Managing ill or injured workers: What employers should know about rehabilitation, redeployment and unfair dismissal

Employers in Australia face a complex matrix of statutory, industrial and common law obligations when managing ill or injured workers.

The recent Fair Work Commission (FWC) decision in Rennick v Victorian WorkCover Authority [2026] FWC 554 provides a timely illustration of what these obligations do, and do not require in order to avoid an unfair dismissal, including what the limits of an employer’s duty to rehabilitate or offer redeployment are. This case also provides guidance to State Government employers who have similar unfair dismissal legislative provisions.

An employer’s rehabilitation and redeployment obligations

Obligations where the injury is work related (under Statutory Workers’ Compensation Schemes)

State and territory workers’ compensation laws place obligations on employers to take all reasonable steps to assist or provide a worker with rehabilitation.

This obligation includes offering suitable duties, where medically appropriate and where available. Suitable duties, also known as light or alternative duties, are meaningful job tasks selected from the injured worker's usual job or another role. They are intended to be temporary to support rehabilitation.

Obligations where the injury/illness is not work related

There is no specific legal obligation upon an employer to assist a worker with rehabilitation or provide suitable duties where the injury/illness is not work related.

However, there is a legal obligation on employers to not unlawfully discriminate against employees because of a physical or mental disability, which includes an obligation to make “reasonable adjustments” to their position to accommodate an employee. There is some grey area here in determining what is reasonable, particularly where adjustments are short term, as it will depend on the circumstances including any unjustifiable hardship imposed on the employer by the adjustments.

In any event, as opposed to workers’ compensation incapacity, there is no obligation to provide alternative duties.

Obligations in all situations

Data shows that an employee who returns to (any) work as quickly as medical advice allows, is more likely to successfully return to work. The cost of replacing an employee (advertising, training, orientation, etc) can be extensive, so supporting an employee where possible makes good business sense. Making adjustments and offering suitable duties shows a culture of support for employees, who are often an employer’s most important asset.

However, where an employee cannot return to their position due to permanent or long-term illness or injury, an employer may eventually need to consider either more permanent adjustments to a role (where reasonable), or termination of employment due to incapacity, in accordance with legislative provisions.

When considering an unfair dismissal application in these situations, a key question the FWC asks is whether an employee was dismissed for a valid reason related to their capacity (including its effect on the safety and welfare of others).

Case example: Rennick v Victorian WorkCover Authority

The Applicant employee was a long serving WorkSafe Victoria inspector who suffered deteriorating psychological health and was eventually diagnosed with complex PTSD, suffering from flashbacks of previous work incidents he had investigated. From November 2023 onward, he was consistently certified as having no capacity for work of any kind, and by July 2025 both treating clinicians and independent examiners described him as totally unfit for employment.

WorkSafe provided the employee with an opportunity to respond to potential dismissal due to being unable to perform the inherent requirements of his role (including providing him the relevant medical evidence), and after considering his response, ultimately dismissed him.

Was there a duty to rehabilitate the employee?

The Applicant argued that WorkSafe failed to engage in early intervention rehabilitation and develop a return-to-work plan, making the dismissal unfair.

However, the FWC, made it clear that if there is no capacity (as in this case), an employer has no ability and no duty to rehabilitate.

The FWC also rejected the argument that WorkSafe had engaged in a course of conduct in not rehabilitating which engineered the Applicant’s incapacity, because he had no capacity to engage in work duties, rehabilitation or other employment-related tasks.

Interestingly, the FWC stated that it was not relevant to consider what the employer should or shouldn’t have done in rehabilitation in an unfair dismissal application, as that is not relevant to whether there was a valid reason to dismiss – the main factor is whether the employee is permanently incapacitated at the time of termination. This means that an employer’s mistakes in a rehabilitation process will not automatically render a dismissal unfair.

Was there a duty to offer a different job?

The Applicant argued WorkSafe should have considered redeployment into an alternative role, possibly even into a lower classification or on reduced remuneration.

The FWC cited Rowe v V/Line Pty Ltd in reiterating that the test for whether there is a valid reason for dismissal is whether the employee can perform the inherent requirements of their actual substantive job, not some theoretical alternative.¹ In any event, the FWC held that redeployment was irrelevant because the Applicant had no capacity for any work, and there was no obligation on WorkSafe to consider other positions.

Caution for employers where some work capacity exists 

This should be approached with caution where an employee has some capacity for work, and where they request specific adjustments based on medical advice.²

In these situations, employers need to seriously consider what the “inherent requirements” of a position are, and what duties or processes can be adjusted within the particular job to accommodate illness or incapacity. The reference to “inherent requirements” comes from discrimination law,³ and considers the characteristics or essential requirements of the employment as opposed to peripheral requirements.⁴ Under discrimination law, employers generally have an obligation to consider reasonable adjustments for an employee with a physical or mental disability, although there is no obligation to make adjustments which would impose unjustifiable hardship on the employer.

This intersection between the unfair dismissal regime and discrimination law is consistent. There is no obligation to offer a different job to an employee, or make a new job, but an employee can only be lawfully dismissed if they cannot perform the “inherent requirements” of their position.

In this case, the FWC commented that two of the inherent requirements of the inspector position involved exposure to injuries and deaths in investigations, and the medical evidence was clear that this was likely to re-traumatise the Applicant, even if he was only involved in administrative paperwork of incidents.

Considerations for employers

1. Obtain clear medical evidence and document everything

• Medical reports obtained by WorkSafe were key to successfully defending this case, and they were clear about the Applicant’s ongoing incapacity. Due to work health and safety obligations, an employer can request, and if necessary direct an employee to provide medical information (from a treating practitioner) or undertake an independent medical examination.
  
• WorkSafe’s documentation (letters, internal communications, medical reports, meeting invitations) was critical in demonstrating procedural fairness and justified decision making.
• For procedural fairness, provide the employee with an opportunity to respond to medical evidence and to the possibility of dismissal due to incapacity. The amount of time provided should allow sufficient time to consult medical practitioners if that might be necessary, and should give consideration to the employee’s illness.

2. Engage in return to work efforts where possible, but capacity dictates obligation

• When medical evidence shows total incapacity, employers are not required to engage in rehabilitation or offer suitable duties.
• However, when an employee has some capacity, and is on workers’ compensation, employers must support rehabilitation and offer any suitable duties that might be available. This obligation is less stringent if the injury/illness is not work-related.
• There is no obligation to create a new position for an ill or injured employee –the FWC will only make an assessment based on the inherent requirements of the employee’s actual position. However, there remains an obligation under discrimination law to make reasonable adjustments (that do not cause unjustifiable hardship) to accommodate an employee’s disability.

¹Rowe v V/Line Pty Ltd [2014] FWC 1437.
²Muller v Toll Transport Pty Ltd (2) [2014] VCAT 472.
³Disability Discrimination Act 1991 (Cth), Anti-Discrimination Act 1992 (Qld) (equivalent to “genuine occupational requirements”), and various other State legislation which have similar wording.
⁴X v Commonwealth (1999), 200 CLR 177.