This extract from a Fair Work Commission decision deals with the thorny legal issue of when there will be a valid reason for dismissal when an employee has become incapacitated from working.
“Was there a valid reason for dismissal related to Mr Riley’s capacity or conduct?
[32] It is well established that order to be a valid reason relating to an employee’s capacity or conduct, the reason for the dismissal should be “sound, defensible or well founded” and should not be “capricious, fanciful, spiteful or prejudiced” 7.
[33] In Rode v Burwood Mitsubishi8 a Full Bench of the Australian Industrial Relations Commission held: “… the meaning of s.170CG(3)(a) the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for an employer to simply show that she or she acted in the belief that the termination was for a valid reason.
[34] Merely establishing the factual basis for the reason for dismissal does not by itself demonstrate it was a valid reason. Dismissal must be a justifiable response to the relevant conduct or issue of capacity9. A reason not of sufficient gravity to justify dismissal is not sound, defensible or well-founded10.
[35] Mr Riley submitted as follows:
“The Respondent relied exclusively on WorkCover Certificates of Capacity that are administrative in nature and provide no prognosis. Despite having the contractual right under Clause 22 of the Employment Contract to require an Independent Medical Examination (IME), the Respondent did not exercise this right. Nor did it write to the Applicant’s treating practitioners for clarification. By ignoring both the WorkCover certificates’ limitations and its own contractual tools, the Respondent deprived itself of a proper evidentiary basis for dismissal. Accordingly, no valid reason existed under s 387(a).”
[References omitted]
[36] By this submission, Mr Riley appears to argue that it cannot be said Nuvei’s conclusion that Mr Riley could not perform the inherent requirements of his job was “sound, defensible or well founded” because it did not avail itself of the opportunity to seek more information about his medical condition and capacity for work, such as through an independent medical examination. Several aspects of the circumstances stand against this submission. First, the information which had been provided to Nuvei by Mr Riley – including a medical certificate of capacity signed by a doctor – indicated Mr Riley had no capacity for work. Second, he himself was provided the opportunity to address whether he had any capacity to perform his role. In circumstances where he was advised his employment may be terminated, I consider it reasonable for Nuvei to conclude Mr Riley had no capacity to perform his role, when he did not take the opportunity to assert that he could. Third, while I accept Nuvei could have proactively sought further medical information, it was not obliged to in circumstances where it had asked Mr Riley to provide any such information, if he wished to, to supplement what it already had in its possession.
[37] In this regard, I note that in the meeting held on 16 June 2025, Mr Riley said he was “doing a lot better”. Mr Riley submitted that this information was given insufficient consideration by Nuvei, indicated by, among other things, its failure to record this feedback in its written summary of his response to the “show cause” process in its termination letter. This is a reasonable submission. However, the indication that he was “doing a lot better” still falls well short of a clear prognosis or indication as to the likelihood of a return of his capacity for work, especially in the light of the medical information in existence at the time, which recorded “no capacity” for work.
[38] As I mentioned above, Mr Riley made submissions as to the probative value of a Workers Compensation certificate of capacity, which he described as “administrative”, and cited several decisions of the Commission as authority for this proposition. These decisions do not exist, nor does authority for the proposition that a certificate of capacity lacks probative value and cannot be relied upon (a point Mr Riley eventually conceded).
[39] In Nicholas Glading v Advizer Pty Ltd11, Deputy President Grayson said:
“Where an employee has been dismissed as a result of issues relating to their capacity, including reasons relating to their ability to perform their role, and the parties are in dispute about whether the employee possessed the requisite capacity to perform their job, the Commission must resolve this issue as a matter of fact.”12
[References omitted
][40] As I have said above, I consider that on the evidence before me, Mr Riley did not have the capacity to perform his role at the time of his dismissal. However, in considering the reasonableness of the decision to dismiss him, regard should also be had as to whether he may have had a future capacity to return to his role. This involves a “prediction” as to future work capacity made at the time of dismissal13. Or as a Full Bench of this Commission has said:
“When an employee is absent because of an incapacity to perform duties, a question of timing arises. The Act precludes a termination for a temporary absence of up to 3 months. If an absence extends beyond that period, it becomes a question of whether there is likely to be a return to duties in the short or medium term. Usually updated medical advice will be important to that consideration. Indeed that medical information could have a bearing on the adequacy of the reason for termination.”
[41] At the time of Mr Riley’s dismissal, the only information available suggesting a possibility of his return to capacity for work was his comment that he was “doing a lot better”. As I have said above, this contrasted with the medical information available at the time, which indicated no capacity for work, and a striking absence of anything more specific indicating his prognosis, in circumstances where he had been absent from work with no capacity for nearly a year and a half.
[42] These are circumstances in which usually, the Commission will find that a decision to dismiss based on a lack of capacity to perform the inherent requirements of the job is made for on a valid reason. I consider that to be the case in these circumstances. This weighs in favour of a finding that the termination of Mr Riley’s employment was not unfair.
[43] I have considered whether it may have been unreasonable to terminate Mr Riley’s employment instead of attempting to re-deploy him into another role. Mr Kawtal conceded in his oral evidence that no consideration had been given to re-deploy Mr Riley. I consider this does not invalidate Nuvei’s decision. On the basis of the material before it at the time, Mr Riley had “no capacity for work” either for his role, or another role.
[44] Mr Riley also submitted that approximately eighteen Account Executive roles were made redundant at the time of his termination, raising “serious doubt as to whether ‘capacity’ was the true reason for dismissal”. In cross examination, Mr Riley was challenged about the evidentiary basis for this submission and conceded that his only evidence was that he believed four other similar positions were made redundant at that time, based on his conversation with some other people (who did not give evidence in this matter). Conversely, Mr Kawtal and Ms Sleiman both said that Mr Riley’s position still exists and is being performed and is not redundant14. I consider that the evidence does not support Mr Riley’s suggestion that the reason
he was given for the termination of his employment was the true reason, and that instead his role was redundant. I do not accept this submission.”
Riley v Nuvei Australia Merchant Services Pty Ltd [2026] FWC 75 delivered 19 January 2026 per Redford C