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Mental health is a complex condition that many employers and employees may face in their lifetime. As an employer, it is crucial to foster a safe environment and support employees who suffer from mental health conditions. There may be circumstances where an employee’s prolonged absence can prevent the effective operation of the business, prompting you to consider termination. This article sets out how to support employees with a mental health condition. It includes your Work Health and Safety (WHS) obligations and consideration for employee leave entitlements, as well as steps to lawfully dismiss employees in circumstances of prolonged absences.

Proactively Supporting Employees

Proactively supporting employees who may be affected by a mental health condition goes beyond simple words of encouragement. As an employer, you should also consider: 

  • your work health and safety obligations;
  • employees’ leave entitlements; and
  • avoiding adverse action.

Your WHS obligations

Work health and safety obligations apply to persons conducting a business or undertaking. So, if you are an employer, you are required to comply with these. Work health safety obligations also extend to officers of a company, and directors and secretaries of a company can be personally liable.

As an employer, your primary duty of care requires you to ensure, so far as is reasonably practicable, the health and safety of workers. This extends to mental health. Therefore, you should apply the same steps as you would to any other health risk, which includes broadly:

  1. identify the hazard;
  2. conduct a risk assessment; and
  3. implement control measures to manage the risks. This could include an EAP program, regular consultation with employees or access to mindfulness tools.

What is reasonably practicable will vary depending on the circumstances of your business and your employees. Essential factors to consider, include the:

  • likelihood of the risk; 
  • degree of harm that could result;
  • availability of ways to eliminate or minimise the risk; and 
  • cost of taking such steps. 

You should also consider how your WHS obligations extend to return to work plans after periods of absence.

Employees’ Leave Entitlements

Permanent full-time employees are entitled to 10 days of personal/carer’s leave per year which is prorated for part-time employees. The days accrue over the year and carry over to the next. Relevantly, an employee can take personal/carer’s leave in circumstances where they do not feel fit to work, perhaps because of a personal illness or personal injury. Reasons to take leave may, of course, extend to mental health.

If employees run out of personal/carer’s leave, you may agree to them taking unpaid leave. We note if they request this and you refuse, this could amount to adverse action and create the risk of a general protections or discrimination claim. We discuss this in more detail below.

Additionally, employers are entitled to request evidence from employees (such as a medical certificate) of the illness or injury that entitles the employee to take personal/carer’s leave or unpaid leave.

Avoiding Adverse Action

The Fair Work Regulations 2009 (Cth) (Act) protects employees from adverse action taken against them if they are temporarily absent from work due to an illness or injury. 

Adverse action includes, but is not limited to:

  • termination of employment; 
  • altering the employee’s position to their prejudice; or 
  • discrimination. 

For example, you should ensure you do not elect to promote another employee rather than an employee who has a mental condition because of the condition. 

However, this does not prevent employees from managing employees’ performance, i.e. taking action for a reason other than their illness or injury where performance is separate from their mental health condition (although this is complex). You should ensure the termination is fair.

Ending Employment

Despite efforts to support employees’ mental health, you may be in a situation where an employee’s extended absence is interfering with the running of your business. This may prompt you to consider termination of their employment.

3 Month Express Prohibition

From the Act, employers are prohibited from dismissing an employee due to a temporary absence from work due to illness or injury. However, an absence is no longer temporary where:

  • the employee’s absence exceeds three months of unpaid absence; or 
  • the total unpaid absence of the employee within a twelve-month period exceeds three months. 

Risk of Discrimination

Anti-discrimination and disability discrimination legislation also makes it unlawful for employers to discriminate against an employee based on their disability. This includes circumstances where an employee terminates an employee. 

Additionally, state and territory workers compensation legislation can prohibit employers from dismissing an employee within a specific period from when an employee incurs a workplace injury. For example, in New South Wales, it is an offence for an employer to dismiss an injured employee within six months of incapacity. 

However, employers can lawfully terminate on discriminatory grounds if the employee cannot meet the inherent requirements of the role even where the employer has made reasonable adjustments to assist the employee. An inability to perform the inherent requirements of a role may generally provide a valid reason for dismissal. Still, there are several substantial risks when attempting to dismiss an employee based on their mental health condition. Therefore, it is crucial to seek advice on whether you are in a position to dismiss an employee on these grounds.

Key Takeaways

As an employer, your duty of care requires you to eliminate or minimise risks to employees’ health and safety. This also extends to mental health conditions. Accordingly, you should consider how to support employees and promote their mental welfare. Where it is unsustainable to retain employees who are absent for prolonged periods, ensure the minimum period of 3 months per 12 months has lapsed before taking any further steps. Even once this period has lapsed, you should ensure you have made reasonable adjustments and considered whether you are in a position to lawfully terminate. 

If you would like more information on managing employees with a mental health condition or creating a supportive workplace environment, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

Frequently Asked Questions

Do my WHS obligations apply to mental health?

As an employer, your WHS obligations extend to mental health. Therefore, you should ensure, so far as is reasonably practicable, the health and safety of your workers. You can apply the same steps as you would to any other health risk, including identifying the hazard, conducting a risk assessment and implementing control measures.

What is adverse action?

Adverse action includes unjustifiable termination of employment or altering an employee’s position to their prejudice. Workplace discrimination also amounts to adverse action.

Can I terminate the employment of an employee with a mental health condition?

The Fair Work Act 2009 prohibits employees from dismissing an employee due to a temporary absence from work due to illness or injury. However, an absence is no longer temporary if the employee’s absence exceeds three months of unpaid absence. Also, absence is not temporary if the total unpaid absence of the employee within a twelve-month period exceeds three months. However, before considering termination, ensure your business has taken all appropriate steps in supporting the employee in question, including allowing them to take personal/carer’s leave.


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