Time off work on workers’ compensation benefits is “continuous service”

The recent Full Bench decision from Fair Work Australia of Workpac Pty Ltd v Bambach [2012] FWAFB 3206 has given rise to concern among some employers within Australia.

The facts of the case were not complicated. A truck driver was only employed by Workpac for two and a half months before he suffered a workplace injury and was unable to work again for over 14 months. After he was certified fit to return to pre-injury duties, he was notified by Workpac that his employment had been terminated. The employee then filed an unfair dismissal claim at Fair Work Australia.

Before Fair Work Australia, Workpac argued that the employee was not protected by the unfair dismissal laws because he had not completed the minimum qualifying period of six months “continuous service”. Workpac contended that the employee had only completed two and a half months continuous service from the time of employment to the date of injury. The employer further argued that the period in which the employee was receiving workers’ compensation benefits was an “excluded period” under section 22 of the Fair Work Act.

Under section 22, some periods off work are not “continuous service”. These include any period of unpaid leave or unpaid authorised absence.

The Full Bench held in the appeal that the truck driver’s 14 month period off work on workers’ compensation was an “authorised absence” because it was “legally sanctioned under workers’ compensation legislation. The consequence was that the benefits paid whilst on workers’ compensation were made pursuant to the employer’s legal obligation to do so with the result that the absence was an authorised paid absence from work. The Full Bench thus determined that the employee’s absence from work on workers’ compensation was not an excluded period for the purpose of “continuous service” under section 22 of the Fair Work Act.

The consequence of this Full Bench decision is that the employee was protected by the unfair dismissal provisions of the Fair Work Act and hence Workpac as the employer, could not rely on the statutory qualifying period to avoid the procedural fairness requirements for a dismissal.

For employers generally, the meaning of “continuous service” is significant not only when implementing any dismissal process in circumstances such as in this case, but also when calculating what an employee’s contractual entitlements might be.

This decision also provides a caution to employers when managing a workers’ compensation claim during the six month qualifying period, and indeed throughout an employee’s period of employment.

It has been reported that national industry groups are seeking to obtain an amendment of the definition of “continuous service” under the Fair Work Act to avoid the unsatisfactory consequence of this case from an employer’s perspective. However, until any amendment comes to pass, the outcome of this case will prevail.

For more information on this case or the conduct of dismissals in the workplace generally, please contact:

Ian CurlewisMichael JensenAlec Weston
PartnerSenior AssociateAssociate
(08) 9288 6756(08) 9288 6944(08) 9288 6873
ian.curlewis@lavan.com.aumichael.jensen@lavan.com.aualec.weston@lavan.com.au