29 September 2025
5 min read
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Managing ill and injured employees is a complex and sensitive challenge facing many employers today. While supporting employee wellbeing, employers must also navigate an intricate web of legal obligations. Poor management can lead to team disruptions, costly legal claims, and significant penalties. To avoid these risks, employers first need to understand their responsibilities.
In Australia, several legal frameworks govern how employers manage ill or injured workers. These include the Fair Work Act 2009 (Cth), the Disability Discrimination Act 1992 (Cth), state anti-discrimination laws and workplace health and safety legislation. Employment contracts, enterprise agreements, and company policies also impact an employer’s actions. When the illness or injury is work-related, workers compensation laws also enter the legal matrix.
The interplay between these frameworks and agreements can make decision making challenging. For example, an employee may be medically unfit to perform their original role but remains protected against dismissal, at least in the short term.
Extended or repeated absences, drops in performance and employee reports may signal concerns about an employee’s fitness for duty. In such cases, employers need to consider conducting a fitness for duty assessment to evaluate the employee’s capacity to work.
Decisions should be based on objective medical evidence. As a first step, employers can seek the employee’s written consent to contact their treating doctor. This enables the employer to request a medical report to determine whether any adjustments to the employee’s role could support a safe return to work, as well as prognosis and estimated recovery time. If the employee does not provide consent, an independent medical examination may be necessary.
Actions thereafter may include implementing recommended adjustments (where reasonable) to the employee’s duties within a trial period, redeployment within the business, or termination if the employee cannot perform the inherent requirements of the role.
When an illness or injury is work-related and a workers compensation claim is made, workers compensation laws require employers to provide ‘suitable duties’ for the injured employee. These duties do not necessarily mean the employee’s pre-injury role, but rather a position that considers the employee’s current capacity to work, appropriate modifications (such as reduced working hours, relocation of the role to a more convenient location for the employee), and whether the role genuinely helps the employee return to work.
Although this obligation is not absolute, in general, employers must take reasonable steps to identify and provide suitable work. This process is usually supported by a Return to Work Policy and Return to Work Coordinator, both of which are mandatory for certain employers depending on the size of the business, employee wages and the industry in which it operates.
If no suitable duties are available, employers must document the steps taken to reach this conclusion. They may also need to notify their insurer of this information.
While it can be difficult when an employee has no capacity to work or there are no suitable duties available, this does not mean that an employer can take steps to terminate the injured worker’s employment.
Injured workers are usually protected from dismissal, for a period of time, if they are unfit for work due to a work-related injury. In Queensland, the protection against dismissal is 12 months, whereas in New South Wales it applies for six months. Nothing prevents the employer, during the protected period, from terminating an injured worker for other reasons, such as serious misconduct.
The Disability Discrimination Act is undergoing its first major review in 15 years, following recommendations from the Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability.
In the Issues Paper released by the federal government, employers managing ill or injured workers may, in future, be required to take reasonable and proportionate measures to eliminate disability discrimination, so far as reasonably practicable. This will form part of an employer’s duty to take positive steps to prevent discrimination in connection with work.
A second proposal is clarity on ‘reasonable adjustments’ and ‘unjustifiable hardship’. The government proposes simplifying the term to ‘adjustments’ to make it clear that employers must make adjustments unless they can demonstrate that doing so would impose unjustifiable hardship on the business. Employers should keep a close eye on the review.
If the employer has taken all reasonable steps but still cannot provide suitable duties, modify the role or redeploy the ill or injured employee, the employer may start considering termination.
If you have questions about the legislation or need advice on how best to manage your employees, please get in touch with partners Megan Cant or Louise Hogg, and watch our on-demand video here which covers the above in more detail.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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