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Defining ‘temporary absence’


Feature Articles

Cite as: (2008) 82(4) LIJ, p. 54

The termination of an employee is fraught with difficulties, especially if illness and injury are involved.

By Emma Goodwin

The termination of an employee is fraught with difficulties, especially if illness and injury are involved.
By Emma Goodwin

The question of how to terminate the employment of an ill or injured employee is an issue that confronts many employers, particularly where the employee has been unable to perform his or her job for a long period.

Such a termination is never easy for many reasons and there are several relevant legal issues. Potential risks for employers going down this path include breaching workers’ compensation legislation or being subject to a claim or claims of disability discrimination, unfair dismissal, or unlawful termination (although in most cases, an employee will have to choose to pursue only one of these: ss672 and 674 Workplace Relations Act 1996 (Cth) (WRA)).

While all these potential risks must be considered when termination of an ill or injured employee is contemplated, this article focuses on the potential for breach of s659(2)(a) of the post-WorkChoices (and pre-“Forward with Fairness”).[1] WRA s659(2)(a) prohibits termination of an employee where the reason for the termination, or one reason for the termination, is that the employee is temporarily absent because of illness or injury.[2] Employers must act carefully to avoid the risk of breaching this obligation.

Unlawful termination provisions pre and post-WorkChoices

At the outset, it should be noted that s659(2)(a) and the related reg 12.8 of the current Workplace Relations Regulations 2006 (WRR) are in identical terms to the pre-WorkChoices WRA s170CK(2)(a), and reg 30C of the former Workplace Relations Regulations.[3]

Therefore, case law on s170CK(2)(a) and reg 30C remain highly relevant when considering the operation of s659(2)(a) and reg 12.8.

Eligibility to make a s659(2)(a) claim

Practitioners will be aware that many employees are excluded from making unfair dismissal claims under the post- WorkChoices WRA: ss638 and 643 (although this is unlikely to alter under the new federal government.[4] However, there are no such exclusions in relation to unlawful termination claims. Provided that an employer is covered by the WRA,[5] then the employee may be eligible to make an unlawful termination claim. This is likely to remain the case under the new federal government. [6]

Depending on the facts, an unlawful termination claim, including one under s659(2)(a), may be more accessible to some employees than one of unfair dismissal. Employers need to be conscious of this.

Temporary absence

Regulation 12.8 of the WRR defines what is meant by “temporary absence”, stating that an absence is temporary if an employee:

  • is medically certified as ill or injured and has complied with all legislative or industrial instrument requirements as to notifying the employer of the absence and providing supporting evidence: reg 12.8.1; and
  • has been absent on unpaid sick leave for less than a total of three months in a 12-month period. While the employee is on paid sick leave, the absence will remain temporary: reg 12.8.2.[7]

However, absences on unpaid sick leave of greater than a total of three months in a 12- month period are not temporary. Where it can be established that an employee has been absent on unpaid sick leave for more than three months in a 12-month period, an unlawful termination claim will fail.[8]

In Nikolich v Goldman Sachs JB Were Services Pty Ltd,[9] Wilcox J of the Federal Court held that:

“ ... reg 30C was intended to be an exhaustive statement of what constituted a ‘temporary absence from work ... If a particular absence does not fall within the reg 30C definition, s170CK(2)(a) has no application to it, even if, in ordinary language, it would be regarded as a temporary absence from work”.[10]

In Nikolich, the employee was absent from work for more than three months immediately before termination of his employment, but was on annual leave for part of the time and unpaid leave for the remainder. He also did not provide medical evidence supporting his absence for this period. Wilcox J concluded that he was not absent on paid sick leave for the duration of his absences and was therefore ineligible to make a claim under the then applicable s170CK.

In Sallehpour v Frontier Software Pty Ltd,[11] Marshall J held that for an absence to be temporary, an employee must have both satisfied the requirements of reg 12.8.1 (then reg 30BC(1)) and be outside the categories detailed in reg 12.8.2 (then reg 30BC(2)). As Wilcox J noted in Nikolich, this meant that it was:

“ ... always necessary to satisfy the requirements of subreg (1), but subreg (2) limited the situations in which satisfaction of subreg (1) was available”.[12]

Nikolich and Sallehpour make it clear that what constitutes “temporary” in this context is what the WRR defines temporary to be. This is important, as some absences that the WRR conceptualises as temporary may appear, particularly to inexperienced employers, not to be temporary at all – for example, where an employee has been absent on paid sick leave for several months. Long absences on paid workers’ compensation are also problematic.

Absence on workers’ compensation

Importantly, it was held by Raphael FM in Lee v Before and After School Care[13] that absence on paid workers’ compensation leave falls within the definition of paid sick leave in reg 12.8 of the WRR and is therefore not a temporary absence. In coming to this view, Raphael FM noted that the WRA and WRR did not, in his view, exclude employees in receipt of workers’ compensation from being in receipt of sick pay.[14] He relied in part on an examination of the Termination of Employment Convention 1982, which underlies some termination of employment provisions in the WRA.

Raphael FM’s decision has a significant impact on employers with employees who are or have been absent on paid workers’ compensation. Effectively, if the decision in Lee stands, it is impossible to terminate such an employee without breaching s659(2)(a) (unless the employee has been absent on unpaid sick leave for three or more months in the 12-month period before termination). This is regardless of the fact that in many cases such an employee may have been absent from work for a very long period. With respect, the decision is a problematic one in terms of interpretation of the WRA, and the issue merits further judicial consideration.

Other features of s659(2)(a)

A prohibition on termination on the basis of illness or injury is similar to the anti-discrimination law prohibition on termination on the basis of impairment or disability. However, as well as the definition of “temporary” in reg 12.8 having to be taken into account in the s659(2)(a) context, there is one other crucial difference from the position under anti-discrimination law.

In contrast to the situation under anti-discrimination law and under s659(2)(f) of the WRA (which prohibits termination of an employee for reasons including disability), in a s659(2)(a) matter the employer cannot rely on the defence that the employee cannot perform the inherent requirements of the position: s659(3) WRA. This is important, because it means that even if the person’s inability to do the work or failure to perform or conduct him or herself adequately is the motivating factor for the termination, rather than the absence on the basis of illness or injury in itself, it is still likely that s659(2)(a) will be found to have been breached if an illness or injury is related to the inability or inadequacy complained of. This is clearly demonstrated in the cases discussed below.

It is also important to keep in mind that the onus in a s659(2)(a) matter is on the employer to prove that a termination was not motivated by the fact that the employee was temporarily absent for reasons of illness or injury: s664(b) WRA. The employee does not need to prove that the termination was for this reason: s664(a) WRA.

In Laz v Downer Group,[15] Moore J of the Federal Court stated in relation to s170CK generally (the case was one where termination was alleged to be on the ground of family responsibilities):

“In my opinion an applicant alleging termination in contravention of s170CK(2) will succeed in the application unless the employer establishes a defence by proving that the alleged reason was not the reason or one of the reasons for the termination ... The success of the application does not depend on the Court being satisfied, other than by reference to the allegation of the applicant, that the termination was for a proscribed reason (or one reason was a proscribed reason) if the employer fails to make good its defence”.[16]

Process and consequences of a successful s659(2)(a) claim

A s659(2)(a) claim will initially be conciliated by the Australian Industrial Relations Commission: ss643(1) and 650 WRA. Should conciliation fail, the complainant must then elect whether to proceed with a claim of unfair dismissal or unlawful termination: s651 WRA.

If the complainant chooses to pursue an unlawful termination claim, the matter will be heard in the Federal Court or Federal Magistrates Court: s663 WRA. While the associated costs are obviously a barrier to some claims and many matters will settle at conciliation, many matters have proceeded to this stage and costs can in some cases be offset through the Unlawful Termination Assistance Scheme.[17]

Under s665 of the WRA, if the Court finds in the employee’s favour, it has the power to impose a penalty of up to $10,000, make an order for reinstatement and make an order for compensation (not including compensation for emotional distress). An employee employed under award-derived conditions may be ordered up to six months’ pay and, if he or she was on leave without pay (or part pay) during the six months immediately before the termination, the amount of remuneration that should have been received during that time. A non-award employee may receive a payment calculated in the same way as for an employee employed under award-derived conditions, or $32,000, whichever is the lesser amount.

Guidance from the courts on s659(2)(a)

A number of cases, largely on the pre-WorkChoices s170CK, have considered the operation of the prohibition on terminating an employee who is absent on the basis of temporary illness or injury. In particular, these cases make clear the difficulty an employer will have defending itself given that the absence on the basis of illness or injury need only be one of the reasons for a termination in order for s659(2)(a) to be infringed. The cases also highlight the fact that the particular circumstances of the employment relationship will be relevant and that employers need to be vigilant about their obligations in order to avoid penalties.

In Emmerson v Housing Industry Association,[18] the employer alleged that the employee, who was on sick leave at the time, had been dismissed for serious misconduct, namely failure to comply with the employer’s motor vehicle use policy (failure to return the vehicle while on sick leave). The evidence suggested that the policy was not known to the employee and that the allegation of serious misconduct was concocted. Ryan J held that:

“The applicant was temporarily absent because of illness. The respondent knew he was absent and that the absence had been certified as temporary and due to illness and due to stress reaction. The respondent concedes that the applicant was on authorised sick leave. The respondent essentially terminated the employment because the applicant failed to comply with a direction to return the motor car. The respondent directed the return of the car because the applicant was absent from work. The absence was temporary and due to illness and the respondent had been informed accordingly. The conclusion seems inevitable that ... the respondent in terminating the applicant’s employment included in the reasons for termination the temporary absence of the applicant due to illness ... I am not satisfied that the temporary absence of the applicant due to illness was not a reason for the termination of his employment.”[19]

The court ordered substantial damages for loss of remuneration, pain and suffering, sick and long-service leave, loss of commission and termination entitlements under the applicable instrument and that the maximum penalty of $10,000 for the breach of s170CK be paid to the applicant. The applicant was a long-serving employee, aged 41 and with a record of good performance.

In Sperandio v Lynch,[20] Jessup J of the Federal Court held that:

“For an employer to act in breach of the provision, there must be an awareness that the absence was because of illness or injury, and the absence must be the reason for the termination. Or, to put it defensively, an employer will succeed in avoiding an adverse finding under the provision upon proving either that he or she did not know the reason for the absence or that he or she did not terminate the employment by reason of the absence”.[21]

In Sperandio, the employer knew that the employee had left the workplace at short notice and was absent and unable to attend the workplace to deal with a disciplinary concern as she was on medically certified leave for stress. There was found to be a breach of s170CK, even though there were other reasons for the termination, largely related to the employee’s performance. Reinstatement was held inappropriate and compensation was for breach of contract rather than breach of s170CK.[22] Jessup J held that the breach of s170CK was not a “serious or flagrant” one and in the circumstances deterrence was not an issue. Further, the prohibited reason was only one reason for the termination. A penalty of $1200 was ordered.[23]

In Johnson v Celik,[24] the employer terminated the employee after she notified the employer of her pregnancy and called in sick because of gastroenteritis. The employer did not attend the hearing and Gordon J noted that the employer had not even attempted to discharge its onus of proof in relation to s170CK(2)(a). The employee was paid a sum for lost remuneration and the court ordered that penalty for breach of s170CK be paid to her personally, with Gordon J holding that:

“The conduct of the respondent in its dealings with the applicant was such as to merit condemnation by imposing a penalty of $1000.”[25]

Most recently, in Gordon v Express Gas Operations Pty Ltd,[26] Burchardt FM of the Federal Magistrates Court found that the employee, who had a long history of absenteeism and was found to be likely to be dismissed for performance reasons in any case, had been dismissed in breach of s659(2)(a) when he was dismissed after taking a week’s leave in relation to a workplace injury. The fact that the employee was taking leave due to injury was found to be known to the employer. The employee was awarded the maximum six months’ compensation. A penalty of $8000 was ordered on the basis that the employer had no knowledge of, and did not apply, the industrial instruments and laws applying to the employee’s employment or principles applying to terminations. Further, the employer’s attacks on the employee’s motivations for commencing the proceeding contributed to the high penalty.

Conclusion

The potential for s659(2)(a) to be a significant barrier to terminating an ill or injured employee should not be underestimated.

Given the wording of the legislation and the relevant case law, the operation of the provision (along with the various other potentially available avenues to challenge a termination) needs to be carefully assessed in light of the particular facts before a decision is made to terminate an ill or injured employee, as defences to a claim of breach of s659(2)(a) are limited. At present, this is particularly the case where the employee in question is in receipt of workers’ compensation payments.


EMMA GOODWIN is a solicitor in the Workplace Relations Group at Clayton Utz. The views expressed are those of the author and not necessarily those of Clayton Utz.


[1] See Australian Labor Party, “Forward with Fairness”, April 2007, http://www.alp.org.au/download/fwf_fnala.pdf and the Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008 (Cth).

[2] The prohibition on terminating an employee who has a disability may also be relevant: see s659(2)(f) WRA.

[3] For further background, see the Explanatory Memorandum to the Workplace Relations and Other Legislation Amendment Act 1996, paras 7.61-7.65.

[4] See note 1 above, internet link, pp19-20.

[5] Generally, the employer is a constitutional corporation or a Victorian employer: see ss5, 6 and 879 WRA.

[6] Note 1 above, internet link, p20.

[7] See the discussion in Nikolich v Goldman Sachs JB Were Services Pty Ltd [2006] FCA 784.

[8] See, for example, Sallehpour v Frontier Software Pty Ltd 139 IR 457.

[9] Nikolich, note 7 above.

[10] Nikolich, note 7 above, para 169.

[11] Sallehpour, note 8 above.

[12] Nikolich, note 7 above, para 175.

[13] (2006) 160 IR 440.

[14] Lee, note 13 above, at 454.

[15] (2000) 108 IR 244.

[16] Laz, note 15 above, at 255.

[17] See http://www.workchoices.gov.au/ourplan/schemes/UnlawfulTerminationAssistanceSchemeUTAS.htm.

[18] [1999] FCA 500.

[19] Emmerson, note 18 above, at para 55.

[20] (2006) 160 IR 360.

[21] Sperandio, note 20 above, at 383.

[22] Sperandio v Lynch (No 2) (2007) FCA 1838 at paras 1-16 inclusive.

[23] Sperandio, note 22 above, at paras 18 and 19.

[24] [2007] FCA 846.

[25] Johnson, note 24 above, at para 30.

[26] [2007] FMCA 1059.

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