Dismissing Employees on Extended Sick Leave: FWC Warns Employers Against Relying on Three-Month Rule

A recent Fair Work Commission decision has reinforced that employers cannot automatically dismiss employees simply because they have been absent from work due to illness or injury for more than three months.

In Timothy Read v SRG Global Assets Pty Ltd [2026] FWC 4240, the Fair Work Commission found that an employer had unfairly dismissed an employee on extended medical leave without adequately investigating his future capacity to return to work.

The decision highlights the importance of obtaining reliable medical evidence and providing procedural fairness before terminating employment on the grounds of incapacity.

Background

Mr Read commenced employment in March 2018 as a radiography and non-destructive testing technician. His duties included industrial radiography, handling specialised equipment and performing technical inspections. He commenced personal leave in January 2024 after experiencing significant health problems.

Mr Read was diagnosed with avascular necrosis affecting his left hip and underwent a total hip replacement in June 2025. He subsequently experienced complications and was investigated for a similar condition affecting his right hip. Throughout his absence, he provided medical certificates confirming that he remained unfit for work.

In September 2025, his supervisor discussed his recovery and possible return to work. The supervisor understood that Mr Read might require further surgery and could remain incapacitated for an extended period. Following advice from human resources, the employer decided to terminate his employment.

The termination letter referred to the employee’s prolonged absence, lack of a foreseeable return-to-work date and the three-month temporary absence provisions of the Fair Work Act 2009. His employment ended on 31 October 2025.

The three-month rule does not automatically permit dismissal

Section 352 of the Fair Work Act protects employees from dismissal because of a temporary absence due to illness or injury, subject to prescribed exceptions.

However, Deputy President Lake emphasised that the expiry of the relevant three-month period does not automatically establish a valid reason for dismissal.

The Commission observed:

“That does not mean that all bets are off once the three-month period has been reached.”

The three-month rule concerns a particular statutory protection. Employers must still comply with their obligations under the unfair dismissal provisions.

Employer failed to adequately assess medical incapacity

The Commission accepted that Mr Read was medically unfit to perform his duties when the dismissal occurred.  However, the medical certificates did not establish permanent incapacity. They identified periods of unfitness while treatment and assessment continued.

The employer had assumed that Mr Read would remain incapacitated for a substantial period without obtaining sufficient medical evidence about his prognosis.

Deputy President Lake considered that an independent medical examination would have been appropriate to assess his likely recovery, capacity to perform duties and potential return-to-work date.  The Commission concluded that the employer had not established a valid reason for dismissal.

Procedural fairness also lacking

The Commission found that the decision to terminate Mr Read’s employment had already been made before the termination meeting.  He had not been warned that dismissal was being considered or given a genuine opportunity to respond.

The employer argued that Mr Read could have challenged the decision during his five-week notice period.  The Commission rejected that argument, explaining that an opportunity to respond must occur before the dismissal decision is made.

Lessons for employers

Before dismissing an employee because of extended medical incapacity, employers should:

  • Obtain reliable medical evidence about the employee’s current and likely future capacity.
  • Assess the inherent requirements of the position and whether the employee may be able to resume those duties.
  • Consider an independent medical examination where existing medical information is insufficient.
  • Consider reasonable adjustments or alternative duties, where appropriate and required by law.
  • Provide procedural fairness by advising the employee that dismissal is being considered and allowing a genuine opportunity to respond.
  • Consider other legal obligations, including discrimination, general protections and workers’ compensation legislation.

The Commission’s decision

Deputy President Lake found that the dismissal was harsh and unreasonable because the employer lacked a valid reason and denied the employee procedural fairness. The Commission determined that Mr Read was entitled to an unfair dismissal remedy, with the question of compensation reserved for further consideration.

The key message for employers is that extended medical absence does not automatically justify dismissal. Employers should carefully assess medical evidence, future work capacity and procedural fairness before deciding to terminate employment.

Employer Services provides practical HR and workplace relations advice to employers managing extended employee absences, medical incapacity and difficult termination decisions.

For advice and assistance, contact Employer Services.