Walking the Tightrope of Managing Ill or Injured Employees

Introduction

Employers generally make bad dismissal decisions when frustrated.

So much is true when managing ill or injured employees. With around 30,000 WorkCover claims made in Victoria each year, keeping a cool head is no doubt a virtue.

But there are other less obvious risks. They arise from inaction. In more colloquial terms, it’s called ‘kicking the can down the road’.

On one hand, acting rashly when dealing with ill or injured Victorian employees without proper legal advice may trigger breaches under the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic) (WIRC Act), and expose the business to Unfair Dismissal, General Protections or Disability Discrimination claims. On the other hand, being overly cautious can be equally, or potentially more, damaging and costly. Getting the balance right is never easy.

Statutory Obligations: The 52-Week Rule under the WIRC Act

In Victoria, once an employee makes a successful WorkCover claim s103(1) of the WIRC Act kicks in. Broady, this section says the employer must offer, to a reasonable extent and for an aggregate of 52 weeks (Obligation Period):

Suitable employment if the employee has a current work capacity; and

Pre-injury employment if the employee restores capacity for work.

The key (and often overlooked) qualifier is reasonableness. As we discuss below, employers are not prohibited from dismissing ill or injured employees for good reasons simply because they are on WorkCover. Nor are employers expected to offer suitable employment indefinitely where reasonable adjustments have been made or attempted to be made over a signficant period of time (see, for example, Jenkins v Secretary, Ministry of Health [2022] NSWIRComm 1013).

Dismissing Ill or Injured Employees

Below we discuss the overlapping statutory regimes when dismissing ill or injured employees.

1. Unfair Dismissal

Contrary to popular belief, an ill or injured employee is not immune from dismissal during the Obligation Period.

As mentioned above, the obligation to provide suitable or pre-injury employment only applies “to the extent that it is reasonable”. This means that, in certain circumstances and with prudent legal advice, an ill or injured employee may be dismissed where there is a valid reason unrelated to the illness or injury (s387(a) of the Fair Work Act 2009 (Cth) (FW Act)).

For example, valid reasons for dismissal may include:

Serious misconduct (see, for example, Benjamin Morovan v Laverton Cold Storage Pty Ltd [2020] FWC 2999); or

Failure to follow lawful and reasonable directions, including attending an independent medical examination (IME) to allow the employer to:
- Obtain further medical information to make a proper assessment on what reasonable adjustments are required to assist the employee to perform the inherent requirements of their role; and/or
- Assess the employee’s ability to perform the inherent requirements of their role, both now and in the foreseeable future (CSL Behring v Papaioannou [2018] FWCFB 1005; Jetstar v Neeteson-Lemkes [2013] FWCFB 9075).

Dismissing an employee for failing to attend an IME is a legal hot potato. Employers should get legal advice before embarking down this path.

Inherent requirements of the role

The case law suggests the magic formula for a dismissal of this type generally (but not always) involves obtaining a medical report that effectively says:

the employee is currently unable to perform the inherent requirements of their role;

the employee is unlikely to be able to perform the same in the reasonably foreseeable future; and

no reasonable adjustments could be made to the employee’s role that would allow them to perform the inherent requirements of their role now or in the future.

Of course, the report may prove next to useless in defending against a legal claim if the inherent requirements are not properly identified in the first place. Antidotally, position descriptions often fall well short of explaining what the inherent requirements of a role actually are.

The inherent requirements of a position are the essential features or defining characteristics of the position. This involves a consideration of “whether the position would be essentially the same without that requirement” (Qantas Airways v Christie (1998) 193 CLR 280; J Boag and Son Brewing Pty Ltd v Button [2010] FWAFB 4022).

In our experience, the inherent requirements of a role are not always obvious, even to the most seasoned line managers.

2. General Protections

General Protections claims are rising in popularity, and accordingly, employers would be wise not to overlook the risk, lest they do so at their own peril.

Adverse action is unlawful if it was taken by the employer for a substantial and operative reason of the employee’s:

physical or mental disability, unless the adverse action was not unlawful under a relevant anti-discrimination law, or the employee could not perform the inherent requirements of the particular position (s351 FW Act);

temporary absence from work because of an illness or injury of not more than 3 months in a 12-month period (s352 FW Act; reg 3.01(5) Fair Work Regulations 2009 (Cth)); or

exercise of a workplace right, including making a workers’ compensation claim, taking personal leave, or raising health and safety issues (s340(1) FW Act).

Navigating General Protections risk is no easy feat. A careful and prudent approach is key to managing legal risk and the cost consequences that follow a dismissal decision made out of frustration and hast.

3. Disability Discrimination

Victorian employers must also avoid directly or indirectly discriminating against ill or injured employees because of a disability or impairment, in breach of the Disability Discrimination Act 1992 (Cth) and/or the Equal Opportunity Act 2010 (Vic).

Tribunals are increasingly recognising the lived experience of those affected by disability discrimination, with awards of general damages on the rise as community standards evolve. This trend echoes developments in sexual harassment and discrimination claims following Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82.

For example, in Studart-Teles v The Department of Education and Training [2023] VCAT 1226, a Teacher was awarded $45,000 for being excluded from work following a spinal stroke. Despite repeated medical evidence effectively saying the employee could return to work with some adjustments, the Department unilaterally deemed him unfit. The Victorian Civil and Administrative Tribunal found that the Department failed to accommodate the reasonable adjustments proposed by his GP. The Tribunal also considered the prolonged 2-year struggle the employee faced in dealing with the bureaucracy of a school acting under the advice and assistance of a Government Department.

The general damages assessment in Donald-Stanton v Secretary, Ministry of Health [2026] NSWCATAD 104 is also noteworthy. Here, the NSW Civil and Administrative Tribunal awarded $55,000 in general damages after a manager and HR subjected an employee to workstation and medical assessments based on perceived physical limitations. Despite no or little evidence of performance issues, and without any request for adjustments, they assumed the employee could not perform the inherent requirements of her role. The Tribunal found this assumption to be unsupported by objective evidence, reinforcing that even well-intentioned concerns are no substitute for fact.

Given the rise in general damages, it’s only a matter of time until litigants increasingly pursue disability discrimination claims in pursuit of financial redress. Gone are the days where employers (and their lawyers) could focus most of their collective attention to navigating unfair dismissal risks only.

Conclusion

While many employers have unfair dismissal claims at front of mind, the more complex, higher-cost, higher-risk areas are General Protections and Disability Discrimination claims.

Ultimately, the core question is whether the employee can perform the inherent requirements of their role now or in the future with reasonable adjustments. If not, dismissal may be justified, but this decision must only be made after prudent legal advice, a well-documented process usually grounded in medical evidence (and not assumptions), and after considering whether any reasonable adjustments can be made.

Adam Colquhoun (Principal) and Grace Foo (Lawyer)

This article is general information only. It is not legal advice. Dismissing ill or injured employees is fraught with legal risk, meaning legal advice should be sought before doing so.