Long-Term Illness And Employment

When can you dismiss an employee on long-term sick leave?

Employers understand that staff will sometimes need time off work because they’re sick or injured. But when an employee is away for months at a time, it can quickly create problems for any business. The employer might find it tricky to cover shifts or complete the work that’s normally done by that employee. And others in the business might have to pick up the slack. When this happens, it can become harder to balance compassion for the employee with the practical realities of running a business. 

At the same time, employees who are dealing with a serious illness may have their own worries – about their income, their job security and whether or not they can be dismissed while they’re trying to recover. 

The law in this area can be a bit complex. While employers can sometimes lawfully terminate employment due to long-term illness, there are significant legal protections in place. And getting it wrong can harm the employee and expose you as the employer to unfair dismissal claims. 

So here’s what you need to know. 

The basics

Employees in Australia are legally entitled to paid and, in some cases, unpaid sick leave. Most employees suffer from short-term illnesses at some point, and employers are obliged to provide leave to allow employees time off to recover. However, the situation becomes more complex when an employee has a long-term illness that prevents them from discharging their employment duties. 

General sick leave entitlements

In Australia, all employees apart from casual workers are entitled to paid personal leave, otherwise known as sick and carers’ leave. This means that employees can take personal leave to deal with their own illness, caring responsibilities or family emergencies. 

Under the National Employment Standards (NES), full-time employees are entitled to 10 days of paid personal leave per year, which builds up progressively based on their ordinary hours of work. Part-time workers also receive personal leave on a proportional basis according to the hours they work. An employee’s contract, enterprise agreement or award can give different personal leave, but only if it matches or increases the minimum standards set out under the NES.

Casual workers are a special case. Though they aren’t entitled to paid personal or carer’s leave, they may be entitled to unpaid carer’s leave in certain situations. For example, a casual employee may be entitled to take unpaid carer’s leave if they need to care for an immediate family or household member who is ill, injured or experiencing an unexpected emergency. Under the NES, casual employees can generally access two days of unpaid carer’s leave for each permissible occasion.

Temporary absence protection

While employees might feel anxious that their job is at risk when they get sick and miss work, there are lots of protections in place. In fact, the law requires employers to treat employees on sick leave fairly and reasonably and avoid any actions that might be construed as medical discrimination in the workplace. In other words, an employer cannot treat their employee less favourably because of their health.

In particular, Fair Work Regulations say that when an employee is absent from work because they’re ill or injured, this should be treated as a ‘temporary absence’. This will happen when:

• The employee is absent because of a genuine illness or injury
• The employee gives acceptance of evidence (like a medical certificate or statutory declaration) within 24-hours of the absence starting (or a longer period if that’s reasonable under the circumstances)
• The total period of absence isn’t more than three months (consecutive or over a 12-month period

When an absence is considered temporary, the employer can’t terminate an employee because of that illness or injury. So the employee’s job is safe. But what happens if the absence goes longer than three months?

Long-term illness and continued employment

If an employee is absent for an extended period, whether for a physical or mental illness, the law changes slightly, as does an employer’s right to dismiss the employee. Here’s what you need to know:

First, the employee is entitled to use their paid personal leave

As we’ve already seen, under the NES, permanent employees are entitled to paid personal/carer’s leave to cover periods when they are unfit for work due to illness or injury. Employees must provide evidence (for example, a medical certificate) if requested, and employers should apply their usual policies for approving and recording this leave.

During this time, the employee falls under ‘temporary absence protections’.

Second, the employee may take unpaid personal leave

If an employee runs out of paid personal leave and is still unfit to return to work, they may be able to take a period of unpaid personal leave. This is usually permitted when supported by medical evidence and is permitted under their award, enterprise agreement contract or with their employer’s approval. Employers often permit unpaid personal leave where the absence is supported by reasonable medical evidence

Third, if an employee can return to work with reasonable adjustments, the employer must consider those adjustments

Federal and State discrimination laws require employers to consider reasonable adjustments to help an employee return to work and perform the requirements of their role. That doesn’t mean they have to take all steps possible to get someone back to work — just reasonable steps.

Reasonable adjustments might mean modifying the worker’s duties, changing their hours or patterns of work or exploring alternative roles that might be more suitable within the business, as long as the employee can still perform the tasks required of their role. An employer might also allow an employee to work from home or work reduced hours. 

Fourth, dismissal is only lawful in limited circumstances

If no reasonable arrangements will allow an employee to return to work and perform their duties, the employer could have a valid reason for dismissal. But any dismissal must be carried out through a fair process (for example, consultation, giving the employee an opportunity to respond and considering up-to-date medical evidence) and must not breach other legal protections such as general protections or discrimination laws.

Long-term illness policy

One safeguard that every employer should have in place is an employee leave policy. Employers, employees and managers then have a clear idea of expectations and the procedures involved in cases of long-term illnesses. 

This policy should set out:

• The employee’s entitlement to sick leave;
• The medical evidence an employee needs to provide and when;
• How often an employee’s capacity will be reviewed; 
• What is meant by a long-term illness;
• If an employee can use other leave entitlements if they run out of paid sick leave; 
• How the organisation will align any decisions with the NES and the Fair Work Act’s protections; and
• Return to work processes.

New employees should read the long-term illness policy during induction and sign to confirm their understanding and agreement.

Employer risk 

If an employer unlawfully dismisses a worker because of illness or injury, they can face significant legal and financial consequences. 

The employee may bring an unfair dismissal or general protections (adverse action) claim. If the court finds for the employee, the employer might have to pay compensation, including back wages, or penalties (or both). And, in some cases, they may be required to reinstate the employee. They might also be required to fix any negative entries in the employee’s records. 

An employer that’s ordered to pay compensation may find it to be extremely substantial, particularly where the employee has suffered a meaningful loss of income and benefits.

In addition, breaching discrimination laws by dismissing an employee because of disability (including many long-term illnesses) can expose the employer to separate proceedings and civil penalties. Regulators or tribunals may order compensation for hurt, humiliation and distress, on top of economic loss, and can impose civil penalties for serious or repeated contraventions. 

Completely aside from any formal or court-ordered sanctions, unlawful dismissal findings can damage a business’s reputation, strain relationships with remaining staff and even have regulators taking a closer look at the employment practices overall.

Tapping case

A good example of how carefully employers need to approach long-term illness and dismissal can be seen in a recent case before the Federal Circuit and Family Court of Australia. 

Ms Tapping was working for Empress Diamonds Pty Ltd when she was diagnosed with aggressive breast cancer. She informed her employer of her intention to take annual and personal (sick) leave as she was scheduled for surgery. She claimed that when she explained that she would need several weeks to recover, her employer responded that he was ‘giving [her] the sack’. Her employer denied this claim.

The court believed the employee’s account, particularly as the employee emailed the employer’s accountant directly afterwards to inform him that she was being terminated due to her cancer treatment. Additionally, the employee had a separation certificate that the employer had signed, which gave the reason for separation as relating to her breast cancer treatment. 

The court dismissed the employer’s assertion that he was unable to read written English and therefore could not understand the certificate’s contents. The employer also published a job advertisement in the days after the conversation to replace the employee. The advertisement did not specify that it was a temporary position due to the employee’s leave. The court was satisfied that the employer unfairly dismissed the employee when he heard that she was intending to access her workplace entitlement to personal and annual leave, which is a right protected under the Fair Work Act.

Conclusion

Balancing long-term illness with employment is never easy – for either the employer or the employee. But because legal risks can be substantial, it’s important to approach these situations carefully, follow a fair process and get legal advice before making any decisions about dismissal or continued employment.

If you need advice about long-term illness, employee dismissal or your workplace rights, get in touch with our team today. We’re here to help!