Mental Health Issues And Dismissal

The case of Finnegan v Komatsu Forklift Australia Pty Ltd (2017) illustrates the importance of addressing mental health issues becoming entwined with the workplace.

In this case, an employee’s poor sales performance resulted in him being placed on a performance improvement plan under a new manager. However, the relationship between the pair was and the employee started to demonstrate symptoms of experiencing some mental health problems.

The employer’s response was to place him on sick leave and require him to complete a fitness for duty assessment with a psychological test. The employee complied and the independent medical assessor concluded that the employee was temporarily unfit for his usual work with his current supervisor. The employer implemented a return to work plan involving a different work location, different duties for a subsidiary of the company, which did not involve any sales targets or any supervision from his previous manager.

The initial return to work program went well, however, the employee raised concerns about an anticipated return to any work under direct supervision of the manager. The employer then chose to cease the return to work plan, and instructed the employee to leave the workplace and subsequently was required to attend a meeting where management proposed terms for separation. The employee rejected these terms and proposed a mediation.

The employer initially agreed to mediation but later cancelled without explanation and directed the employee to return to work but report to a different manager with his sales performance targets remaining in place.

The employee commenced a period of extended sick leave and subsequently made a workers’ compensation claim, which was rejected. Eventually, the employee’s sick leave entitlement was exhausted and he unsuccessfully contested the rejection of his workers’ compensation claim.

After a period of more than three months absence on unpaid leave, the employer wrote to the employee indicating it was considering dismissal for incapacity and asked the employee to submit any further material regarding his capacity to return to work within 14 days. This was presumably done in line with section 352 of the Fair Work Act 2009 (Cth). The employee’s lawyers requested a one-week extension, which was granted. A further extension was sought but was denied.

Eventually, the employee was dismissed because on the basis that he had, for an extended period, refused to work and refused to perform a full range of duties. However, the FWC disagreed with this conclusion and found that the employee had not refused to perform work. Rather, his absence was due to his incapacity to work.

The key point of this case was that the FWC observed that an employee who is absent from work on the basis of certified medical incapacity could not be construed as refusing to work unless the employer could properly establish that the alleged medical incapacity was some kind of falsification. In this case, falsification was not found, thus the dismissal was unfair.




The FWC stated:

“Mental health issues are difficult matters which need to be treated with considerable care and compassion. In particular, mental health issues should not be artificially elevated as barriers to continued employment.”

The FWC stated that the employer did not have due regard for the employee’s age, evidence by the fact it made payment upon termination of one months’ notice when, because of the employee’s age, he was entitled to payment of five weeks. Further, the FWC also considered the employer should have granted the second request for an extension, given this would have allowed the employer to obtain information about the employee’s medical prognosis.

Interestingly, the FWC was also critical of the fact that the letter of dismissal was sent by email to an employee of some eight years of service who was suffering from mental health issues. It was also found that the use of the words “I wish you all the best for the future” was paradoxical given the employee “was being discarded in such a perfunctory and impersonal manner”.

The key points to take from this case are:

  • caution ought to be taken by an employer when dealing with an employee with mental health issues.
  • an employer should afford an employee with a “show cause” meeting with the relevant decision-maker before any dismissal is made; and
  • communication should be professional and personal (i.e. not sent via email).

Written by Michael Turnell