Can employers dismiss workers on mental health leave? FWC looks into recent case
The Fair Work Commission (FWC) recently dealt with an unfair dismissal application filed by a worker who was terminated while on extended mental health leave.
The case involved a worker who became unfit for work due to mental health conditions following a workplace disagreement.
The worker argued that her dismissal was unfair, claiming she had been an efficient and productive employee.
She maintained that her employment was terminated without proper notice or opportunity to respond, despite her mental health conditions being work-related and stemming from a workplace incident in September 2024.
The worker sought reinstatement to her position, arguing that the employer failed to follow proper procedures before dismissing her.
Mental health dismissal background
The worker started employment with a solar energy company in February 2024 as a service, warranty and maintenance coordinator. The employer is a wholly owned subsidiary of a major energy provider with around 55 employees.
Initially, the worker performed well and "was an efficient and productive employee who played an important role in reducing the number of outstanding tickets for [the employer] during the first half of 2024."
However, the situation changed following a workplace disagreement on 4 September 2024 with another coordinator.
She "was upset that [the colleague] had contacted a customer that [the worker] had previously been dealing with" and was concerned about the advice provided. This incident led to her mental health issues and five months of absence.
The worker became unfit for work around 5 September 2024, exhausted her paid leave by 1 October 2024, and commenced unpaid leave.
The employer terminated her employment on 3 February 2025, stating she was not fit to perform the inherent requirements of her role.
Mental health dismissal capacity assessment
The FWC examined whether there was a valid reason for dismissal related to the worker's capacity. Under the Fair Work Act 2009, employers must have a sound reason that is "sound, defensible or well founded" and not "capricious, fanciful, spiteful or prejudiced."
The evidence showed the worker "has been unfit for her full duties since at least 26 September 2024."
Medical certificates certified her as fit to work only one day per week, subject to having no contact with the field operations & metering leader.
However, the employer could not accommodate these restrictions. The worker "remained unfit for work until at least 5 May 2025," well beyond the three-month period protected under the Fair Work Act.
The FWC found there was a valid reason for dismissal, noting she "was unfit to perform her regular role for around five months and there was no realistic prospect of [the worker] returning to her substantive position or role when [the employer] dismissed her on 3 February 2025."
FWC: Valid reason for dismissal
Despite finding a valid reason for dismissal, the FWC identified significant procedural problems. The worker was not told about the potential termination before receiving the dismissal letter.
The FWC noted that "[the employer] did not provide [the worker] with notice that her employment may be terminated prior to sending her the termination letter on 3 February 2025."
Under the Fair Work Act, employers must notify workers before deciding to terminate and in "explicit and plain and clear terms."
The FWC accepted the employer "was presented with a difficult situation given [the worker's] mental health conditions and reluctance to attend meetings."
However, it found no reason why the employer "could not have notified [the worker] in writing that it was intending to end her employment."
The worker "was not provided with an opportunity to respond to the reason for dismissal before she received her termination letter." Workers must be given an opportunity to respond to dismissal reasons before the termination decision is made.
Is it unfair dismissal?
The FWC weighed all factors under section 387 of the Fair Work Act to determine whether the dismissal was harsh, unjust or unreasonable.
While procedural problems favoured the worker, the valid reason for dismissal based on incapacity carried significant weight.
The employer had dedicated human resource specialists and access to significant resources as a subsidiary of a major energy company.
The FWC determined that although the dismissal was procedurally unfair, "procedural defects do not mean a dismissal will be unfair in every case."
It accepted the employer's argument that providing procedural fairness "would have been extremely unlikely to alter the ultimate decision to dismiss [the worker]" because she could not provide medical evidence of fitness to return.
The FWC described this as "an unfortunate case" involving a "very hardworking, proud, and dedicated person" whose relationship with the employer "deteriorated dramatically following her disagreement with [the colleague] on 4 September 2024."
Work ‘creates stress and anxiety’ for the worker
Even if the dismissal had been found unfair, the FWC indicated it would not have awarded any remedy. Reinstatement was considered inappropriate as it would not be safe for the worker.
The FWC noted that "dealing with [the employer] creates stress and anxiety for [the worker]" and stated it "would not order that [the worker] return to working for [the employer] in those circumstances."
Medical evidence supported this position. One doctor indicated that while "returning to work may be therapeutic for [the worker]," he expressed concern that "working at the pre-injury workplace could be detrimental to [the worker's] mental health."
The worker had consistently maintained she did not seek compensation, resisting production orders about her income "on the ground that she is expressly not seeking compensation."
Ultimately, the FWC concluded: "I find that [the worker's] dismissal was not harsh, unjust, or unreasonable and that [the worker] was not unfairly dismissed." The application was dismissed.
