5 min read

Dismissing employees with mental health issues is fraught with difficulty

By Charles Power

The facts in Finnegan v Komatsu Forklift Australia Pty Ltd (2017) are a typical case of health issues becoming entwined with workplace change and unsatisfactory work performance.

After five years’ service as a Field Service Technician, an employee was moved into the role of Customer Service Supervisor in 2014, something not uncommon in many industries. In this role the employee became directly responsible for achieving certain sales levels and business activity results.

After about a year in this role, the employee’s poor sales performance resulted in him being placed on a performance improvement plan. The plan was suspended in order to allow the employee to demonstrate his ability to perform under a new manager.

But relations with the new manager quickly deteriorated and, in the meantime, the employee showed symptoms of experiencing some mental health problems.

The employer’s response was to place him on sick leave and require him to complete a fitness for duty assessment with a psychological test. The employee complied and the independent medical assessor concluded that the employee was temporarily unfit for his usual work with his current supervisor, and should be returned to work as soon as possible working under a different supervisor.

Return to work plan

The employer implemented a return to work plan involving a different work location, different duties for a subsidiary of the company, which did not involve any sales targets or any supervision from his previous manager.

The return to work progressed well during the first two weeks. In week three the employee was transferred back to duties for his employer, albeit at a different location, and not immediately under any direction from the manager.

The employee raised concerns about an anticipated return to any work under direct supervision of the manager. The employer then chose to cease the return to work plan, and instructed the employee to leave the workplace.

The employee was later directed to attend a meeting where management proposed terms for separation. The employee rejected these and expressed a desire for there to be some formal mediation undertaken between the manager and him.

The employer initially agreed to mediation and then cancelled the planned meeting without explanation and directed the employee to continue in his previous role of Customer Service Supervisor but reporting to a branch manager rather than the manager he had a difficulty with.

The employee was told his ongoing performance in line sales targets would be required.

The employee commenced a period of extended sick leave and subsequently made a workers’ compensation claim, which was rejected. The employee wrote to the company seeking advice as to his medical condition and prognosis for return to work in the Customer Service Supervisor role. The employee’s doctor replied indicating that the employee did not have any current capacity for work.

The employee’s sick leave entitlement exhausted and he unsuccessfully contested the rejection of his workers’ compensation claim.

After a period of more than three months absence on unpaid leave the employer wrote to the employee indicating it was considering dismissal for incapacity and asked the employee to submit any further material regarding his capacity to return to work within 14 days.

When that time expired, the employee’s lawyers wrote to the employee requesting a one-week extension, which was granted. The employee’s lawyers sought a further extension at the end of the extended period, which was denied.

The employee was then dismissed because he had, for an extended period, refused to work and refused to perform a full range of duties.

The worker took his case to the Fair Work Commission.

The Fair Work Commission (FWC) ruled the reason for dismissal – refusal to return to work and to perform a full range of duties – was not a valid reason for dismissal. The employee had not refused to perform work. Rather, his absence was due to his incapacity to work. The reason stated for the dismissal was factually incorrect.

The FWC observed that an employee who is absent from work on the basis of certified medical incapacity could not be construed as refusing to work unless the employer could properly establish that the alleged medical incapacity was some kind of falsification.

There was no evidence to suggest that the employee’s medical incapacity arising from mental health issues was false or some contrivance. Consequently, the stated reason for dismissal had no basis in fact and was therefore not valid.

By artificially elevating the employee’s mental health issues as a barrier to on-going employment without seeking medical evidence regarding the employee’s prognosis for any return to work, the FWC considered the employer had missed the opportunity to dismiss for a valid reason – that the employee was incapable of performing the inherent requirements of the position that he occupied as a Customer Service Supervisor.

The FWC was unable to establish this as the reasons because the person that made the decision to dismiss the employee did not give evidence as to why he rejected options other than dismissal, including returning the employee to the Field Service Technician role or extending the unpaid leave so as to obtain some clear medical evidence regarding any prognosis for the employee’s capacity to fulfil the inherent requirements of the Customer Service Supervisor role.

The FWC stated: “Mental health issues are difficult matters which need to be treated with considerable care and compassion. In particular, mental health issues should not be artificially elevated as barriers to continued employment.”

The FWC surmised the employee might have been treated more favourably if he was inflicted with a physical injury or illness, such as cancer. The employer did not have due regard for the employee’s age, evidence by the fact it made payment upon termination of one months’ notice when, because of the employee’s age, he was entitled to payment of five weeks.

The FWC also considered the employer should have granted the second request for an extension, given this would have allowed the company to obtain information about the employee’s medical prognosis.

In circumstances where the employee was suffering from mental illness and was communicating via his doctor and lawyer, the employer should have spoken to the lawyer and explored the employee’s medical prognosis and options for agreed separation. In failing to do so, the FWC concluded the employer had not provided the employee with a proper opportunity to respond to issues surrounding his capacity for continued employment.

Dismissal letter

The FWC was also critical of the fact that the letter of dismissal was sent by email to an employee of some eight years of service who was suffering from mental health issues, and who had previously only communicated via his treating medical practitioner or his lawyer. The FWC considered this was callous, almost beyond belief, to dispatch an email communication as the means to convey the decision to dismiss. For the letter of dismissal to conclude with the words “I wish you all the best for the future” while the employee “was being discarded in such a perfunctory and impersonal manner” reflects very poorly upon a corporation of the size and stature of the employer.

The FWC expressed the view that the employer should revise its dismissal procedure to:

  • mandate the opportunity for an employee to be provided with a “show cause” meeting with the relevant decision-maker before the determination of any dismissal is made; and
  • ensure that communication of any decision to dismiss is conveyed in a manner that is respectful, and maintains basic standards of human dignity (i.e. not by email).

The FWC criticised the approach of first forcing the employee onto sick leave without explanation, and then reversing this without further explanation. The FWC also considered the employer should have explained why it cancelled the mediation.

The FWC ruled the dismissal was without valid reason and implemented by way of an unreasonable and unjust process. Furthermore, the method of communicating the dismissal was harsh.

Small remuneration

Given the employment would not have continued for any significant period of time, the FWC only awarded one week’s remuneration.

The FWC made this passing comment: “As a personal, general observation, I believe that HR specialists may benefit from a re-naming of their vocation. HR should stand for Human Relations rather than Human Resources. Employees are not like other resources that an employer utilises in the operation of its business. Employees are human beings, they can be easily damaged, and when faulty they should be handled with more care than machines.”

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