Valid grounds or not, a workplace complaint changes the legal equation
Alfred Health had solid grounds to terminate a nurse. A federal court ruled it was unlawful anyway.
On 27 February 2026, the Federal Circuit and Family Court of Australia ordered Melbourne's Alfred Health to pay $22,000 in compensation and an $8,000 civil penalty to a former nurse practitioner it had dismissed in 2021.
The case turns on a scenario HR professionals encounter more often than they might like: an employee who has lodged a workplace complaint, gone on extended leave, and eventually can no longer perform their job. Alfred Health had a documented, legitimate basis for the termination. The court still found it unlawful.
Stacey Palfreyman worked as an Aged Care Nurse Practitioner in Alfred Health's Mobile Assessment and Treatment Service when she made a bullying complaint against colleagues. She went on workers compensation, which ran until May 2021. By September that year, she had not returned, and Alfred Health ended her employment on 8 September 2021 on the basis that she could not perform the inherent requirements of her role.
The medical evidence backed that position. Her last certificate of capacity stated: "Unable to return to work in previous role due to work environment and breakdown of relationships..."
But the termination was not made for that reason alone. The court had already found, in a liability judgment on 18 September 2024, that the dismissal was also connected to Palfreyman's decision to make a bullying complaint and her rights under occupational health and safety law. Under the Fair Work Act, that dual motive is enough. A termination linked to the exercise of a workplace right is unlawful, even when a valid, separate reason also exists.
On economic loss, Palfreyman argued she would have stayed in the role until at least age 65. Judge Symons rejected that. The court found her employment would almost certainly have ended around the same time anyway, on incapacity grounds alone. No lost wages were awarded.
The court did accept the human cost. Palfreyman's daughter, former husband and psychologist all gave evidence describing anxiety, insomnia, nightmares, social withdrawal and a lasting impact on her sense of self and career security. No formal psychiatric diagnosis was before the court in admissible form. The $22,000 reflected that.
The $8,000 penalty sat at around 12% of the maximum available. The court stopped short of finding the conduct was deliberate, but was direct on one point: Alfred Health had no specific policy covering general protections or adverse action, and had done nothing to review its processes after the liability finding. The judgment observed that "the failure to take the opportunity to revisit current procedures... suggests that there is at least a modest need for specific deterrence."
What the case makes plain for those managing termination risk is this: a documented incapacity ground does not insulate an employer when a protected complaint sits in the background. Who made the termination recommendation, why, and what was written down at the time all matter enormously in litigation. And the absence of a general protections policy is a gap courts will notice, and mention.
