These situations often involve long-term illness, workplace injuries, psychological injuries or extended periods of absence. They are emotionally difficult, legally complex and rarely come with a clear answer.

Many employers assume they need a doctor to declare an employee “permanently incapacitated” before termination can be considered.

Recent Fair Work Commission decisions suggest that isn’t the real test.

The real question is whether the employee can perform the inherent requirements of the role, with reasonable adjustments, and whether there is a realistic pathway back to doing so.

Two similar cases. Two different outcomes.

The dismissal that was upheld

In Daunis v Rivercity Ferries Pty Ltd, the employee could not safely perform the physical requirements of her role and any return depended on future surgery with no reliable timeframe or evidence that it would restore full capacity. The employer considered adjustments but demonstrated they would not overcome the essential requirements of the job. The Commission upheld the dismissal.

The dismissal that wasn’t

In Grujicic v Lineage Aust Trs Pty Ltd, the employee’s specialist said he was fit for full-time work and recommended a trial to determine his actual capacity. The employer dismissed him before that trial occurred. The Commission found the employer had reached a conclusion that the medical evidence did not support.

So what does Fair Work actually look at?

The lesson from these cases is not that employers must wait forever.

It’s also not that an IME automatically creates a pathway to termination.

What Fair Work appears to be looking for is whether the employer has enough evidence to make a reasonable decision.

Before terminating, employers should be able to answer:

• What can the employee do today?
• What can’t they do?
• What do the medical specialists actually say?
• What reasonable adjustments have been considered or trialled?
• Is there a realistic pathway back to performing the role?
• If there is, what is the timeframe?
• If there isn’t, what evidence supports that conclusion?

The more clearly an employer can answer those questions, the stronger the decision is likely to be.

How far do reasonable adjustments go?

Employers must genuinely consider reasonable adjustments.

That might include modified duties, altered hours, workplace modifications, graduated return-to-work arrangements or assistive equipment.

However, employers are generally not required to:

• remove the core duties of the role permanently;
• create a new position that does not exist;
• indefinitely transfer essential duties to other employees; or
• continue arrangements that are no longer workable.

Importantly, what is reasonable may look very different between organisations.

A large employer with significant resources, redeployment opportunities and multiple teams may be expected to accommodate restrictions for longer than a small organisation with limited staffing, limited budgets and no alternative positions available.

That does not mean larger employers must accommodate indefinitely, nor does it mean smaller employers can terminate simply because arrangements are inconvenient.

It does mean Fair Work will often assess reasonableness in the context of the employer’s size, resources, operational realities and ability to sustain the arrangement.

Is it different when it’s a workplace injury?

Often, yes.

A non-work-related medical condition is usually a capacity issue.

A workplace injury can be a capacity issue, a workers compensation issue, a return-to-work issue and sometimes a workplace rights issue all at the same time.

That is why workplace injury cases tend to carry higher risk and require much greater care before termination is considered.

The Bloom HR takeaway

If you’re looking for a simple answer to:

“When can I terminate?”

Unfortunately, there isn’t one.

There is no point where an employer can simply decide they have waited long enough.

Every case turns on its own facts, its own medical evidence, the role involved, the availability of reasonable adjustments and the resources of the employer.

The safest approach is not to ask:

“Can we terminate?”

The better question is:

“Do we have enough evidence to reasonably conclude there is no realistic way for this employee to perform the role?”

If you’re not sure of the answer, you’re probably not ready to make the decision.

That’s why capacity-based dismissals are one of the few areas of employment law where getting advice before acting is almost always more effective than defending the claim afterwards.

Here to help

Managing a long-term illness, psychological injury or workplace injury matter?

Before moving towards termination, make sure your medical evidence, assessment of reasonable adjustments and consultation process are as strong as your intentions.

Bloom HR supports employers across Australia to navigate complex capacity, fitness-for-work and return-to-work matters with confidence, compliance and compassion.

We offer a complimentary 30-minute consultation with our Founder and CEO, Natalie Carrington.

Schedule a consultation

The post When is it fair to terminate an employee who can no longer do the job? appeared first on Bloom HR.