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UpdatesMay 02, 2018

Take these important steps when dismissing for incapacity

The Fair Work Commission (FWC) has recently considered whether a dismissal for incapacity was “harsh, unjust or unreasonable”.

By Lauren Drummond

The Fair Work Commission (FWC) has recently considered whether a dismissal for incapacity was “harsh, unjust or unreasonable”.

The decision in Kothandan v Transdev Melbourne Pty Ltd (2018) concerned a bus driver who was dismissed because he was incapable of performing the inherent requirements of his position.

The employee was injured and worked on modified duties for approximately 8 months. He later developed severe anxiety and ceased being able to work altogether. In total, approximately 18 months elapsed from the date of the employee’s initial injury until his dismissal, while the employer afforded the employee the opportunity to rehabilitate and access appropriate medical treatment, in order to facilitate his return to work.

Inherent requirements

An employer will have a valid reason for dismissal for capacity if it can demonstrate that the employee is unable to perform the inherent requirements of the position. The FWC has stated that it is the substantive position or role of the employee that is to be considered and not some other modified, restricted duties or a temporary alternative position.

In an unfair dismissal claim where an employee is alleged to have been dismissed due to incapacity, the FWC is required to consider whether the employee suffered from the alleged incapacity, having regard to the relevant medical and other evidence before the FWC. The relevant evidence is the evidence that was current at the time of the dismissal.

Medical evidence

In Kothandan, the employee injured his back at work and was offered restricted duties. The employee also made a workers’ compensation claim for his injury, which was accepted. The employee then developed severe anxiety and was unable to attend work from late-March 2017.

In May 2017, the employee was required to undergo an independent medical assessment for his workers’ compensation claim, which found he was suffering from severe anxiety and did not have any capacity for work.

The employee attended his treating medical practitioner on the same date, which also indicated he was not capable of returning to his pre-injury hours and duties as he was unable to drive a motor vehicle independently.

It was determined by the employer that the employee’s restricted capacity prevented him from working as a bus driver and his employment was to be terminated. He was dismissed on 13 November 2017.


The FWC found that the dismissal was not “harsh, unjust or unreasonable” and dismissed the application. It agreed that the medical evidence established that the employee’s ongoing anxiety affected his judgement and he was not capable of regularly driving buses as required by the role.

Although the comprehensive medical reports relied on by the employer were from a few months prior to the dismissal date, the employee had produced certificates of capacity that satisfied the FWC that his capacity was consistent with the earlier medical reports.

Importantly, the employee was also given an opportunity to obtain further medical evidence from his treating medical practitioners and was provided with a letter to give to his doctors that set out the information that the employer required.

The letter to the employee stated:

“It is important that we have accurate and detailed medical information because it may affect what the Company decides to do about your job. If your incapacity is such that you will not be able to safely carry out your pre-injury/ illness duties in the near future, we will need to give serious consideration as to whether or not to continue your employment.”

Accordingly, the FWC found the employee was notified of the reason for his dismissal and afforded a reasonable period of four weeks to obtain further medical evidence. He did not produce any further reports prior to his dismissal.

In concluding that the reason for dismissal was valid, the FWC stated that an employer is not obliged to maintain employment indefinitely in circumstances where an employee can no longer do the job he was employed to do.

Commissioner McKinnon also disagreed with the employee’s proposition that he was not given a chance to rehabilitate and receive appropriate medical treatment, determining that over the 18-month period the employer took reasonable steps to return the employee to work and that the medical treatment he received appeared to be consistent with the medical advice.

Lessons for employers

Employers should ensure that employees that are unfit for work for extended periods of time are given an opportunity to return to work, including:

However, an employer is not obliged to keep employment available for an employee indefinitely. If the medical evidence indicates that the employee is unlikely to be able to meet the inherent requirements of the role for the foreseeable future, then an employer can dismiss for incapacity (of course, provided that any applicable obligations owed by the employer under workers’ compensation legislation have also been met).

It is important that such a decision is based on current medical evidence and the employee is given an opportunity to respond to the employer’s decision to dismiss based on that evidence.


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