A court has accepted that a transport company made an ill employee’s position redundant as part of a genuine restructure, but found it took unlawful adverse action when it detrimentally altered her position because of her mental condition.


An account manager told the Federal Circuit Court that the company gave her the choice of changing roles or resigning and ultimately dismissed her because of a temporary absence due to illness or injury under s352.

The court heard that after a week-long absence from work, the account manager presented medical certificates, including one that said she was unfit to work for another week. Her employer asked her to see a company doctor, who said she was suffering from an anxiety and stress disorder but was fit to return to normal duties and provided a clearance certificate.

However, the company’s state manager told the account manager that based upon the doctor’s report, she could not continue to perform her usual duties and gave her to until end of the day to decide between three options: perform a telephonist role with a reduced salary of $30,000, take on a sales executive position with a significant workload increase, or resign.

The account manager said she could not respond straight away and the next day completed a WorkCover claim and saw her own doctor, who issued a certificate of incapacity for the next fortnight.

On the same day she gave the certificate to her employer, the company’s HR manager sent her a letter telling her she had exhausted her personal leave entitlements, was unfit for her position and had two days to choose which of the alternative positions she wanted.

She told her employer she felt “bullied and forced to resign, which was placing her under stress” and a fortnight later obtained another certificate of unfitness for another month.

While on leave, the company advertised a more senior position and when she returned to work she was told her position was redundant, effective immediately. It told her it had restructured and she was not suitable for the new position. It did not provide a redundancy letter, but deposited $1,600 into her account with the reference “termination”.

The company’s managing director, who made the decision to restructure the position, told the court it was not driven by the employee’s compensation claim, absence or medical condition but by a desire to streamline the account management team and ensure customers were serviced by experienced staff.

The judge found the employer engaged in a genuine restructure, as the newly-created position was at a much higher level, with a far higher salary.

He found that because the redundancy had not been based on a prohibited reason it was unable to grant the employee’s request for compensation for the salary gap between her account manager position and her new job, which she had been in for 11 months.

However the judge found the employer had breached s340 and s351 of the Fair Work Act and these were “deliberate to the extent that the [managing director] decided not to act according to the medical certificates provided, but acted on her own assessment of the applicant’s capacity to work”.

He took issue with the managing director’s claims that she was concerned by a medical report stating the employee had a “long term illness that had been escalating” and that the company was seeking to offer alternative positions that she could carry out until she was well.

“The Court takes that to be an admission, that the [account manager’s] employment was altered due to the applicant being unwell … that the [account manager] was offered a change to temporary employment, both positions with reduced responsibilities and one with a reduced salary.”

The judge ordered the employer to pay a penalty of $5,940 (including a 10 percent discount) for one breach of s351. He accepted there was only one breach arising out of a single course of action “as the changes to the [account manager’s] employment arose out of one course of conduct”.

The Court said the employer would have been entitled to a greater discount if it was satisfied that the managing director had been “motivated solely by a desire to protect the health and welfare of the [account manager]”, however he had “doubts about the veracity of the witness on that issue”.

The judge ordered the account manager to pay $1,500 to cover costs incurred by the company when she adjourned the case, so she could include an unsuccessful claim that her workers compensation claim was part of the reason she was made redundant.

He rejected a claim that the account manager had been bullied under s789FD of the Fair Work Act, finding no evidence of repeated unreasonable conduct towards her that might create a safety risk.


Approximately 20% of your workforce are likely to be experiencing a mental health issue at any one time, with this percentage likely to increase steadily over the next twenty years. iHR believes it is in your best interests to support employees with mental health issues and actively take steps to create a mentally healthy workplace. There are significant costs associated with unsupported mental health issues. These include absenteeism, reduced productivity, high turnover, increased likelihood of accidents and workers’ compensation claims.

While each organisation is unique, action can be taken across the following six pillars to create a mentally healthy workplace:

  • Pillar 1: Develop and implement policies which support mental health in the workplace, such as work/life balance or fatigue management policies.
  • Pillar 2: Raise awareness and reduce any stigma associated with mental health in the workplace.
  • Pillar 3: Build skills and resilience in your employees to assist them in managing mental health issues of their own and those of their colleagues.
  • Pillar 4: Improve your workplace culture by using evidence-based strategies. A positive workplace culture is associated with lower levels of stress, depression and anxiety.
  • Pillar 5: Facilitate access to psychological support services, such as Employee Assistance Programs.
  • Pillar 6: Support programs to facilitate staying at, and returning, to work.

Recent research has shown that organisations investing in successfully implemented mental health initiatives more than double their investment through reduced levels of absenteeism, presenteeism and compensation claims.

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