Legal Insights

Mental health issues in unfair dismissal claims

• 21 September 2016 • 2 min read
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Employers should exercise caution when considering disciplinary action or termination of an employee with mental health issues

Employers will be aware that the Fair Work Act sets out certain factors that the Fair Work Commission is required to consider in order to determine if a dismissal of an employee is ‘unfair’.

These factors include whether the employer has a valid reason to terminate the employee’s employment, whether in respect of a performance-related dismissal the employee has had an opportunity to respond to performance concerns, and whether the dismissal, in all the circumstances, was ‘harsh’.

Increasingly, in circumstances where an employee who has engaged in misconduct warranting termination has a mental health condition, the Fair Work Commission has been willing to find that the employer is required to consider the illness as a mitigating factor when determining what disciplinary action to take. This may be the case even where the employer has not been formally notified of any such medical condition.

In the recent case of Thomas Vernham v Jayco Corporation Pty Ltd, an employee who had engaged in serious misconduct in the workplace was found to have been unfairly dismissed, because of his medical condition. Whilst the employee had sent threatening emails with violent content (including threats to kill), the Fair Work Commission found that the forklift driver's mental illness was a mitigating factor that should have been considered by his employer.

While the employer argued that it had no knowledge of the employee’s medical condition, the Fair Work Commission found that the employer did have sufficient knowledge of his mental health to have prompted it to ask questions about his mental state (including the way in which the employee presented at meetings with HR, and the personal difficulties that he disclosed during these meetings). The employer was ordered to pay $42,600 in compensation, which was reduced by 40%, to reflect the employee’s serious misconduct.

And in other developments in this space, an employee who fails to file an unfair dismissal claim within the required 21 days due to mental health issues may be granted an extension of time for ‘exceptional circumstances’. In the decision of Nyssa Kyte v Fire Trucks Australia, an employee was allowed to file her claim 64 days late after suffering mental health issues arising from the termination of her employment.

Accordingly, employers should exercise caution when considering disciplinary action or termination of an employee who has (or presents as likely to have) a history of mental health issues, even where the employee has engaged in serious misconduct. Employers should ensure that careful consideration is given to an individual’s particular personal circumstances prior to taking steps to dismiss an employee.

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