Incapacity to work is not a refusal to work

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This article was written by Georgia Mullins.

In a decision highlighting employer's obligations to employees with a mental illness, the Fair Work Commission (FWC) has found an employer failed to provide due process to an incapacitated employee after misconstruing his extended absence from work on certified sick leave as a refusal to work.

Implications for employers

Employers should be aware that employees who are absent from work because of illness cannot be considered to be refusing to work unless it can be established that their illness is not genuine. In particular, mental health issues are difficult matters which need to be treated with considerable care and should not be unreasonably regarded as barriers to ongoing employment.

Additionally, employees should be provided with a "show cause" meeting with the relevant decision maker before the determination of any dismissal is made. It is important that communication of any decision to dismiss an employee is conveyed in a respectful manner and dismissal by electronic means should be avoided.


John Finnegan, a customer service supervisor at Komatsu Forklift Australia Pty Ltd (KAL), was placed on a performance improvement plan in August 2015 after failing to meet his sales targets. The plan was abandoned in March 2016, when KAL directed Mr Finnegan to take sick leave, due to concerns about his behaviour, general work performance and relationship with his manager, Mr Leontis. KAL required Mr Finnegan to complete a fitness for duty assessment and a psychological test, from which Mr Finnegan was assessed as being temporarily unfit for his usual work. A return to work plan was subsequently implemented but was discontinued weeks later due to Mr Finnegan's ongoing mental health concerns.

Shortly after the return to work plan was abandoned, KAL sent Mr Finnegan a letter directing him to return to his usual work but report to a different manager rather than Mr Leontis. Mr Finnegan provided a medical certificate in response to this direction, indicating that he was unfit to work.

In late October 2016, KAL sent Mr Finnegan a letter indicating it was considering deeming Mr Finnegan medically unfit to return to work, thus ceasing his employment. The letter requested Mr Finnegan provide further evidence of his work capacity by 9 November 2016. KAL granted Mr Finnegan's lawyers an extension to provide further information but denied a second request for a further extension. Consequently, KAL dismissed Mr Finnegan, claiming that he had refused to work for an extended period.

Mr Finnegan claimed that he was unfairly dismissed because of the procedural errors and misinformation that KAL had acted on. In particular, KAL never contacted Mr Finnegan's psychiatrist for accurate information about his medical condition. Additionally, KAL never explained why it placed Mr Finnegan on leave in March 2016, why it implemented and subsequently abandoned his return to work plan without his input, and why it cancelled a mediation process he requested.

KAL argued that it made reasonable attempts to accommodate Mr Finnegan's return to work, including reconfiguring its management structure, but that Mr Finnegan refused to return to work to perform his duties.


The FWC held that KAL unfairly dismissed Mr Finnegan by "artificially elevating" his incapacity to work as a refusal to perform the inherent requirements of his role. Mr Finnegan's absence from work due to a certified medical incapacity could not be construed as a refusal to work unless KAL could establish the incapacity had been falsified. Additionally, KAL's failure to respond to Mr Finnegan's doctor's invitation to discuss his condition further was problematic.

The FWC also noted that KAL overlooked "a number of fundamental elements of due process" in the way it handled the workplace processes that led to Mr Finnegan's dismissal. Mr Finnegan was dismissed without a "show cause" meeting and his dismissal letter was sent by email, an "entirely inappropriate means by which to advise any employee of their dismissal". Instead, KAL should have provided Mr Finnegan with a proper opportunity to respond with relevant information about his medical incapacity and employment prognosis.

Additionally, the FWC held that as there was no evidence from the individual who made the decision to dismiss Mr Finnegan, KAL had no sound basis to conclude that Mr Finnegan's employment should have been terminated. The FWC also commented that mental health issues must be treated with care and compassion, and not "artificially elevated as barriers to continued employment".

The FWC ordered KAL to pay Mr Finnegan one week of remuneration as compensation, given that Mr Finnegan's medical incapacity to work was ongoing.

Finnegan v Komatsu Forklift Australia Pty Ltd [2017] FWC 2433 (10 May 2017)

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