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CCIWA Mental Health Kit: Part 9 – Termination

By Beatrice Thomas

Mental health can negatively impact a person's performance at work, so what happens if you need to terminate an employee because of this?

Case law and practical considerations  

The potential causal link between mental illness and poor performance has been highlighted in a number of recent decisions before the Fair Work Commission (FWC) and the Federal Court of Australia.

Mental illness is a health issue that can have a significant effect on the way a person thinks, behaves and responds to various situations.

The Australian Bureau of Statistics has recently identified that 45 per cent of Australians will suffer at least one form of mental illness in their lifetime.

As a result of this, it is not uncommon for employees to cite mental illness as a reason for their poor performance or unsatisfactory behaviour in the workplace.

Termination: Avoiding a successful general protections claim 

Recently, there have been a number of decisions of the Federal Court that have explored the link between mental illness and the underperformance of an employee. These cases have focussed on the employee’s argument that their contract of employment was terminated because of their mental illness.

In such an application, the question of whether an employee should be entitled to a remedy (most commonly reinstatement or compensatory relief,

or both) turns precisely on whether a court determines the employee’s contract of employment was terminated by reason of their mental illness.

It is important to note that such a reason need only be one of a number of reasons for termination. It does not need to be the predominant justification leading to the termination.

Many cases involving the claim that an employee was terminated because of their illness or injury are general protections claims. Such proceedings are instituted in the FWC but are heard and determined by the Federal Court, or in some circumstances, the Federal Circuit Court of Australia.

In a general protections action, an individual claims they have a workplace right and in response to their seeking to exercise that workplace right, a third party (most commonly the employer) takes adverse action against them.

The FW Act strictly prohibits an employer from taking adverse action against an employee because the employee has exercised a workplace right. The definition of “adverse action” under the FW Act also broadly encompasses termination of employment.

Section 351 of the FW Act provides that an employer must not take adverse action against an employee because of that employee’s mental disability.

Importantly, these cases also identify the considerations to be held by employers dealing with employees with mental illness and the factors taken into account when deciding whether an employer has in fact engaged in adverse action against an employee because of their illness.

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Case summary: no evidence that mental illness caused poor performance

A solicitor employed by the Office of Public Prosecutions (OPP) in 2007 and after he broke his leg in 2010, his work attendance was sporadic.

In 2012 his workplace requested a medical certificate from the solicitor's doctor, not knowing he was also suffering from depression and anxiety.

His doctor advised him to inform the OPP of his mental health issues, after which he was terminated.

The case was first heard in the Federal Circuit Court, which found the applicant’s employment had been terminated due to mental illness he had disclosed to his employer. The applicant was awarded compensation of $93,750 and the court imposed a penalty of $10,000 on the OPP.

On appeal, the Federal Court determined the OPP did not engage in adverse action against the applicant.


Employer obligations and risk management 

Even though there is no legal obligation upon an employee to disclose a mental illness, employers have an obligation to ensure their workplaces are safe and free from any risk that may exacerbate a pre-existing medical condition.

In this manner, employers are required to ensure they comply with the requirements imposed by the Occupational Safety and Health Act 1984 and the FW Act.

Employees who suffer from mental illness may benefit from access to the employer’s employee assistance program, further training and support (if they are having difficulty meeting the inherent requirements of the position or prescribed targets) or involvement in a mentoring program.

However, circumstances may become more complex where an employer seeks to performance manage an employee and either prior to, or during that process, the employee discloses to the employer that they suffer from a mental illness.

Even though there are no measures an employer can take to entirely eliminate the possibility that the employee may lodge an adverse action claim, there are safeguards that the employer may adopt to assist the process is fair and any risk borne by the employer is minimised.

1.  Conducting an impartial investigation into the facts

Notwithstanding the disclosure of a medical illness, the employer may conduct an investigation into poor performance and/or misconduct where it considers the situation warrants such action.

In such circumstances, it may be appropriate to:

  • provide the employee with the allegations of poor performance or unsatisfactory behaviour in writing;
  • advise the employee that the employer has not pre-judged the allegations against them;
  • conduct an investigation meeting at which the allegations are put to the employee in full and they are afforded the opportunity to respond;
  • carefully consider the responses provided by the employee and any other mitigating circumstances that may be relevant; and
  • conduct a disciplinary meeting at which the employee is advised of the reasons for termination, if that is the decision taken by the employer.
2. Assessment of medical evidence pertaining to the illness

As was the case in State of Victoria (Office of Public Prosecutions) v Grant, where the employee identifies they suffer from a mental illness, it is incumbent on the employer to satisfy themselves of the nature of that illness and the effect, if any, it has on the employee’s ability to meet the requirements of the role as outlined in their contract of employment and job description.

To that end, the employer may request the employee provide a medical report detailing the nature of the illness and the direct bearing the illness has on the employee’s role. In some cases, following the employer obtaining the employee’s consent, it may be appropriate and productive for the employer to have direct communication with the employee’s treating doctor.

Accordingly, it may assist the process for employers to provide a copy of the employee’s job description to the employee’s doctor for the doctor’s comment on what restrictions may result by reason of the illness.

It goes without saying that if there is no medical evidence creating a correlation between the employee’s illness and the underperformance (and if there are other reasons unrelated to the illness for the unsatisfactory discharge of duties), if the employer considers it appropriate, disciplinary action may be taken against the employee, including the termination of their services.

Due to the complexity of issues faced by employers when performance issues are occurring in the context of such illnesses, members are encouraged to contact CCI to discuss the options available to them.

For further information or advice please contact CCIWA’s Employee Relations Advice Centre on (08) 9365 7660 or [email protected].

For advice and guidance on work, health and safety matters contact CCIWA’s Employee Relations Advice Centre on (08) 9365 7660 or email [email protected].

The potential causal link between mental illness and poor performance has been highlighted in a number of recent judgments.

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