What are the legal risks involved in managing employee injury/illness?

Performance management of employees who are ill or injured is a sensitive issue in both legal and practical terms, especially if performance management processes leads to an adverse outcome such as termination of employment.

It is important to remember that ill or injured employees can be performance managed and that in appropriate circumstances it may be possible to lawfully terminate employment.

Section 352 of the Fair Work Act 2009 (Cth) (FW Act) limits the capacity of an employer to lawfully terminate employment in circumstances where an employee is on paid personal/carer’s leave. Performance management must also navigate workers compensation, anti-discrimination, unfair dismissal, unlawful termination, general protections and work health and safety laws obligations.

See What are the legal risks associated with managing employee injury/illness?

What are the legal risks associated with performance management?

”Performance management" can be the day-to-day supervision of an employee’s work, with regular, informal communications about work expectations and delivery of work, coaching and providing informal feedback on performance.

Performance management can also refer to a formal process through which an employee’s performance is reviewed and monitored, usually as a result of the identification of some shortcoming in the employee’s work performance. These processes would commonly include putting in place specific performance targets and monitoring the individual’s progress towards attainment of those targets. Failure to achieve performance targets may lead to disciplinary action up to and including termination of employment.

Effective performance management is an important part of the operation of a business. If it is mismanaged, it may give rise to significant legal exposures for employers both at common law and (especially) under statute.

These statutory exposures can include claims under unfair dismissal laws, alleged breaches of the general protections in Pt 3-1 of the Fair Work Act 2009 (FW Act) and claims under federal and state anti-discrimination legislation.

Part 3-1 of the FW Act and most anti-discrimination legislation contain ”reverse onus" provisions. This means that once an applicant (employee) establishes adverse treatment it is then for the respondent (employer) to prove that that the adverse treatment did not take place because the applicant had exercised or proposed to exercise a workplace right or because an applicant had a workplace right.

This means it is important that employers have appropriate performance management policies and procedures. Just as important is adhering to policies in practice as failing to do so may have significant adverse consequences in any subsequent legal proceedings.

Effective performance management of employees who are ill or injured must start from a recognition that all employees have entitlements to take paid personal or sick leave under the FW Act. It is quite likely that they will also have entitlements under one or more of an award, enterprise agreement, contract of employment or employer policy. Where the illness or injury is work-related, then the employee may well be entitled to periodic and/or lump sum payments, and a measure of job protection, under workers’ compensation legislation as well.

As indicated, this does not mean that it is not possible lawfully to performance manage employees who are ill or injured, and to terminate their employment if necessary. However, it does mean that any performance management program must take proper account of the fact that the employee is ill or injured, and if employment is to be terminated it is important to take proper account of the requirements of s 352 of the FW Act and of relevant anti-discrimination legislation.

See What are the legal risks associated with performance management?