Legal News & Analysis – Asia Pacific – Australia – Labour & Employment

In Brief

• Managing ill, injured and chronically absent employees is one of the greatest challenges for employers. In every case, human resources practitioners are required to navigate a minefield of legal obligations from a variety of sources – constantly weighing up legal risk with every move.
• With headcount and productivity a continuing focus, some employers are conducting ‘whole-of-business’ reviews of the capacity of employees to perform their roles.
• Such reviews often identify deficiencies in the way particular cases have been managed. Occasionally, these deficiencies turn on a misunderstanding of employers’ rights and obligations.
• Recent decisions of the Fair Work Commission and the Federal Court have re-emphasised that:A strategic review allows employers to identify cases that require an additional level of proactivity and, with some analysis and planning, can lead to a streamlined and efficient process for managing the employee’s capacity (or lack thereof) in a way that minimises legal risk. Often, employers see the benefit in developing a ‘roadmap’ with various options that distil the legal complexity and create a practical (and visual) path for line managers to follow.
  • employers can direct employees to attend an independent medical examination in order to test their fitness for work,¹ and
  • an employee’s inability to perform the inherent requirements of the position (now, and in the foreseeable future) will generally be a valid reason for dismissal.²

• A strategic review allows employers to identify cases that require an additional level of proactivity and, with some analysis and planning, can lead to a streamlined and efficient process for managing the employee’s capacity (or lack thereof) in a way that minimises legal risk. Often, employers see the benefit in developing a ‘roadmap’ with various options that distil the legal complexity and create a practical (and visual) path for line managers to follow.
• On completion of the review, systems can be put in place to ensure that these issues are managed appropriately, consistently, and regularly going forward – hopefully removing the need to conduct another broad review in the future. Such an approach is the only way to ‘de-activate’ this legal minefield.

The Balancing Act

Managing ill, injured and chronically absent employees is one of the greatest challenges for employers – and the reasons for this are clear. In every case, human resources practitioners are required to navigate a minefield of legal obligations from a variety of sources – constantly weighing up legal risk with every move.

The claim exposure to the business is significant – general protections, discrimination (State and Federal), unfair dismissal, workers’ compensation, privacy, bullying, health records, Fair Work Act, breach of contract and industrial instruments, occupational health and safety – the list goes on. For this reason, pro-active and ongoing management of these cases is a rarity – which only serves to increase legal exposure (and cost to the business).

Fixing The Problem – A Strategic Review

Employers often use traditional quiet periods such as the beginning of the year to undertake efficiency projects.

With headcount and productivity a continuing focus, we have seen many employers undertake whole-of-business reviews of their employees’ capacity to perform their roles, including in relation to long and short term ill or injured workers. The purpose of such a review is to identify:

• First, whether individual cases are being managed in the best way to ensure a successful and sustained return to work in the quickest time possible,
• Second, for those unlikely to return, whether retraining, redeployment, or termination of employment might be appropriate.

To put it bluntly, such a review is only necessary for the reason that it identifies ‘fitness for work’ cases that have not been managed appropriately. This might be for a number of reasons:

• Discipline – Employees have not been held to the requisite notification and evidence requirements for accessing paid (or unpaid) leave,
• Delay – Employees have been allowed to remain on extended unpaid sick leave for too long, without clear expectations on when a final ‘stay or go’ decision will be made,
• Alternatives – Employers have failed to adequately explore reasonable adjustments that could be made to the role to accommodate illness or injury, or any redeployment opportunities,
• Clarity – Employers have failed to be clear with employees about job requirements, and whether modified roles are permanent or temporary,
• Medical evidence – Employers have failed to proactively manage the employee’s capacity for work, and seek out medical evidence to support a ‘stay or go’ decision (or press the relevant medical practitioner when the employer’s questions have not been answered). 

Occasionally, these deficiencies turn on a misunderstanding of employers’ rights and obligations.

Knowing Your Rights And Obligations

Whilst a certain degree of compassion, respect and empathy is expected during what can be a difficult time for an employee, it is to be remembered that employers do nothave an ongoing and indefinite obligation to maintain an incapacitated employee’s employment.³ Indeed, to do so would be expensive, unproductive, and no doubt contrary to the interests of the business (perhaps inhibiting the creation of jobs and growth) and the employees themselves. It sends the wrong message to other staff (who become jaded in having to ‘pick up the slack’), not to mention shareholders.

Recent decisions of the Fair Work Commission and the Federal Court have re-emphasised that:

• employers can direct employees to attend an independent medical examination in order to test their fitness for work,⁴ and
• an employee’s inability to perform the inherent requirements of the position (now, and in the foreseeable future) will generally be a valid reason for dismissal.⁵

Nevertheless, the process adopted by the employer in managing the employee’s capacity for work, and the facts as they exist at the time of dismissal, are crucial in navigating the legal minefield. For example, employers must ensure that they have clear and timely medical evidence supporting the decision to dismiss before that decision is made, and allow the employee the opportunity to challenge that evidence (including by taking into account the views of the employee’s treating practitioner).⁶

Outcomes Of A Strategic Review

In light of the above, there is value in conducting a ‘whole-of-business’ review.

On first inspection, the initial findings are common – employers regularly find that individual cases have been mismanaged for significant periods of time, for a variety of reasons (including those set out above).

The review allows employers to identify these cases that require an additional level of proactivity, and with some analysis and planning can lead to a streamlined and efficient process for managing the employee’s capacity (or lack thereof) in a way that minimises legal risk. Often, employers see the benefit in developing (quite literally) a ‘roadmap’ with various options that distil the legal complexity and create a practical (and visual) path for line managers to follow.

On completion of the review, systems can be put in place to ensure that these issues are managed appropriately, consistently, and regularly going forward – hopefully removing the need to conduct another broad review in the future. Such an approach is the only way to ‘de-activate’ this legal minefield.

End Notes:

1. In the absence of an express contractual or industrial instrument restriction to the contrary – Australian and International Pilots Association v Qantas Airways Limited [2014] FCA 32.
2. Jetstar Airways Pty Ltd v Neeteson-Lemkes [2013] FWCFB 9075, and Ronald MacDonald v Jetstar Airways Pty Limited T/A Jetstar [2014] FWC 488.
3. Save for certain limited exceptions in the workers’ compensation space.
4. In the absence of an express contractual or industrial instrument restriction to the contrary – Australian and International Pilots Association v Qantas Airways Limited [2014] FCA 32.
5. Jetstar Airways Pty Ltd v Neeteson-Lemkes [2013] FWCFB 9075, and Ronald MacDonald v Jetstar Airways Pty Limited T/A Jetstar [2014] FWC 488.
6. Jetstar Airways Pty Ltd v Neeteson-Lemkes [2013] FWCFB 9075, and Ronald MacDonald v Jetstar Airways Pty Limited T/A Jetstar [2014] FWC 488.

For further information, please contact:

Paul Burns, Partner, Herbert Smith Freehills

[email protected]

Kirsty Faichen, Partner, Herbert Smith Freehills

[email protected]

Drew Pearson, Partner, Herbert Smith Freehills

[email protected]

Anthony Longland, Partner, Herbert Smith Freehills

[email protected]

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