Valid reason, correct procedure but dismissal still unfair


Valid reason, correct procedure but dismissal still unfair

A worker whose employment was validly terminated on the grounds of medical incapacity has nonetheless won his unfair dismissal application.

A worker whose employment was validly terminated on the grounds of medical incapacity, has nonetheless won an unfair dismissal application and an order for reinstatement… even though the Commissioner said the employer's procedures “can’t be criticised”.


Chris Papaioannou had his employment terminated on the grounds of medically-related incapacity on 6 July this year by employer CSL Limited.

“On the basis of the medical evidence available to it, CSL has now formed the viewed that you do not have the capacity to perform your pre-illness duties now or in the foreseeable future. CSL has not received any information which would enable us to form a different view. Accordingly, CSL regrets to advise you that your employment with CSL will be terminated effective today, 6 July 2017,” the employer notified Mr Papaioannou.

The law

Subject to certain criteria, Fair Work Act-covered employees are protected from unfair dismissal (s382). A dismissal is unfair if it is “harsh, unjust or unreasonable,” (s385) and there is a long list of criteria in s387 that the Commission considers when deciding if a dismissal is harsh.

Held by the Commission

Commissioner Ryan considered that Mr Papaioannou’s employment was validly terminated for sound, defensible and non-capricious reasons as the employer relied on an appropriate medical report by an occupational physician. Accordingly, there was a valid reason for the termination under s387(a).

The Commissioner also held that there were no errors by the company in relation to the administration of termination of employment under sections 387(b)(c) and (d).

“This is not a question or a case where any of the procedures followed by the employer would have any impact on a finding of fairness or unfairness. The employer can’t be criticised whatsoever for its procedures in this matter… Nothing… would weigh in favour of a finding that the dismissal was unfair. They would in many respects support an outcome that the dismissal was fair,” Commissioner Ryan said.

There were no issues around unsatisfactory performance ((s387(e)). The size of the enterprise ((s387(f)) was held to be not relevant. The conduct of the company’s human resources management, an important factor under s387(g), was praised.

“It has got a robust and comprehensive industrial relations/HR management system,” Commissioner Ryan said.

An open and shut case?

Despite having a valid reason for the dismissal, and finding the employer “can’t be criticised whatsoever for its procedures”, Commissioner Ryan nonetheless ruled the decision was harsh and therefore unfair.

The Commissioner ordered reinstatement and announced an intention to make an order for the restoration of lost pay.

Other relevant matters

Under s387(h), the Commission is required to take into account “any other matters that the FWC considers relevant”.

Under the CSL Limited enterprise agreement, Mr Papaioannou was paid salary continuance, on an on/off basis, from April 2013 to the date of termination, 6 July 2017, for a total of 39 weeks. There was a cap on salary continuance of 104 weeks… but the salary continuance paid prior to 10 October 2016 did not count towards calculation of the cap.

Commissioner Ryan noted that the salary continuance provisions of the enterprise agreement were available to all employees and were “incredibly generous.” The Commissioner held that salary continuance was directly relevant to the issues of harshness and fairness as Mr Papaioannou would have had the opportunity under the enterprise agreement of being able to carry on receiving salary continuance had he remained in employment.

“It’s harsh because in circumstances where the employment could not be carried out by the applicant because of the current incapacity of the applicant… the dismissal itself denied the applicant the benefit of the terms of an enterprise agreement which were intentionally designed to be generous and intentionally designed to specifically cover long periods of absence by the employee. The applicant simply didn’t have to have the capacity to work in order to get the benefits of the enterprise agreement. The enterprise agreement was predicated upon the applicant not having the capacity to work in order to get the benefit of the agreement,” the Commissioner reasoned.

No immunity

It should be noted that the Commissioner also held that the decision had no bearing on any future actions an employer may take to dismiss an employee at a future date after reinstatement.

“That reflects absolutely the correct position of the employer that salary continuance does not make an employee immune from dismissal,” the Commissioner said.
Chris Papaioannou v CSL Limited (U2017/7855)
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