By Charles Power

In a recent decision, the Full Bench of the Fair Work Commission (FWC) has sought to resolve conflicting views of its role in determining if an employer has a valid reason for dismissing workers that are dismissed on the basis of incapacity to perform the requirements of the role.

Whether there is a “valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees)” is a matter to be taken into account by the FWC in assessing whether the dismissal was “harsh, unjust or unreasonable”.

Where the termination of employment relates directly to the employee’s incapacity to perform the inherent requirements of the role, the FWC will consider the medical evidence and whether it supports a finding that the employee cannot perform the inherent requirements of the job for the foreseeable future.

Different approaches regarding medical evidence

In CSL Limited v Papaioannou (2018), the employer dismissed a worker because he had no capacity to perform his pre-illness duties. However, there were differences in opinions between the treating medical practitioners as to the prospects of the employee’s future return to work.

One prognosis estimated that the employee’s recovery would be about 6 months, whereas the alternative medical assessment estimated between 12-24 months. The FWC’s decision at first instance ruled it was not its role to decide ‘who is right or who is wrong’, and went on to conclude that the dismissal was harsh and ordered reinstatement.

This approach was reflected in another FWC decisionLion Dairy (2016). In that decision, the FWC determined it was not its role to make an expert medical assessment. An employer is entitled, and expected, to rely on expert assessments. If there is some apparent conflict in medical opinions, it will usually be incumbent on the employer to resolve that conflict (provided its reliance on the evidence was reasonable).

The decision found that the FWC’s interference with the employer’s reliance on medical evidence is only warranted if its actions are unreasonable (for example, because the report is vague or inconclusive).

However, a more recent decision, the FWC in Jetstar Airways Ltd v Neeteson-Lemkes(2018) ruled the FWC must consider and make findings as to whether, at the time of dismissal, the employee suffered from the alleged incapacity, having regard to the relevant medical and other evidence before the FWC and, if so, whether there were any reasonable adjustments which could be made to the employee’s role to accommodate their return to work.

Those findings then need to be considered and treated as matters of significance in the process of deciding whether there was a valid reason for the dismissal.

This approach was followed in V v Ambulance Victoria (2018), where the FWC decided that there was not a valid reason for termination based on capacity, after considering the relevant medical evidence.

The FWC assessed the medical evidence and saw conflicting findings from different practitioners regarding the current and future work capacity of the employee. The FWC noted it was its responsibility to determine whether the evidence supported a finding that there was a valid reason for the termination of employment in all of the circumstances, including the particular nature of the industry and the employee’s role.

Decision in Papaioannou

The Full Bench in Papaioannou adopted the approach taken in Jetstar and Ambulance Victoria and rejected the approach in Lion Dairy. It is now clear that there is no basis to leave the resolution of any conflict in medical opinion to the employer. In a dismissal related to the person’s capacity, the FWC will consider and make findings as to whether, at the time of dismissal, the applicant suffered from the alleged incapacity.

The appeal was upheld, and the matter was remitted for rehearing. In relation to the conflicting medical evidence, the FWC found that, on either prognosis, the employee was unable to perform the inherent requirements of his role and that this constituted a valid reason for the dismissal.

However, the FWC again awarded reinstatement on the basis the dismissal was “harsh”. This was due to the specific facts, which included an enterprise agreement with a generous salary continuance entitlement that the employee would have continued to be paid, had the employment not been terminated.

Lessons for employers

Prior to dismissing an ill or injured employee for incapacity an employer should:

• request relevant medical evidence about the employee’s capacity to perform the requirements of the role;
• consider whether the evidence unequivocally indicates that the employee is unable to return to work and perform the inherent requirements of their role;
• consider whether the evidence indicates that the employee can return on a gradual basis or reasonable adjustments can be made to the role to enable their return to work;
• exercise caution when dealing with conflicting or vague medical evidence, and consider whether ‘on a best-case scenario’ the employee has capacity to return to work in the foreseeable future; and
• have regard to specific circumstances, such as policies or terms within an applicable enterprise agreement that may support an employee’s gradual return to work.