Can someone on workers comp be made redundant?

Can someone on workers comp be made redundant?
By Paul Munro on 3 October 2017 Can an employee who is receiving workers compensation be made redundant?

This question was sent to our Ask an Expert service.

Q We have an employee who recently lodged a successful workers compensation claim with our insurance company. However, because of a downturn in business, several positions will become redundant at the end of next month, including the position occupied by the employee who is on workers compensation.

Can the company terminate an employee who is receiving workers compensation on the grounds the position has become redundant?

A There are a number of statutory obligations imposed on an employer which protect an injured employee from dismissal, including unfair dismissal and general protections under the Fair Work Act, state or territory workers compensation law, discrimination law and disability discrimination law. Generally, these protections do not apply if an employee’s dismissal is a genuine redundancy.

However, if the dismissal is challenged, an employer would need to demonstrate that the criteria used to select the employee for redundancy was not biased because of the employee's absence due to injury.

Provided the selection criteria for redundancy are objective (eg. based on factors such as skills, experience, training and performance of each individual), then an employee’s incapacity is irrelevant to their selection for redundancy.

The Fair Work Act defines when a dismissal is considered a genuine redundancy.

Genuine redundancy – Fair Work Act


Redundancy can be described as the situation where an employer no longer requires employees to carry out work of a particular kind or to carry out work of a particular kind at the same location. Redundancy refers to a job becoming redundant and not an employee becoming redundant.

The Fair Work Act (s389) defines a ‘genuine redundancy’ to mean if:
  • the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
  • the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy, and
  • it is not reasonable to redeploy the employee at the time of termination.
In a matter heard before the Fair Work Commission, it determined that because an employer had satisfied these three elements of the definition of ‘genuine redundancy’ under the Fair Work Act, the dismissal of an employee who was receiving workers compensation payments was not found to be unfair. See Cliffe v Construction Glazing Pty Ltd [2015] FWC 1008 (11 February 2015).

General protections


Under the Fair Work Act (s352), if the grounds for selecting an employee for redundancy are due to an employee’s work-related injury or illness, an employer could be regarded as taking adverse action against the employee under the general protections provisions of the Fair Work Act. This prohibits the dismissal of an employee on grounds that are considered discriminatory. The Fair Work Act specifically refers to the prohibition of a termination on the grounds of an employee’s temporary absence from work due to illness or injury.

State/territory workers compensation law


Many state and territory workers compensation laws prohibit the termination of an employee’s employment within a specified period of time where the sole or primary reason for the dismissal is because of the employee’s absence on workers compensation. The ‘specified period’ can range from six months (under NSW law), 48 weeks (under Victorian law), to 12 months (under Queensland law), or indefinitely (under South Australian law where the employer employs 10 or more employees).

Reference should therefore be made to the relevant state or territory workers compensation law to determine whether an employer can terminate an employee when the position becomes redundant.

Discrimination law


Protections exist under both the Disability Discrimination Act 1992 [Cth] and the Fair Work Act. They require an employer to investigate making any adjustments that may be able to be made to accommodate a person’s disability. An employee must be capable of performing the inherent requirements of the job. It is not unlawful where a person’s disability prevents them from performing the inherent requirements of the job. Where an employee has an ongoing inability to perform the inherent requirements of a job, and no reasonable alternatives for redeployment or job modification exist, termination may be justified.

Bottom line: In the above circumstance, it is important the reason for selecting an injured employee for redundancy is based on objective selection criteria and not because of the employee’s absence due to injury. Otherwise, there are a number of statutory protections under which an injured employee could make a claim against their dismissal.

See also: Can you take long service leave while on workers comp?
Need more help with WHS/OHS management?

Australian Business Consulting and Solutions has a dedicated team of WHS/OHS experts who can assist you with your specific WHS/OHS issues and problems. If you would like a free and obligation-free initial assessment of what you require in terms of professional assistance, you can obtain more information from our website.

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