Information Centre · Employment Law
Managing Ill and Injured Employees in Australia: An Employer's Guide
Managing an ill or injured employee is one of the highest-risk areas of Australian employment law. Done well, it protects the employee, the business and the workforce, and produces a defensible decision at each step. Done badly, it produces unfair dismissal, disability discrimination, general protections and workers compensation claims — often at the same time. This guide sets out the framework and the document trail.
Key points
- Employees on personal / carer's leave under Part 2-2 Division 7 of the Fair Work Act 2009 (Cth) are protected from termination on the ground of a 'temporary absence' from work — regulation 3.01 of the Fair Work Regulations 2009 (Cth) defines when an absence is temporary (broadly, three consecutive months of paid or partly paid absence, or a total of three months in a twelve-month period).
- Once an absence exceeds the temporary threshold, the general protections in section 352 no longer bar dismissal on that ground — but termination remains exposed to unfair dismissal, disability discrimination and general protections claims unless the employer has documented the process, obtained current medical evidence and considered reasonable adjustments.
- The Court's usual focus is whether the employee can perform the 'inherent requirements' of the role with reasonable adjustments — an independent medical examination (IME), properly framed by the actual position description, is the single most important piece of evidence in a lawful capacity-based dismissal.
- Reasonable adjustments under the Disability Discrimination Act 1992 (Cth), the Equal Opportunity Act 2010 (Vic) and similar state laws are compulsory unless they would cause unjustifiable hardship — modified duties, adjusted hours, workplace equipment, redeployment and phased return-to-work should each be considered and documented.
- Concurrent workers compensation entitlements complicate the picture — most state schemes place restrictions on dismissing an injured worker within a defined period (in Victoria, 52 weeks under section 410 of the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic)); premature termination triggers reinstatement and compensation orders.
- The safe employer sequence is: current medical evidence → written request for the employee's own medical response → IME against the position description → consideration and documentation of reasonable adjustments → show-cause meeting with a support person → written decision with reasons — early legal advice reduces the risk of Fair Work Commission and human-rights litigation.
A Ringwood professional-services firm has a senior manager on long-term personal leave with a complex medical condition; the medical certificates are vague and open- ended. A Croydon manufacturer has a production supervisor whose lower-back injury has kept them off work for eight months. A Melbourne CBD retailer has an employee whose anxiety and depression have progressed to the point where customer-facing work is no longer possible. Each of these employers must now decide how to manage the case — and each decision they take is exposed to review in the Fair Work Commission, the Federal Court, VCAT or the Australian Human Rights Commission.
Managing an ill or injured employee lawfully is a document trail. The employer needs current medical evidence, accurately-framed inherent requirements, a properly briefed independent medical examination where required, genuine consideration of reasonable adjustments, and a disciplined show-cause and decision process. The topics covered below apply nationally under the Fair Work Act 2009 (Cth) and the Disability Discrimination Act 1992 (Cth), with Victorian-specific overlay from the Equal Opportunity Act 2010 (Vic) and the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic).
This article is general information only and is not legal advice.
The Personal Leave and Temporary Absence Framework
Full-time and part-time employees accrue paid personal / carer's leave under Part 2-2 Division 7 of the Fair Work Act 2009 (Cth). The National Employment Standards provide 10 days of paid leave per year (pro-rated for part-time employees). Casual employees have limited unpaid entitlements. Personal leave can be taken for the employee's own illness or injury, or to care for an immediate family or household member.
Section 352 protects an employee from dismissal on the ground of temporary absence from work due to illness or injury. Regulation 3.01 defines when an absence is temporary: broadly, three consecutive months of paid or partly paid absence, or three months in total (paid or unpaid) in the preceding twelve months. Once an absence exceeds these thresholds, the section 352 protection ends — but the employer's exposure to unfair dismissal, disability discrimination and general protections claims does not.
Inherent Requirements — the Anchor of a Lawful Process
The inherent requirements of the role are the essential tasks that must be performed at the required standard for the role to exist as that role. Correctly framing them is the single most important step in a lawful capacity-based dismissal. Inherent requirements are drawn primarily from:
- the position description;
- historical performance standards and objectively demonstrable outputs;
- safety obligations under state and federal OHS law;
- customer-facing or field-based requirements that cannot be substituted; and
- legal requirements attaching to the role (a driver's licence, a professional registration, a security clearance).
Non-essential features — particular hours, particular seating arrangements, historical peripheral tasks or arrangements that were previously informal — are generally not inherent requirements and must be adjusted where reasonable.
Medical Evidence — Treating Practitioner and IME
The employer's decision-making rests on medical evidence. The starting point is the employee's treating-practitioner evidence — general practitioner and any relevant specialists. Where the treating evidence is thin, inconsistent or outdated, the employer should commission an independent medical examination (IME) with an appropriately qualified specialist.
A well-briefed IME:
- is preceded by a written request to the employee explaining the purpose, the specialist and the process;
- includes the position description and any inherent-requirement statement;
- includes relevant workplace evidence (safety incidents, attendance history, workload changes);
- poses defined questions about current capacity, prognosis, adjustments and timing; and
- is paid for by the employer, with reasonable travel expenses covered.
An IME briefed without the position description or without defined questions almost invariably produces evidence that is worse than useless.
Reasonable Adjustments
The Disability Discrimination Act 1992 (Cth) and the Equal Opportunity Act 2010 (Vic) require reasonable adjustments unless they would impose 'unjustifiable hardship' on the employer. Adjustments may 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);
- physical alterations to the workplace;
- changes to supervision or reporting arrangements;
- additional recovery breaks; and
- redeployment to a different role within the business.
Unjustifiable hardship is a stringent standard and requires evidence: costed, considered and documented. A discomfort or inconvenience is not unjustifiable hardship.
General Protections and Discrimination Exposure
Part 3-1 of the Fair Work Act 2009 (Cth) prohibits adverse action against an employee because they have or exercised a workplace right — including the right to take personal leave, to make a complaint, or to seek an accommodation. For more on adverse action see our companion article on general protections claims in Australia.
Termination on the ground of disability or illness is direct disability discrimination unless the employee cannot perform the inherent requirements with reasonable adjustments. Indirect discrimination arises where a neutral requirement disproportionately affects people with a disability and is not reasonable. State-based equal-opportunity claims can run alongside Federal claims.
Workers Compensation Interaction
Where the illness or injury is work-related, a workers compensation claim under state legislation runs in parallel. In Victoria the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic) governs the scheme. Section 410 of that Act imposes a 52-week no-dismissal protection: most Victorian employers cannot dismiss an injured worker on the ground of the work-related incapacity within 52 weeks. Premature termination triggers reinstatement and compensation orders. Similar protections exist in other Australian jurisdictions with variations in duration and scope.
Return-to-work planning is compulsory. The employer must provide suitable employment (as defined in the Act), engage constructively with the WorkCover agent or equivalent, and document the return-to-work plan.
Psychosocial Hazards and Mental-Health Cases
The Occupational Health and Safety Act 2004 (Vic) and the Occupational Health and Safety Amendment (Psychological Health) Regulations require Victorian employers to identify, assess and control psychosocial hazards. Where an employee's illness or injury has a mental-health dimension, the psychosocial-hazard framework and the ill-and-injured-employee framework operate together. For more on the psychosocial-hazard regime see our companion article on psychosocial hazards in Victorian workplaces.
The Show-Cause and Decision Meeting
Once the employer has current medical evidence, an IME (if required), a documented adjustments assessment and a considered view on capacity, the employer holds a show-cause meeting. The employee is invited to bring a support person, is given the evidence in advance and is provided an opportunity to respond. Common categories of response include further medical evidence, alternative adjustments the employee wishes to be considered, requests for redeployment and requests for additional time. Each response must be genuinely considered before the decision is finalised.
The Written Decision
The final decision is issued in writing. It should summarise the evidence, address the adjustments considered (and, if relevant, why they were not adopted), address redeployment, respond to the employee's show-cause submission, state the decision, state the effective date, confirm entitlements (notice pay, unused leave, any severance) and provide details about post-employment support (for example, employee assistance program access for a defined period). The written decision is the primary document the Fair Work Commission will read if the matter proceeds to litigation.
Interaction With Performance and Misconduct Issues
Ill and injured employees can also underperform or engage in misconduct. Where the two are entangled, employers must take care not to conflate them. Performance issues must be managed through a properly conducted performance- improvement process; misconduct must be investigated under a proper disciplinary process; capacity must be assessed through the medical framework described above. See our related articles on managing underperformance, workplace investigations and suspension pending investigation.
Common Employer Mistakes
The most common mistakes we see include: relying on stale medical certificates rather than current specialist evidence; commissioning an IME without a position description; failing to document reasonable-adjustment consideration; treating redeployment as an afterthought or not considering it at all; conflating performance, misconduct and capacity; dismissing during the 52-week workers-compensation window; asking for underlying diagnosis rather than capacity information; 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 the full ill-and-injured-employee lifecycle — reviewing employment contracts and position descriptions, briefing IMEs, drafting reasonable-adjustment plans, running the capacity-decision process, interacting with WorkCover agents and rehabilitation providers, and defending unfair dismissal, general protections, disability discrimination and workers-compensation claims. Our employment law team works closely with our commercial and business law team so employment-contract, insurance and governance issues are managed together within a single matter.
Frequently Asked Questions
What is the 'temporary absence' rule under the Fair Work Act?
Section 352 of the Fair Work Act 2009 (Cth) prohibits an employer from dismissing an employee because the employee is temporarily absent from work due to illness or injury. 'Temporary absence' is defined in regulation 3.01 of the Fair Work Regulations 2009 (Cth). Broadly, an absence is temporary if the employee has been away for no more than three consecutive months on paid personal leave, or has been away for a total of no more than three months (paid or unpaid) in the preceding twelve months. Once an absence exceeds these thresholds, the section 352 protection ends — but discrimination, unfair dismissal and general protections risks continue.
Can we terminate an employee who is on long-term personal leave?
Only lawfully, and only after a rigorous process. Termination during a 'temporary absence' as defined in regulation 3.01 is prohibited. Once that period has ended, termination is permissible in principle — but the employer must be able to defend the decision against unfair dismissal, disability discrimination and general protections claims. That requires current medical evidence, a properly conducted independent medical examination (IME), documented consideration of reasonable adjustments, an opportunity for the employee to respond, and a decision on capacity to perform the inherent requirements of the role.
What are the 'inherent requirements' of the role?
The 'inherent requirements' are the essential functions of the role — the tasks that must be performed, at the required standard, for the role to exist as that role. They are drawn primarily from the position description, historical performance expectations, safety obligations and objectively demonstrable outputs. Non-essential features (particular hours, particular seating arrangements, or historical peripheral tasks) are generally not inherent requirements and must be adjusted where reasonable. Correctly framing inherent requirements is the single most important step in a lawful capacity-based dismissal.
When should an employer commission an independent medical examination (IME)?
An IME should be commissioned once the employer has current medical evidence from the employee's treating practitioners and needs an independent, role-specific assessment of the employee's capacity. The IME should be conducted by an appropriately qualified specialist, briefed with the full position description and any inherent-requirement statement, provided with the employee's medical history and any relevant workplace evidence, and asked defined questions about capacity, prognosis, adjustments and timing. A poorly briefed IME often produces evidence that is worse than no evidence at all.
Can we require the employee to attend an IME?
Generally yes, provided the direction is a lawful and reasonable direction of the employer. Most modern awards, enterprise agreements and well-drafted employment contracts either expressly authorise the direction or provide implicit support. A refusal to attend a properly requested IME can support disciplinary action and can itself be relied upon in a capacity decision. Employers should confirm the direction in writing, offer to pay for the IME and cover reasonable travel expenses, and give the employee an opportunity to raise legitimate objections (for example, if the nominated specialist has a conflict of interest).
What are 'reasonable adjustments'?
Reasonable adjustments are workplace modifications that enable an employee with a disability, injury or illness to perform the inherent requirements of the role. They may include modified duties, adjusted hours, remote work, equipment (ergonomic chairs, standing desks, screen-reading software), physical alterations to the workplace, phased return-to-work programs, changes to supervision arrangements or redeployment to a different role. The Disability Discrimination Act 1992 (Cth) and the Equal Opportunity Act 2010 (Vic) require adjustments to be made unless they would impose 'unjustifiable hardship' on the employer.
When is a workplace adjustment an 'unjustifiable hardship'?
Unjustifiable hardship is a stringent standard. The Court and tribunals consider the nature of the benefit and detriment likely to accrue to any person concerned, the effect of the disability on the person's ability to perform work, the financial circumstances and estimated expenditure required, the availability of financial and other assistance, and the nature of the workplace. Large employers are held to a higher standard than very small ones. A discomfort or inconvenience is not unjustifiable hardship. Evidence of genuine assessment — costed, considered and documented — is essential.
How do we handle a mental-health absence?
Mental-health absences are handled on the same legal framework as physical illness or injury, but with additional care. The employer should never make assumptions about capacity or prognosis. Current specialist evidence (usually from a treating psychiatrist or psychologist) is essential, and an IME may be appropriate where the treating evidence is thin, out of date or inconsistent. Reasonable adjustments — modified duties, altered reporting lines, workload reductions, phased return — should be considered explicitly. Psychosocial-hazard obligations under state OHS law (in Victoria, the Occupational Health and Safety Act 2004 (Vic) and the Psychosocial Hazards Regulations 2022) run in parallel.
What is the workers compensation dimension?
Where the illness or injury is work-related, a workers compensation claim under state legislation (in Victoria, the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic)) will usually run in parallel. Under section 410 of that Act, most Victorian employers cannot dismiss an injured worker on the ground of the work-related incapacity within 52 weeks of the incapacity commencing. Premature termination triggers reinstatement and compensation orders. Return-to-work planning, suitable-employment plans and interaction with the WorkCover agent are compulsory. Similar rules exist in other Australian jurisdictions.
What is a lawful sequence for a capacity-based termination?
The safe sequence is: (1) gather current treating-practitioner evidence; (2) share the position description and inherent-requirement statement with the employee and their treating practitioners; (3) if the treating evidence is thin, inconsistent or unclear, commission a properly briefed IME; (4) receive the IME report and share it with the employee; (5) invite the employee's response, including any further evidence and any adjustments they wish to be considered; (6) genuinely consider and document reasonable adjustments, including redeployment; (7) hold a show-cause meeting at which the employee can bring a support person; (8) take the decision, issue reasons in writing and pay all applicable entitlements. Every stage is documented.
What are the discrimination risks?
Termination on the ground of a person's disability or illness is direct disability discrimination unless the person cannot perform the inherent requirements of the role with reasonable adjustments. Indirect discrimination arises where a neutral requirement (an attendance requirement, a rostering rule) has a disparate effect on people with a disability and is not reasonable. Both direct and indirect discrimination are actionable under the Disability Discrimination Act 1992 (Cth) and state equal-opportunity legislation. General protections claims under Part 3-1 of the Fair Work Act 2009 (Cth) additionally protect employees against adverse action for exercising a workplace right (including taking leave).
Can we ask an employee for medical information?
Yes, within limits. An employer is entitled to reasonable information about the employee's capacity to perform the inherent requirements of the role — but not to the employee's underlying diagnosis or general medical history. Requests should be specific, role-focused and made in writing. Overreach (particularly requests for the underlying diagnosis where capacity information would be sufficient) is a common source of privacy complaints and general protections claims.
Do we have to hold the role open indefinitely?
No. Once the temporary-absence period has ended and the employee cannot perform the inherent requirements of the role with reasonable adjustments — including redeployment where feasible — the employer is not required to hold the role open indefinitely. But the decision to end the employment must be made on the evidence, after considering adjustments, and after affording procedural fairness. The Court's focus is on the quality of the process, not just the outcome.
How can Parke Lawyers help?
Parke Lawyers advises Australian employers on the whole ill-and-injured-employee lifecycle — reviewing employment contracts, position descriptions and inherent-requirement statements; managing personal-leave and long-term-absence cases; briefing and interpreting IMEs; drafting reasonable-adjustment plans and redeployment offers; running the capacity-decision process; interacting with workers compensation agents and rehabilitation providers; and defending unfair dismissal, general protections, disability discrimination and workers compensation claims where they arise. Early advice, before the employee has become entrenched in the process, materially reduces litigation exposure.
Employment Law
Manage the case, not the crisis.
Parke Lawyers advises employers on lawful, evidence-based management of ill and injured employees — capacity assessment, reasonable adjustments, workers compensation interaction and defensible termination decisions.
This article is general information only and does not constitute legal advice. Please obtain advice tailored to your circumstances.