Can you dismiss an employee while they are on leave?

Is it possible to have a ‘fair and reasonable’ dismissal process for an employee who isn’t actually in the office?

Can you dismiss an employee while they are on leave?
Most HR professionals know that disciplinary procedures need to be fair and reasonable – but is this ever possible when an employee is on leave? Aside from the moral issues, is it ever legally acceptable to terminate someone who is on leave?

According to Patricia Ryan, principal at The Workplace Employment Lawyers, while there is no absolute prohibition around dismissing an employee on sick or annual leave, doing so would put the employer at risk.

“There would be an immediate question asked around why a termination would be necessary while the employee was on annual or sick leave, which is generally short-term,” she told HC.

“When an employee is on sick leave, unless they have been absent for more than three months in a 12 month period, it is unlawful to terminate them for the reason that they’ve been absent due to illness.”

If an employee is suffering with an illness that means they are away for two weeks, any termination for that absence is unlawful. However, if someone is suffering from an ongoing illness that means they need months off, once they have been absent for three months their employer could put in a process leading to termination on the basis that they are unable to fulfil the inherent requirements of the role.

“In this scenario, the employer must engage with the employee and their doctor, and ask for the prognosis,” Ryan told HC.

“They can also look at whether it’s possible to keep their job open with a temporary worker, but if this is not possible they could move to termination.”

Is it urgent?

In terms of terminating employees who are on annual and sick leave, the question would be raised around why the employer could not postpone the process until the employee returned to work.

“What’s so urgent or important that it couldn’t wait until the employee came back from leave?” Ryan said.

“The only circumstance could be where the company is closing its doors, perhaps due to a financial problem meaning that the business cannot continue to operate.

“In this situation, all employees who were to be put on notice – including those on leave – would need to be contacted at same time.”

Responding to misconduct

If there is a circumstance where someone is on leave and, during that leave, has been found to have engaged in ongoing misconduct that could continue to occur while they are away – for example, stealing from the company via their work IT system – the employer could have grounds to start the dismissal process before they return.

“The company needs to have grounds to terminate their employment, and this needs to be done using a fair process,” Ryan said.

“One of the things the employee needs is an opportunity to respond to any allegations made against them – there may be a need for further investigation or explanation.

“Simply terminating without a meeting makes it likely that the employer is going to miss those procedural steps, and the employer may find themselves on the wrong end of an unfair dismissal claim.”

Ryan advised that in other circumstances – where postponing the dismissal is not detrimental to the company – the employer should wait for the worker to return to work.

“As far as is possible, the employer should seek not to interrupt the employee’s leave – particularly if it’s sick leave,” she said.

This is especially applicable if the leave is related to the employee’s mental health; Ryan advised that employers should “try to avoid bringing up misconduct during that time”.

“If the employee is suffering from depression, which you are aware of, try to avoid bombarding them with allegations,” she suggested.

“If the employee has a broken leg, and is not mobile so is sitting at home, you could perhaps look at going ahead with the process – especially if their misconduct is ongoing.”

Ryan explained that in some circumstances, misconduct may have been so serious that you need to raise it as soon as possible.

“For example, if the employee is using their company email address to sexually harass other employees, you would have grounds to contact them straight away,” she told HC.

“However, if the misconduct was an isolated incident that happened some time ago, it’s best to raise it when the employee comes back to work – it all depends on the severity of the misconduct and the impact it had on other employees and the business.”

Parental leave

According to Ryan, approaching employees on parental leave is slightly different – primarily because the length of their leave is more substantial.

“If there was going to be a redundancy, the employer would have to fulfil two requirements,” she said.

Under the Fair Work Act, there is a provision that if someone goes on parental leave and there are subsequent changes to their workplace, the employer is obligated to let them know. Examples of this include downsizing, relocating premises, merging with another business, and restructuring within their team.

Additionally, if the employee is covered by an award or enterprise agreement there will be a clause requiring the employer to consult with the employee about significant workplace changes.

“Once again, simply dismissing the employee on parental leave usually leads to the suggestion that the dismissal was based on leave discrimination,” Ryan said.

“But if downsizing and redundancies occur, there is nothing to stop the person on parental leave being chosen for redundancy provided that they are not being chosen purely because they are on leave.”

She gave the example that if a housekeeper was working in a hotel and the company decided to outsource that team, then workers on parental leave could justifiably be made redundant like everyone else in that team.

Workplace injuries

“When it comes to injuries, businesses operate under state law, so legislation varies,” Ryan told HC.

“Some provisions protect those who are absent due to workplace injury – in New South Wales, it’s unlawful to terminate an employee within six months of the date of their injury purely for the purpose of the injury or absence arising from it.

“Particular care would need to be taken to ensure that employees are not terminated for these reasons.”

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