Lee v Hills Before & After School Care (2007) FMCA 4 by Sam Kennedy and Deborah Tadros | May 2007 Areas of Expertise | Workplace Relations and Workers Compensation
Introduction A recent decision in the Federal Magistrates Court of Australia highlights that employers must be careful before deciding to terminate an employee on workers compensation. The Court held that workers compensation is analogous to paid sick leave and, as such, employees who are absent from the workplace for more than 3 months in a year are protected from dismissal by the federal Workplace Relations Act and Workplace Relations Regulations. This decision is significant and should be considered when an employer attempts to terminate an employee who is receiving workers compensation, even casual employees who are not normally entitled to paid sick leave.
The Facts Ms Lee was a long time casual employee of Hills Before & After School Care. She suffered a workplace injury for which she received workers compensation benefits. She was subsequently absent from work due to illness or injury for more than 3 months out of a 12 month period, and was eventually dismissed for this reason. The employee alleged that her dismissal was unlawful because the employer breached section 659 of the Workplace Relations Act which, among other things, provides that an employer must not terminate an employee who is temporarily absent from work because of illness or injury. The requirements to be met for a ‘temporary absence’ are set out in Regulation 12.8 of the Workplace Relations Regulations. Essentially, the employee must produce a medical certificate covering the period of absence and otherwise comply with any ancillary requirements contained in an industrial instrument relating to absences from work. However, the absence will not be considered ‘temporary’ if the employee is off work for more than 3 months within a 12 month period, unless the employee is on paid sick leave.
The Issue The issue before the Federal Magistrates Court was whether the employee’s absence from work on workers compensation could be considered ‘paid sick leave’ and therefore covered by Regulation 12.8.
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The Decision The Court decided that absences from work following a work-related illness or injury, for which an employee is entitled to compensation, should be considered a ‘special kind of paid sick leave’. Accordingly, in Ms Lee’s case, the employer had breached section 659 and Regulation 12.8 and the dismissal was unlawful. During the course of the decision, the Court observed that: •
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The purpose of a workers compensation system is to provide protection to injured employees. It would be absurd if employees claiming workers compensation could be legitimately terminated if they were absent from work for more than 3 months, but employees who claimed sick leave could not be terminated. Although in some states, such as NSW, the relevant statutory provisions make a distinction between sick leave and workers compensation payments (see section 50 of the Workers Compensation Act 1987) the purpose of this is to ensure that an employer does not substitute sick leave for workers compensation payments, and therefore does not preclude an interpretation of ‘paid sick leave’ as including workers compensation. Furthermore, if the parliament had intended to exclude employees on workers compensation, it could have been stated explicitly in the legislation.
Comment The Court justified its reasoning in this case by relying upon an international convention adopted by Australia, the Termination of Employment Convention 1982, which was intended to protect workers from arbitrary dismissal. Article 6 of the Convention provides – 1. 2.
Temporary absence from work because of illness or injury shall not constitute a valid reason for termination. The definition of what constitutes temporary absence from work, the extent to which medical certification shall be required and possible limitations to the application of paragraph 1 of this Article shall be determined in accordance with the methods of implementation referred to in Article 1 of this Convention.
Within the Convention, there is no definition of ‘temporary absence from work because of illness or injury’. The Court therefore felt it necessary to ‘go behind’ the Convention to see what the drafters had intended. The Court looked at a number of preliminary submissions and committee reports that had been made during the process leading up to the signing of the Convention, and concluded that workers compensation law had been considered by the drafters and, although it was not expressly stated to be applicable to situations of ‘temporary absence’, it was nonetheless not excluded. The Court also relied upon a judgment of the Australian Industrial Relations Commission in CFMEU v Cooks Construction Pty Ltd [2006] in which there was a dispute as to whether or not an employee, absent from work and receiving workers compensation, was on ‘continuous service’ for the purpose of accruing an entitlement to annual leave. Senior Deputy President Drake stated:
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“Workers absent on workers compensation leave are workers absent on a special kind of sick leave – one which has additional attendant obligations for the employee and employer. Workers compensation payments and leave are referred to as an entitlement in the Agreement and are in fact legislative entitlements for an injured worker in New South Wales. … [T]here is no interruption to the provision of service by a worker who accesses his entitlement to workers compensation leave any more than there is an interruption to the provision of service by an employee who is on sick leave or any other authorised leave. Such an employee, on workers compensation leave, is in actual service.” We believe that the Federal Magistrates Court’s reliance upon CFMEU v Cooks Construction Pty Ltd was misplaced, because it dealt with a different issue (accrual of annual leave while on compensation, rather than the categorisation of workers compensation as paid sick leave) and was dependent upon the particular wording of a specific industrial award. In our opinion, the decision in Lee v Hills Before & After School Care is flawed, and there is no certainty that it will be followed in other cases, although there is no doubt that dismissed employees and their unions will endeavour to take advantage of the case. [In this regard we note that a decision of the South Australian Industrial Relations Court in Laught v Civil & Mechanical Services Pty Ltd (30 March 2007), two months after the Lee decision, held that the dismissal of an employee who was receiving workers compensation for a work-related psychiatric illness was unfair because inadequate notice had been given of termination, but there was no discussion in that case as to whether or not the dismissal had been unlawful.] In addition, the Lee decision appears to be contrary to the express words used in Section 659 and the international convention on which it is based — i.e., the protection of workers who are temporarily absent from work because of illness or injury. One can hardly say that an employee who is off work for one year or longer on workers compensation is ‘temporarily’ absent. There are many cases of injured workers who continue to receive compensation payments for many years after ceasing work, and an employer could not terminate their employment if the Lee decision is correct.
Implications Unlike the bulk of the federal Workplace Relations Act which applies only to incorporated employers, section 659 applies to all employers, incorporated or not. Accordingly, the Lee decision has significance for every employer, whether covered by state or federal industrial laws. Any employer considering the termination of employment of a worker who is receiving workers compensation, must seek specific legal advice.
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For more information, please contact:
Sam Kennedy Partner T: 02 8257 5733 sam.kennedy@turkslegal.com.au
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