Sick Leave and Dismissal

Personal Leave

The entitlement to Personal (Sick) Leave has caused a lot of confusion over the last few years.  Permanent employees receive 10 days paid leave each year, but how is that calculated?  Following a recent High Court decision, we are now pleased to clarify the position. 

Originally paid leave was calculated based on ordinary hours worked.  This means for example if a full time Receptionist works 38 hours each week over 52 weeks, she is entitled to 76 hours paid leave for the year (10 days x 7.6 hours each day). 

This calculation was then disputed on the basis that some employees work different hours each day.  The argument was where, for example, a full time Receptionist works 12 hours on Wednesdays and was sick on 10 Wednesdays, then she should be entitled to 120 hours paid leave (10 days x 12 hours each day); a significantly higher cost to Employers. 

The Federal Court agreed, and then the High Court overruled the decision on 13 August 2020 reverting to this original position.

This means employees are entitled to 10 days paid leave for each year, based on ordinary hours worked, rather than days worked.  A full-time employee is therefore entitled to 76 hours paid leave each year, regardless of the days and times those hours are worked.

Dismissing sick employees

Many Practices have reported an increase in absences due to sickness, during Covid-19 times.  Whether an Employee is absent for a physical or mental health reason, there are limits to the protections offered by Fair Work. 

It is generally unlawful to dismiss an Employee due to temporary illness.  If this happens, Employers can be exposed to various risks including claims for unlawful termination, unfair dismissal, adverse action or discrimination. 

It is an area Employers seek to avoid, and which should be managed cautiously. 

The situation is however different where the illness prevents the Employee from carrying out the inherent requirements of the role, or where the Employee has been absent due to illness (as long as the entire absence is not covered by paid personal leave) for more than 3 months in 12 months.

In terms of the illness, by way of simple example, say a dentist goes blind and can no longer diagnose and treat patients.  In this case, the dentist cannot perform the inherent requirements of the role, however any subsequent dismissal should be effected carefully and fairly.

In terms of duration, consider a dental assistant suffers from mental health illnesses and cannot often make it to work.  If the Employee has more than 3 months off (either calculated on a cumulative or consecutive basis) in 12 months and the absence is not 100% covered by paid personal leave, the illness will not be considered temporary and will lose the protection of unlawful termination and adverse action under Fair Work. 

However the Employer will still need to effect the termination properly and fairly, and with regard to any other discrimination laws that operate outside of Fair Work.

In a recent case we acted for a Practice where a Clinical Assistant was absent for long bouts due to mental illness.  The Practice calculated she had taken a combination of paid personal leave, unpaid leave and annual leave for the absences.  In total, the employee took more than 500 hours off work in the year.  Based on the full time role, the Employee had more than 494 hours off due to illness on combined leave, which equated to more than 3 months.

In this case the Employee was dismissed on the basis that she was not able to meet the inherent requirement of the role, which was to work full time.  Incidentally, the Employee did not originally disclose the illness, provide evidence of a medical clearance or communicate when she would be better.  Although this was not the basis for the dismissal, it might have been relevant if her total absence was less than 3 months.

Managing mental health and sick employees can be complex and challenging, and can have a wider impact on the team, especially in a small business.  We strongly suggest taking legal advice prior to effecting a termination based on illness or absence due to illness.

If you have a similar issue or would like to discuss how we can help you, please email us info@clinlegal.com.au.

Please note the laws are evolving and may change in the coming days and weeks.  The above information is current as at the date of publication and is based on information made publicly available.  It is important to stay appraised of any developments or changes. This Circular is produced for guidance purposes only and is not a substitute for legal advice.  Legal advice should be sought for individual circumstances. For tailored advice for your Practice, please contact us for a confidential discussion:info@clinlegal.com.au