Workers compensation - rehabilitation & termination issues


Workers compensation - rehabilitation & termination issues

Termination of an employee who has been absent from work because of prolonged illness or injury is not a simple matter.


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Termination of an employee who has been absent from work because of prolonged illness or injury is not a simple matter. Employees are protected by several pieces of overriding legislation, including Federal unfair dismissal legislation, state/territory workers compensation legislation, state/territory anti-discrimination legislation, and federal disability discrimination legislation.

Generally, the intent of workers compensation legislation throughout Australia is to accommodate an employee's return to work after a workplace-related injury or illness, usually through the establishment of an appropriate rehabilitation program.

Dismissal is seen by legislators as preventing the rehabilitation process from occurring, with the relevant legislation usually providing the employee with a reasonable period of time in which to recover from their injury or illness before dismissal may be considered as an option for an employer.


Employers should be aware that compliance with workers compensation legislation with respect to an employee's dismissal does not, of itself, prevent the possibility of a successful claim for unfair dismissal by the employee under any of the other aforementioned legislation, particularly when due process has not been observed by the employer. This is particularly the case for an employer with more than 100 employees, who would be subject to the unfair dismissal laws under WorkChoices.

An employer should seek the appropriate legal advice before terminating an employee under these circumstances.

Rehabilitation & dismissal while on workers compensation

The following is a summary of the provisions in each state and territory with respect to rehabilitation and the termination of an employee who is absent on workers compensation:

New South Wales

Under workers compensation legislation, an employer cannot terminate an employee within six months of being injured, if the reason for the termination is due to the employee's absence on workers compensation.

An employer must have a workplace rehabilitation program and a written return-to-work plan for an employee incapacitated for more than 12 weeks.


An employer is required to keep a position open for an injured worker for at least 12 months.

In addition, an employer must prepare a return-to-work program for any injured worker off work for 20 days or more (whatever the size of the business).


Under workers compensation legislation, the employer must not dismiss an employee within 12 months after he or she becomes injured, solely or mainly because the employee is not fit for employment in a position because of the injury.

An employer must take all reasonable steps to provide rehabilitation and suitable duties to injured workers. Employers with 30 or more employees at a workplace must appoint a fully-trained and WorkCover-accredited rehabilitation coordinator and have a rehabilitation policy and procedures in place.

South Australia

An employer with less than 10 employees is required to keep a position open for an injured worker for 12 months. An employer with 10 or more employees is required to keep a position open indefinitely.

The position must be employment for which the worker is fit and, so far as reasonably practical, the same as or equivalent to the position in which the worker was employed immediately before the incapacity. If the employer does not make a suitable job offer, heavy penalties may apply. The WorkCover Corporation is obliged to prepare a rehabilitation plan after three months, which is binding on both the worker and the employer.

Western Australia

Except in certain circumstances, the employer of an injured worker who attains at least partial capacity for work within 12 months of the date upon which he/she becomes entitled to receive weekly payments of compensation, is obliged to provide the worker with a job as reasonably practicable to the job he or she was doing immediately before becoming entitled to receive weekly payments.

After four consecutive weeks of incapacity, or 12 weeks of incapacity within a 12-month period, the employer must notify the Workers' Compensation and Rehabilitation Commission, who in turn may require the employer to take reasonable steps to facilitate the rehabilitation of the worker.


The employer is required to keep the position open for the injured worker for 12 months, unless it is not practicable to do so or a reason for the position no longer exists. In addition, arrangements to make available suitable alternative duties is also the duty of the employer.

Where incapacity exceeds 14 days, the employer is required to prepare a return-to-work plan and employers with more than 20 workers are required to prepare and display a rehabilitation policy.

Northern Territory

The employer must assist with any rehabilitation program and take all reasonable steps to provide suitable employment.

If the employer is unable to provide the worker with suitable employment they, in consultation with their insurer, must refer the worker to an alternative employer incentive scheme.

There is no time limit prescribed after which the injured worker may be dismissed.

Australian Capital Territory

As part of the Injury Management Process, an employer must provide for suitable employment after an injury has occurred where a request for work is received within six months of injury, and take part in vocational rehabilitation for the injured worker.

An obligation on the employer does not apply where the employee leaves the employment of their own volition; or, the employer ended the employment for a reason other than the employee's absence on workers compensation; or where the employer cannot provide suitable employment.

Workers compensation premiums

An employer should be aware that despite dismissing an employee, the company's future workers compensation premiums may still be effected by an ex-employee's continued compensation payments. To avoid this situation, an employer should ensure the employee's workers compensation case continues to be monitored with the company's insurer.

When an employee is dismissed, an employer can lose interest in the employee's case. Constant vigilance with an ex-employee's workers compensation situation is necessary in limiting any future increase in the company's workers compensation premium. Therefore, the dismissal of an employee absent on workers compensation should be viewed by the employer only as a last resort after all other alternatives have been exhausted.



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