Dismissal of employees whilst on leave

A common question raised by employers is whether an employee can be dismissed whilst the employee is absent on personal/carer’s leave or annual leave. The question is common because employees often retreat onto leave when the employment relationship becomes dysfunctional, due to stress arising from disciplinary action, or to delay their dismissal.

There is no universal statutory prohibition on dismissing employees who are absent on personal leave or annual leave. However there are significant risks for doing so.

General Protections risks

The ‘General Protections’ within the Fair Work Act 2009 make it unlawful to dismiss an employee because of the employee’s use of leave. Specifically, it is unlawful to dismiss an employee because he or she is ‘temporarily absent due to illness or injury’. A ‘temporary absence’ is defined as an absence lasting less than three months, supported by appropriate medical evidence. In addition, it is unlawful to dismiss an employee because of the employee’s physical or mental disability, family or carer’s responsibilities, pregnancy status, or religion. As a practical matter, these characteristics may require the employee to take personal/carer’s leave, annual leave, or parental leave from time to time. Any decision to dismiss an employee because of leave taken as a result of these characteristics will be in contravention of the General Protections.

The Fair Work Act imposes a reverse evidentiary onus on the above General Protections. This means that where an employee claims that he or she was dismissed for a prohibited reason, that reason is presumed unless the employer can establish that the employee was dismissed for some other (non-prohibited reason).

Unfair Dismissal risks

Even if the dismissal is for a non-prohibited reason (e.g. poor work performance or the redundancy of the employee’s position) during a period of leave, the dismissal may also result in an Unfair Dismissal claim. For example, dismissing an employee for poor work performance whilst the employee is absent on leave may be seen as procedurally unfair if the leave prevents the employee from fully responding to the performance allegations. Alternatively, terminating an absent employee due to redundancy may mean that the employer has not complied with any award obligation to consult with the employee prior and in relation to the redundancy. Unless the dismissal is urgent and necessary, doing so whilst an employee is absent on leave will be seen as suspicious and likely expose the employer to an unnecessary unfair dismissal risk.

Legal requirements

The Fair Work Commission has determined that the right to notice of termination and the right to annual leave are independent and so cannot be used to offset or cancel out the other. A decision by an employer to give notice of termination to an employee will not be effective if the termination is to take effect during a granted period of annual leave (CEPU & Ors v Silcar Pty Ltd [2013] FWC 856). In such a case, the employer will need to extend the period of notice by the period of the annual leave, or re-credit the period of leave. Alternatively, the employer must provide the employee with payment in lieu of notice.
An employer should consider the following questions before deciding to dismiss an employee on leave:
1. Is the employee being dismissed because of his or her absence on leave, or any discriminatory ground that has required the employee to take the leave?
2. Has the employee been fully notified of the reason for the intended dismissal, and been afforded appropriate procedural fairness prior to the dismissal taking effect?
3. Can the dismissal wait until the employee returns from leave?
4. Will any dismissal risk an increase to the employer’s workers compensation insurance premiums?
Because of the legal risks, and the significant costs involved in defending any of these claims, employers should seek legal advice prior to dismissing an employee who is currently taking, or has recently taken, a period of leave.

More Information

Please call the leading employment lawyers in Parramatta, the Matthews Folbigg Workplace Solutions team on 9635-7966 to speak with one of our employment lawyers.