Dismissing an employee when they are on personal leave – when is this allowed?

Managing performance and terminating employment are unfortunately sometimes necessary parts of running a business, and as an employer, it’s crucial to make sure you go about these things in the right way. If you need to terminate somebody’s employment, you need to ensure that you have grounds to do this, and comply with any relevant procedures or processes. Failing to do so could mean facing an ‘adverse action’ claim or similar.

When an employee is on ‘sick’ or personal leave, or has exercised some other workplace right, it is important for employers to be cautious in approaching performance management. A recent case gives some comfort to employers, however, holding that employers do have the right to issue ‘reasonable workplace directions’ while employees are on personal leave. Note that as always, what is considered ‘reasonable’ will depend on the particular circumstances.

The recent case of Swanson v Monash Health considered whether an employer had the right to issue reasonable workplace directions while an employee was on personal (‘sick’) leave. In this situation, the Court held that an employer’s actions in dismissing an employee, who refused a direction to attend an Independent Medical Assessment (‘IMA’) during a period of paid personal leave, did not amount to adverse action. In this case, Swanson failed to attend three lMAs and was subsequently terminated for refusing these lawful requests.

Swanson argued that terminating her employment was unlawful because she was on personal leave, and thus her employer was unable to issue workplace directions to her. The employer, Monash Health, denied that they terminated her because she was on personal leave, and instead argued that directing her to attend an IME was a reasonable workplace direction, and her failure to comply amounted to misconduct. Thus, her termination was for the misconduct, not the leave. The Court held that Swanson being on paid personal leave at the time, was in no way relevant to the decision to terminate her employment and thus not relevant in the Court’s decision.

Monash Health directed Swanson to attend the IMA so that they could facilitate their return to work as she had been on personal leave due to bullying and harassment claims.

This case confirms an employer’s right to direct employee’s to attend IMAs while on paid personal leave and their right to subsequently terminate their employment should they refuse to comply.

What does this mean for employers?

This decision provides comfort to employers that they can lawfully direct employees to attend IMAs while that employee is on paid personal leave. Should the employee refuse this direction, employers can lawfully terminate the employee. The exception to this rule is if the request was not reasonable and lawful in the circumstances. The key take away point from this recent case is that employees are still bound by their employment contracts and must fulfil their employment obligations, even during periods of paid personal leave.

It is important for employers to protect themselves against adverse action claims. Employers must ensure that the reason for an employee’s termination is due to their failure to follow a reasonable and lawful director and not the exercise of a workplace right i.e. taking paid personal leave.

How we can help

Sinclair + May specialises in employment law and often work with employers to effectively manage the IMA process with their staff. If you are in this position, or are unsure of whether you can lawfully request that an employee do something, it’s always better to ask first. Being sure of your position, and the risks of taking various courses of action, is crucial if you are going to avoid or successfully defend an employment related claim. If you are unsure about your rights and feel that you may be subject to an adverse action claim or would like some guidance around managing or lawfully terminating an employee, please contact us on 03 9111 5660 to book in your free 15 minute chat.

This is general advice only. Liability limited by a scheme approved under Professional Standards Legislation. 

Published Oct 31, 2018

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