Managing employee performance can be challenging under any circumstances. When performance concerns arise alongside long-term illness or injury, employers often face an even more complex situation. Balancing operational requirements with legal obligations requires careful planning, procedural fairness and a clear understanding of employment law.
In New South Wales, employers must consider obligations under the Fair Work Act 2009 (Cth), applicable industrial instruments and anti-discrimination legislation before making decisions about employees who are absent due to illness or injury. A failure to follow the correct process can expose a business to unfair dismissal claims, general protections disputes or disability discrimination complaints.
At Maguire & McInerney Lawyers, we regularly advise employers and businesses throughout the Illawarra and New South Wales on employment law matters, including workplace investigations, performance management, disciplinary processes and lawful termination. Understanding the legal framework before action is taken can significantly reduce risk while supporting fair workplace outcomes.
Long-term sick leave does not automatically end employment
A common misconception is that prolonged absence from work automatically allows an employer to terminate employment.
In reality, Australian employment law provides important protections for employees who are temporarily unable to work because of illness or injury. The length of an employee’s absence is only one factor that should be considered. Employers must also assess the medical evidence, the employee’s capacity to perform the inherent requirements of the role and the legal protections that apply.
Before any employment decision is made, it is important to determine whether the employee is likely to return to work, whether reasonable workplace adjustments are available and whether continued employment remains practicable.
Each situation requires an assessment based on its own facts rather than a predetermined timeframe.
Our Employment Law team regularly assists employers in navigating these complex issues while minimising legal and commercial risk.
Understanding the Fair Work Act and employee protections
The Fair Work Act 2009 (Cth) provides several protections for employees who are absent from work due to illness or injury.
Importantly, employees are generally protected from dismissal because they have exercised a workplace right or taken personal leave in accordance with the National Employment Standards. Employers should therefore distinguish between legitimate concerns about an employee’s capacity to perform their role and decisions based solely on an absence from work.
Where performance concerns also exist, employers should ensure those issues are genuine, well documented and managed separately from the employee’s medical condition.
Maintaining this distinction can help reduce the risk of adverse action or general protections claims.
Disability discrimination must also be considered
In addition to obligations under the Fair Work Act, employers should consider anti-discrimination legislation before making decisions affecting employees with medical conditions or disabilities.
Not every illness constitutes a disability under the law. However, many long-term physical and psychological conditions may attract legal protection.
Before considering termination, employers should carefully assess:
- whether the employee has a disability recognised by law;
- whether reasonable workplace adjustments are available;
- whether those adjustments would enable the employee to perform the inherent requirements of the position, and;
- whether the proposed action could amount to unlawful discrimination.
Reasonable adjustments will differ between workplaces and individual circumstances. In some cases, temporary changes to duties, altered working hours or modified work arrangements may assist an employee’s return to work while allowing the business to continue operating effectively.
Taking time to properly assess these options demonstrates procedural fairness and may reduce legal risk if employment decisions are later challenged.
Managing performance concerns fairly
Performance issues should not be ignored simply because an employee has experienced illness or injury. However, they should be managed carefully and objectively.
Employers should ensure that performance concerns relate to measurable work outcomes rather than assumptions about an employee’s health.
A fair performance management process commonly includes:
- identifying specific performance concerns;
- providing clear expectations for improvement;
- allowing the employee to respond;
- offering appropriate support or training;
- documenting meetings and discussions, and;
- allowing a reasonable opportunity to improve.
Consistent documentation is particularly important. If employment decisions are later reviewed by the Fair Work Commission or a court, contemporaneous records often provide valuable evidence that a fair process was followed.
Why procedural fairness matters
Procedural fairness is one of the most important principles in Australian employment law.
Before disciplinary action or termination is considered, employees should generally understand the concerns that have been raised and be given a genuine opportunity to respond.
A procedurally fair process often involves:
- explaining the performance or conduct concerns;
- providing relevant information supporting those concerns;
- allowing sufficient time for a response;
- considering any explanation offered by the employee, and;
- making decisions based on all available evidence.
Even where an employer believes termination may ultimately be justified, failing to follow a fair process can significantly increase the likelihood of legal proceedings.
The Fair Work Commission regularly considers whether employers have acted fairly throughout the disciplinary process, not simply whether a valid reason for dismissal existed.
When can termination become lawful?
Managing prolonged illness or ongoing performance concerns requires careful legal and practical assessment. Although employers have legitimate operational needs, termination should generally be viewed as a last resort after appropriate processes have been followed.
In some circumstances, termination may be lawful where an employee is unable to perform the inherent requirements of their position, even after reasonable workplace adjustments have been considered. Equally, dismissal may be justified where documented performance concerns continue despite genuine opportunities to improve.
However, every decision should be based on the individual circumstances rather than assumptions about an employee’s illness or anticipated recovery.
Before proceeding with termination, employers should consider:
- whether current medical evidence has been obtained;
- whether the employee remains protected under workplace or anti-discrimination legislation;
- whether reasonable adjustments have been explored;
- whether procedural fairness has been observed throughout the process, and;
- whether the reasons for termination are clearly documented and supported by evidence.
Taking a structured and well-documented approach can significantly reduce the risk of future legal disputes.
What have the courts and Fair Work Commission said?
Australian courts and the Fair Work Commission have consistently reinforced the importance of balancing an employer’s operational requirements with the legal rights of employees experiencing illness or injury.
Decisions across these jurisdictions demonstrate several key principles:
- Employers should obtain current and reliable medical information before making significant employment decisions;
- Employees should be given a genuine opportunity to respond to concerns affecting their employment;
- Procedural fairness remains critical, even where there is a valid reason for dismissal;
- Employers should consider whether reasonable workplace adjustments would enable the employee to continue performing the inherent requirements of the role, and;
- Every case depends on its own facts, including the nature of the position, the medical evidence and the employer’s operational circumstances.
These principles highlight why a careful and consistent process is often just as important as the ultimate decision itself.
Best practice for documenting the process
Strong documentation is one of the most effective ways to demonstrate that an employer has acted reasonably and fairly.
Throughout the performance management process, employers should maintain records of:
- performance meetings;
- written performance expectations;
- improvement plans;
- correspondence with the employee;
- medical information received;
- workplace adjustment discussions;
- responses provided by the employee, and;
- decisions made and the reasons supporting them.
Accurate records help ensure decisions are based on objective evidence rather than recollection. They also provide valuable support if the matter is later reviewed by the Fair Work Commission or another tribunal.
Our Employment Law team regularly assists employers in developing compliant workplace procedures, reviewing performance management documentation and advising on disciplinary processes before disputes arise.
Practical steps for employers
Managing long-term sick leave and performance concerns requires consistency, objectivity and clear communication.
Employers can reduce legal risk by:
- implementing clear workplace policies;
- addressing performance concerns promptly;
- separating medical issues from performance issues wherever possible;
- obtaining appropriate medical evidence before making decisions;
- considering reasonable workplace adjustments;
- documenting every significant discussion and decision;
- following procedural fairness throughout the process, and;
- obtaining legal advice before taking disciplinary action or terminating employment.
Early advice often allows concerns to be addressed before they develop into unfair dismissal, discrimination or general protections claims.
Businesses may also benefit from reading our related articles on Unfair Dismissal, and Employment Contracts, together with our Employment Law service page, to better understand their legal obligations throughout the employment relationship.
Managing workplace risk through informed decision-making
Long-term sick leave and performance issues can present difficult challenges for employers. Nevertheless, these situations can often be managed effectively by following a fair process, relying on objective evidence and understanding the interaction between employment and discrimination laws.
Carefully assessing medical evidence, considering reasonable workplace adjustments and providing procedural fairness before making significant employment decisions can help protect both the business and its employees.
At Maguire & McInerney Lawyers, we provide practical, commercially focused employment law advice to businesses throughout Wollongong, the Illawarra and across New South Wales. Whether assistance is required with performance management, workplace investigations, disciplinary action or termination, our experienced team is here to help.
Contact Maguire & McInerney Lawyers today for trusted advice on employment law and workplace compliance.
