Managing Ill and Injured Employees in Australia: An Employer's Guide

Personal and carer's leave — the starting point

The National Employment Standards in Part 2-2 Division 7 of the Fair Work Act 2009 (Cth) provide full-time and part-time employees with 10 days of paid personal/carer's leave per year of service, accruing progressively and calculated by reference to ordinary hours (see Mondelez v AMWU [2020] HCA 29). Casual employees are not entitled to paid personal leave but may take up to 2 days of unpaid carer's leave per permissible occasion under s 102. Under s 104 employees are entitled to 2 days of compassionate leave per permissible occasion — paid for full-time and part-time employees, and unpaid for casuals. Section 97 permits personal leave to be taken because the employee is unfit for work because of a personal illness or injury, or to care for an immediate family or household member. Section 107 requires the employee to give notice as soon as practicable and, if required by the employer, to provide evidence that would satisfy a reasonable person that the leave is properly taken.

Modern awards, enterprise agreements and employment contracts often add to (but cannot detract from) these entitlements — for example, by specifying acceptable forms of evidence or by providing enhanced paid leave. Employers should confirm the applicable instrument before insisting on particular evidence.

The temporary-absence protection under s 352

Section 352 of the Fair Work Act prohibits an employer from dismissing an employee because the employee is temporarily absent from work due to illness or injury. Regulation 3.01 of the Fair Work Regulations 2009 (Cth) defines a 'temporary absence' as one where the employee has provided notice and evidence in accordance with the Act, and either the absence has extended for no more than 3 months, or the total absences of the employee within a 12-month period (in respect of which the required notice and evidence were given) have been no more than 3 months in aggregate. Paid personal/carer's leave taken under Division 7 is not counted toward those limits.

Section 352 is a narrow protection. Its expiry does not itself render a dismissal lawful — it removes only a specific statutory bar. Once the temporary-absence protection has ended, the employer's decision remains exposed to the unfair dismissal regime in Part 3-2, the general protections regime in Part 3-1 (including adverse action for exercising a workplace right such as taking personal leave), the Disability Discrimination Act 1992 (Cth) and state equal-opportunity legislation, workers compensation protections and any contractual or industrial-instrument obligations. Employers who treat expiry of the temporary-absence period as a green light to terminate are commonly the subject of successful claims.

The overlapping regimes — different tests and remedies

A capacity-based dismissal can be attacked under several separate regimes at the same time, each with different tests, eligibility criteria, evidentiary burdens and remedies:

• Unfair dismissal under Part 3-2 asks whether the dismissal was harsh, unjust or unreasonable having regard to the criteria in s 387, including whether there was a valid reason related to capacity and whether the employee was afforded procedural fairness. Remedies focus on reinstatement or compensation subject to statutory caps — see our article on unfair dismissal claims.
• General protections and adverse action under Part 3-1 include protections for exercising a workplace right and against discrimination on certain attributes; s 361 presumes that action was taken for an alleged reason unless the person taking it proves otherwise. Available remedies may include uncapped compensation and civil penalties, but neither is automatic and outcomes depend on the pleaded case, evidence and the exercise of the Court's discretion — see our article on general protections and adverse action.
• Disability discrimination arises under two separately drafted regimes. Under the Disability Discrimination Act 1992 (Cth), a failure to make reasonable adjustments can itself be direct discrimination (s 5(2)) or indirect discrimination (s 6(2)); the inherent-requirements exception in s 21A applies only where the person would be unable to carry out the inherent requirements of the particular work even if reasonable adjustments were made; and unjustifiable hardship is a separate exception (s 21B) whose factors are set out in s 11, with the burden of proof on the party claiming it (s 11(2)). Under the Equal Opportunity Act 2010 (Vic) the employer must make reasonable adjustments under s 20 unless the employee could not adequately perform the genuine and reasonable requirements of the employment even after adjustments, with the s 23 exception assessed against the s 20(3) and s 20(4) factors. Remedies in discrimination proceedings are not subject to the unfair-dismissal compensation cap.
• Workers compensation statutes impose their own return-to-work obligations and their own protections against dismissal for reasons connected with a claim (in Victoria, the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic)).
• Contract and industrial instruments — express contractual clauses, awards and enterprise agreements may prescribe consultation, notice and process obligations that stand alongside the statutory regimes.

No single defence resolves all of these regimes. 'Inherent requirements' is not a universal answer; success under one regime does not immunise the employer from the others.

The requirements of the role — and the employer's preferred method

The first analytical step, and the one employers most often skip, is to identify the functional outcome the role genuinely requires and to separate it from the employer's current method of achieving that outcome. A requirement to attend sites across the eastern suburbs is not the same as a requirement to drive a particular vehicle from the employer's existing fleet. A requirement to be contactable across a shift is not the same as a requirement to work a particular roster pattern. A requirement to handle stock safely is not the same as a requirement to lift a set weight unaided. Policies, standard equipment, rosters, locations and procurement arrangements are usually the employer's chosen means, not the requirement itself — and treating them as immovable is how employers come to conclude, incorrectly, that no adjustment is possible.

The requirements of the role are drawn from the position description read against the actual work, historical performance standards and outputs, legitimate safety and legal requirements attaching to the role, and (where relevant) customer-facing or field-based requirements that cannot fairly be substituted. Non-essential features such as particular hours, particular seating arrangements or historical peripheral tasks are generally not requirements of the role at all and should be adjusted where reasonable.

Reasonable adjustments — the Commonwealth and Victorian tests are different

The two regimes use different statutory language, and merging them is a common and consequential error. Under the Disability Discrimination Act 1992 (Cth):

• a failure to make reasonable adjustments for a person with a disability is itself capable of amounting to direct discrimination under s 5(2), and indirect discrimination under s 6(2) where the person could only comply with a requirement or condition if adjustments were made;
• the inherent-requirements exception in s 21A applies only where, because of the disability, the person would be unable to carry out the inherent requirements of the particular work even if the employer made reasonable adjustments — assessed having regard to the person's training, qualifications and experience, their performance in the role if already employed, and any other factor it is reasonable to take into account (s 21A(2)); and
• unjustifiable hardship is a separate exception (s 21B). The matters relevant to unjustifiable hardship are set out in s 11(1) — the nature of the benefit or detriment to any person concerned, the effect of the disability, the financial circumstances of and expenditure required by the employer, the availability of financial and other assistance, and any relevant action plan given to the Australian Human Rights Commission — and, under s 11(2), the burden of proving unjustifiable hardship lies on the person claiming it.

Under the Equal Opportunity Act 2010 (Vic) the framing is different and the expression 'unjustifiable hardship' does not appear. Section 20(1) applies to a person with a disability who is offered employment or is an employee and who requires adjustments in order to perform the genuine and reasonable requirements of the employment. Section 20(2) requires the employer to make reasonable adjustments unless the person could not or cannot adequately perform those genuine and reasonable requirements even after the adjustments are made. Whether an adjustment is reasonable is determined under s 20(3) by reference to all relevant facts and circumstances, including:

• the employee's circumstances, including the nature of the disability;
• the nature of the role held or offered;
• the nature of the adjustment required;
• the financial circumstances of the employer;
• the size and nature of the workplace and the employer's business;
• the effect on the workplace and the business of making the adjustment, including the financial impact, the number of people who would benefit or be disadvantaged, and the impact on efficiency, productivity and (if applicable) customer service;
• the consequences for the employer of making the adjustment;
• the consequences for the employee of not making the adjustment; and
• any relevant action plan under the Commonwealth Act or Disability Action Plan of a public sector body.

Section 23 then provides the Victorian exception: an employer may discriminate on the basis of disability in the areas covered by ss 16 or 18 only if the employee requires adjustments to perform the genuine and reasonable requirements, the employer has complied with s 20 where it applies, and either the adjustments are not reasonable adjustments having regard to s 20(3), or the employee could not adequately perform the genuine and reasonable requirements even after the adjustments are made, having regard to the s 20(4) factors (training, qualifications and experience, and current performance in the role). Victorian employers who ask themselves whether an adjustment would cause 'unjustifiable hardship' are applying the wrong test.

Adjustments that are commonly reasonable, depending on the facts, include:

• modified duties or a redistribution of tasks;
• adjusted hours, phased return-to-work or shorter working days;
• remote or hybrid work arrangements where compatible with the role;
• equipment (ergonomic chairs, sit-stand desks, screen-reading software, communication aids, modified or differently specified vehicles or plant);
• reasonable physical alterations to the workplace;
• changes to supervision or reporting arrangements;
• additional recovery breaks; and
• consideration of redeployment to a suitable alternative role.

Whether redeployment is a 'reasonable adjustment' or a distinct requirement of the unfair-dismissal analysis varies with the facts, the industrial instrument and the regime under which a claim is brought; either way, the question of whether a suitable alternative role is available should be genuinely considered and documented.

The process is cooperative and evidence-driven. An employee is not required to arrive with a fully formed, perfectly specified adjustment proposal, and an employer is not expected to read minds: the employer must ask, listen, obtain the medical information it needs, look beyond its existing standard arrangements, test the real cost and operational impact with evidence rather than assumption, consider a trial or time-limited adjustment where feasible, and give reasons if an option is rejected. Cost and disruption are legitimate considerations, but they must be quantified, not asserted.

Recent Victorian authority — Norton v Boroondara CC

In Norton v Boroondara CC [2026] VCAT 761 (reasons and orders 15 September 2026, proceeding H503/2024), VCAT found direct discrimination under s 18 of the Equal Opportunity Act 2010 (Vic) where the Council dismissed the employee on 16 October 2024 on the incorrect understanding that he could not perform the genuine and reasonable requirements of his role and that no reasonable adjustments were available. The s 23 exception was not established.

Three points are of general application. First, the genuine and reasonable requirements of a role must be separated from the employer's chosen method of meeting them — its policy position, its standard equipment, its roster, its site arrangements or its procurement practice. Second, repeated show-cause correspondence is not a substitute for genuine consultation about adjustments. Show-cause processes are not inherently improper, and there are situations in which a capacity process properly reaches that point; but a show-cause letter asks the employee to justify their continued employment, and it cannot do the work of a cooperative inquiry into what adjustments are available. Third, employers are expected to investigate options beyond their existing standard arrangements before concluding that nothing can be done.

The exposure is substantial. Compensation of $901,163.03 was assessed, but the orders were framed in the alternative rather than as an unconditional payment: reinstatement remained the subject of a possible compulsory conference, and under that pathway $200,020.05 was immediately payable with $701,142.98 contingent if reinstatement could not be agreed. Interest and costs were left unresolved in the 15 September reasons. Unlike the unfair dismissal jurisdiction, compensation in discrimination proceedings is not subject to a statutory cap. The decision is referred to here only as current Victorian authority on the statutory tests discussed above; employers facing a comparable situation should obtain advice on the application of ss 18, 20 and 23 to their own facts rather than reason from the outcome in a single case.

Medical information, fitness for work and independent medical examinations

Employers may request information about an employee's capacity to perform the requirements of the role, and may direct an employee to attend an independent medical examination (IME), where the request or direction is lawful and reasonable in the circumstances. An express term of the contract, a workplace policy, an applicable award or enterprise agreement, or a statutory framework will often supply the power. It is not correct, however, to say that an express contractual or statutory power is always essential: depending on the facts, a direction may be lawful and reasonable because it is supported by the employer's occupational health and safety duties or by the implied obligations of the employment relationship — for example where there is a genuine need to understand fitness for work and the available medical information is inconsistent, unexplained or out of date (see Thompson v IGT (Australia) Pty Ltd [2008] FCA 994; Grant v BHP Coal Pty Ltd [2017] FCAFC 42). Whether any particular direction is lawful and reasonable remains a question of fact and degree.

A request or direction should be:

• necessary and proportionate to a specific, legitimate purpose (typically assessing capacity to perform the inherent requirements and any adjustments required, and prognosis);
• made in writing, explaining the purpose, the practitioner and the process;
• accompanied by the position description and any inherent-requirements statement, so the practitioner can address capacity role-specifically;
• limited to information reasonably necessary — employers should not seek broad diagnoses, unrelated conditions or entire medical histories where information about capacity, prognosis and adjustments would be sufficient;
• procedurally fair — offering the employee an opportunity to raise legitimate concerns (such as a conflict of interest with the nominated practitioner) and to receive and comment on the report; and
• paid for by the employer, including reasonable travel expenses.

Overreach — particularly requests for underlying diagnostic information not needed to assess capacity — is a common source of privacy complaints, general protections claims and industrial disputes. A refusal to attend a lawful and reasonable IME may support further action, but whether any particular direction is lawful and reasonable is a case-by-case question.

Privacy and the employee-records exemption

Health information about employees is 'sensitive information' under the Privacy Act 1988 (Cth) and attracts heightened protections under the Australian Privacy Principles. The 'employee records' exemption in s 7B(3) is narrower than commonly assumed: it applies only to acts and practices of an organisation that are directly related to a current or former employment relationship between the organisation and the employee, and only to an employee record of the employee. It does not authorise unlimited collection of new health information from third parties, does not apply to prospective employees, and does not extend to purposes unrelated to the employment relationship. In Victoria, handling of health information also engages the Health Records Act 2001 (Vic).

Practical implications: collect only what is reasonably necessary for a specified purpose; be transparent with the employee about what will be collected, from whom and how it will be used; store health information securely and separately from ordinary personnel files; restrict access to those with a need to know; and avoid disclosing health information to internal audiences beyond those who require it to make or implement a decision.

Consultation obligations

Consultation obligations may arise from multiple sources at the same time. Modern awards and enterprise agreements commonly contain consultation machinery, but whether it is engaged by a particular decision depends on the terms of the clause and the nature of the proposed change — typically a major workplace change that is likely to have a significant effect on employees, or a change to regular rosters or ordinary hours of work under the applicable term. Ordinary minor operational adjustments do not automatically trigger those clauses. Contracts and policies may impose additional process. Under s 35 of the Occupational Health and Safety Act 2004 (Vic), employers must, so far as is reasonably practicable, consult with employees and any elected health and safety representatives on matters that will or may directly affect their health or safety, including proposed changes to the working environment or the way work is done. The WIRC Act requires consultation with the worker (and, where appropriate, treating practitioners) as part of return-to-work planning. Consultation is not a formality; whether a failure to consult renders an otherwise defensible decision unfair depends on the source of the obligation, whether it was engaged on the facts and the circumstances of the case.

Return-to-work and workers compensation in Victoria

Where an illness or injury is work-related in Victoria, the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic) applies alongside the employment-law regimes. Part 4 imposes the return-to-work obligations, each carrying its own penalty:

• Section 103 — provide employment. The employer must, to the extent that it is reasonable to do so, provide the worker with suitable employment while the worker has a current work capacity, and pre-injury employment while the worker no longer has an incapacity for work, until the expiration of the 'employment obligation period'. 'Pre-injury employment' is defined in s 96(1) as employment in a position that is the same as or equivalent to the position held before the injury.
• Section 104 — plan the return to work. The employer must, to the extent reasonable, plan the worker's return to work from the date it knows or ought reasonably to have known of the incapacity, which includes obtaining relevant information about capacity, considering workplace support, aids or modifications, assessing and proposing options for suitable or pre-injury employment, consulting under s 105, giving the worker clear and current details of the arrangements, and monitoring progress.
• Section 105 — consult. The employer must, to the extent reasonable, consult about the return to work with the worker directly, with the worker's treating health practitioner (subject to the worker's consent) and with any occupational rehabilitation provider — by sharing information, giving a reasonable opportunity for views to be expressed, and taking those views into account.

The employment obligation period is defined in s 96(1) as an aggregate period of 52 weeks, whether or not consecutive, in respect of which the worker has an incapacity for work resulting from or materially contributed to by the injury, beginning on the earliest of the dates on which the employer receives a medical certificate issued under s 25(1), receives a claim for weekly payments, or is notified by the Authority that the worker has made such a claim or provided such a certificate. It is therefore an aggregate, not necessarily 52 consecutive calendar weeks, and the exclusions in s 103(2) and (3) — including periods during which a claim has been rejected, or during which a Return to Work improvement notice is stayed — affect the calculation. Under s 119 the Authority or self-insurer must give the worker information about the period and how it is calculated. Employers should confirm the commencement, calculation and remaining balance in the particular case before acting.

The Act does not contain a standalone prohibition on dismissing a worker merely because the worker is unfit during that period. The protections operate differently, and it is worth being precise about them: failing to provide employment as required by s 103 is itself an offence carrying substantial penalties; and under Division 7 of Part 12 it is an offence under s 575, and grounds for civil proceedings under s 578, for an employer to dismiss or threaten to dismiss a worker, alter a worker's position to their detriment, or treat a worker less favourably in relation to promotion or re-employment, where a substantial reason is that the worker gave notice of an injury, took steps to pursue a claim for compensation, or gave or attempted to give a claim. In s 578 proceedings, brought in the Industrial Division of the Magistrates' Court within one year of the conduct, the employer bears the burden of adducing evidence that the alleged reason was not a substantial reason once the facts constituting the conduct are proved. The statutory defences include that the conduct was necessary to comply with the WIRC Act, the Accident Compensation Act 1985 or the Occupational Health and Safety Act 2004, and that the worker was unable to perform the inherent requirements of the employment even if the employer had made reasonable adjustments. The court may order damages for hurt and humiliation, remuneration of up to 12 months and reinstatement or re-employment.

The workers compensation regime does not replace the federal and state employment-law regimes; it operates alongside them. The provisions described here are Victorian. Other Australian jurisdictions frame these obligations differently — some, unlike Victoria, do impose an express restriction on dismissing an injured worker within a defined period together with a notice requirement to the scheme regulator — so employers operating in more than one state should confirm the current statutory framework, definitions and employer obligations in each jurisdiction before acting.

OHS duties and psychosocial risks

The Occupational Health and Safety Act 2004 (Vic) requires employers, so far as is reasonably practicable, to provide and maintain a working environment that is safe and without risks to health, including psychological health, and to consult with employees on matters that may affect their health or safety. Since 1 December 2025 the Occupational Health and Safety (Psychological Health) Regulations 2025 (Vic) (S.R. No. 103/2025) have supplemented the Act, requiring employers to identify psychosocial hazards in the workplace, to eliminate the associated risks so far as reasonably practicable or, if that is not reasonably practicable, to reduce them so far as reasonably practicable, and to review and revise control measures in the prescribed circumstances. These Regulations are Victorian only; employers elsewhere should check the psychosocial regulations applicable in their jurisdiction. WorkSafe Victoria's approved Compliance code: Psychological health (Edition 1, September 2025) provides practical guidance on complying with those duties. WorkSafe Victoria publishes further material on managing psychosocial hazards — such as high job demands, low job control, poor support, poor workplace relationships, exposure to traumatic content, bullying and harassment. Where an employee's illness or injury has a psychological dimension, or where workplace factors may be contributing to that condition, the OHS duties and the ill-and-injured-employee framework operate together. For a broader discussion see our companion article on psychosocial hazards in Victorian workplaces.

Distinguishing incapacity from performance, misconduct and redundancy

Incapacity, performance, misconduct and redundancy are separate grounds with different processes and evidence. Incapacity is a medical question addressed through current medical evidence and consideration of adjustments. Performance is managed through a properly conducted performance-improvement process — see our article on managing underperformance. Misconduct is investigated through a disciplinary process consistent with contract, policy and procedural fairness — see our articles on workplace investigations and suspension pending investigation. Redundancy under s 389 of the Fair Work Act concerns whether the employer no longer requires the person's job to be performed by anyone — see our article on genuine redundancy and consultation. Mischaracterising incapacity as another ground — particularly relabelling it as redundancy or performance — is a common source of unfair dismissal and adverse action findings.

A disciplined process for capacity decisions

There is no formulaic 'safe' absence period after which an employer acquires a right to terminate. Exhausted paid leave, an expired temporary-absence period and a long series of medical certificates create no safe harbour, and no set of steps guarantees a defence. Employers who make defensible capacity decisions typically follow, and document, a disciplined process:

1. analyse the role accurately — identify the functional outcomes it genuinely requires, and record which features are requirements and which are the employer's current method, policy, equipment, roster or location;
2. obtain current, role-specific treating-practitioner evidence about functional capacity, framed by that analysis rather than by a request for a diagnosis;
3. if the treating evidence is thin, out of date or inconsistent, consider whether a lawful and reasonable direction to attend an IME is available and appropriate on the facts;
4. brief the IME properly, with the position description, the functional requirements and defined questions about current capacity, prognosis and adjustments;
5. share the report with the employee and invite a response;
6. ask the employee what adjustments they propose, and engage with partly formed proposals rather than dismissing them for lack of specificity;
7. investigate options beyond the employer's existing standard arrangements — alternative equipment, altered rosters, different site or travel arrangements, redistributed tasks, external funding or assistance;
8. test cost and operational impact with real evidence rather than assumption, and consider a trial or time-limited adjustment where feasible;
9. record the reasons for rejecting any option considered;
10. comply with consultation obligations under the award, enterprise agreement, contract, policy and OHS law;
11. only once genuine adjustment consultation is complete, and if the evidence supports it, commence a distinct and procedurally fair capacity process — putting the position and the evidence to the employee, allowing a real opportunity to respond, and permitting a support person at any decision meeting;
12. make the decision on the evidence, issue reasons in writing that address the adjustments and alternatives considered, and pay all applicable entitlements; and
13. where a Victorian workers compensation claim is on foot, coordinate with the WorkCover agent, comply with the Part 4 obligations in ss 103 to 105, confirm the commencement, calculation and remaining balance of the employment obligation period, and take advice on the ss 575 and 578 discriminatory-conduct provisions before any dismissal.

Records should be respectful, factual and shared only on a need-to-know basis. Communications should never be retaliatory. Surveillance, coercion and pressure to resign expose the employer to general protections and adverse action claims that are more serious than the underlying capacity issue.

Common employer errors

The errors we see most often include: treating expiry of the temporary-absence period, or the exhaustion of paid leave, as an automatic right to terminate; defending the employer's preferred method instead of identifying what the role actually requires; applying the Commonwealth 'unjustifiable hardship' test to a Victorian equal opportunity question, or the Victorian 'genuine and reasonable requirements' test to a Commonwealth inherent -requirements question; relying on stale medical certificates rather than current, role-specific evidence; commissioning an IME without the position description or defined questions; asking for broad diagnostic information where capacity information would be sufficient; using show-cause correspondence as a substitute for adjustment consultation; asserting cost or disruption without evidence; failing to document consideration of reasonable adjustments and suitable alternative roles; failing to comply with award, enterprise agreement, contract or OHS consultation obligations; overlooking the return-to-work obligations in ss 103 to 105 of the WIRC Act and the discriminatory-conduct provisions in ss 575 and 578; relabelling a capacity issue as performance, misconduct or redundancy; and communicating the decision in short, dismissive correspondence rather than a fully reasoned letter.

How Parke Lawyers can help

Parke Lawyers advises Victorian and other Australian employers on managing ill and injured employees — reviewing employment contracts and position descriptions, preparing lawful requests for medical information and briefing IMEs, drafting reasonable-adjustment plans and considering suitable alternatives, running consultation and decision processes, coordinating with WorkCover agents and rehabilitation providers, and defending unfair dismissal, general protections, discrimination and workers compensation claims where they arise. Early advice, before positions have become entrenched, helps employers keep their options open. Our employment law for employers team works with our commercial and business law team so employment, insurance and governance issues are managed together within a single matter.

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