on the relevant medical and other evidence before the Commission, as determined in Jetstar.”


What does this mean for employers?

Caution always needs to be exercised whenever an employer is considering terminating the employment of an ill or injured employee who has been absent from work for extended period. While an employee may seek to commence an unfair dismissal claim, there are other employment or discrimination related claims which may be available to an employee in those circumstances.

In making any decision to terminate, it is critical that an employer obtains a report from the employee’s treating medical practitioner or as a result of an independent medical examination, which sets out a diagnosis of the employee’s medical condition and the expected prognosis for that condition. That report must focus on whether the employee is capable of performing the inherent requirements of their role at that time or in the foreseeable future, and whether any reasonable adjustments or accommodations could be made so as to allow that to occur.

Where there are conflicting or competing medical opinions which have been provided, then an employer cannot simply rely upon the opinion of its choice. Rather, in those circumstances an employer must seek to resolve the conflict in some way, such as by seeking further clarification from the relevant medical practitioners or by seeking a further assessment, in order to be able to establish that it has a valid reason for termination. Where an employer does not properly resolve that conflict, then the Commission may determine for itself which medical evidence should have been relied upon.


Authored by:

Brett Feltham, Partner

Katie White, Lawyer

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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