Unfair dismissal, frustration of contract, health of employees

The South Australian Employment Tribunal has held that the dismissal of an employee by the South Australian Department of Health and Wellbeing on the grounds that the contract of employment had become frustrated by the employee’s inability to physically undertake some of her duties because of inter alia weight issues was harsh, unjust and unreasonable.

Here are a number of extracts from the decision.

“The applicant’s employment of 25 years as a Registered Nurse was terminated on 2 November 2018 by Deborah Chin, the respondent’s Interim CEO for the Northern Adelaide Local Health Network. The given reason was frustration of the employment contract……………………..The employment was said to be frustrated because the applicant was unfit to perform “the duties inherent to your role due to a non-work related medical condition”. The condition was stated to be raised BMI, reduced cardiovascular fitness and knee arthritis. The decision was said to be based on the opinion of an occupational physician, who examined the applicant at the respondent’s request, that “you are not medically able to safely perform all the inherent duties of your position without limitation or restriction”…………………………….. The principle of frustration of employment contracts was authoritatively set out in Finch v Sayers[4], and adopted by the Full Supreme Court in Giancaspro v Shrm (Australia) Pty Ltd[5].

12 Mr Giancaspro had become incapacitated for his job by reason of an accepted work caused incapacity in about 1990. He did not resign and claimed he was never dismissed. And so about 13 years later, while still in receipt of compensation entitlements under SA’s then workers compensation law, he claimed accrued long service leave, and annual leave loading entitlements. His claim was dismissed by an Industrial Magistrate, a Judge on the first appeal and then by the Full Industrial Court on the basis that the employment contract ended by frustration at an undetermined point in time that precluded the claims.

13 The Full Supreme Court upheld the appeal against the frustration conclusion. His Honour Bleby J stated:[6]

The respondent before this Court acknowledged that the question of frustration of the contract had been neither pleaded nor argued before the Full Court of the Industrial Relations Court. Had it been pleaded or argued, and had the appellant been legally represented, the Court’s attention might have been focussed more than it was on the consequences of the decision of the Supreme court of New South Sales in Finch v Sayers where Wootten J observed that the starting point for consideration of any question of frustration is an analysis of the terms of the contract. He pointed out that many conditions of a contract of employment were now regulated by statute or industrial award, including conditions of annual leave, sick leave, long service leave and superannuation. Wootten J continued:

One important feature of many of these benefits, e.g. long service leave, annual leave, sick leave and superannuation, is that they commonly depend on, or are proportioned to, continuity of service. In such circumstances, the proposition that, independently of any act of the parties, a contract of employment is automatically discharged by a certain degree of incapacity on the part of the employee bears a totally different aspect from what it did one hundred years ago. Then it merely meant that the employee could not be sued for not carrying out the agreed work, and the employer did not have to go on paying for work which was not being performed, and hold the job open. Today a similar proposition could have a quite unforeseen and arbitrary effect on accruing rights, as is indeed claimed by the defendants in this very case and would mean the automatic discarding of the disabled employee in a way quite inconsistent with current attitudes and industrial practice.

In short, the usual understanding in many types of employment today is that prolonged incapacity of an employee does not automatically terminate the employment but, subject to sick leave rights, excludes the employee from work and the employer from the obligation to pay, and gives the employer (and perhaps also the employee) the right to terminate the employment.

Importantly, for the purpose of this case, Wootten J observed:

The review of the authorities shows that, before one can answer the question whether a contract of employment is frustrated, one must look at the whole of the terms of the contract, express and implied, and at all the surrounding circumstances, including the provisions made for the sickness and retirement of the employee, and the general practice of the particular employer, or in similar employment. When one does this, it may well be that, in many areas of employment in contemporary society, particularly where one is dealing with an indefinitely continuing relationship, and not the performance of a specific task, there is relatively little room for the operation of the doctrine of frustration due to illness.

The approach of Wootten J to the frustration of contracts of employment has been endorsed by the Court of Appeal of New South Wales as being “overwhelmingly persuasive in the modern industrial context”.

In this case none of the evidence considered by Wootten J to be relevant was considered by or argued before the Full Court of the Industrial Relations Court. There was specific reference to s 58b(3) of the WRC Act, but not in the context of frustration, and a passing reference to “the obligations imposed upon SHRM by the WorkCover Act”. It would have been relevant to consider not only the terms of any award governing the appellant’s employment, but also a number of relevant statutory provisions. Those provisions include but are not limited to s 6(1) of the Long Service Leave Act 1987 under which a worker’s continuity of service is not affected by, among other things, absence of the worker from work on account of illness or injury, and s 6(2) of that Act which would seem to provide that such absence, unlike absence for some other reasons, counts as service for the purpose of long service leave entitlements.

(citations omitted)

14 This common law principle is reflected in s 5 of the Frustrated Contracts Act 1988 (SA) to the extent it provides that “a contract is not wholly frustrated by the frustration of a particular part of the contract if that part is severable from the remainder of the contract.”

15 The relevant nursing industrial award and enterprise agreement include provisions about accruing and taking personal or sick leave.

16 Clause 6.2 of the Nurses (South Australian Public Sector) Award 2002 provides for personal leave to be accrued at the rate of 96 hours per year.

17 Clause 6.2.2.1 states that “Paid personal leave will be available to an employee, other than a casual employee when they are absent: due to personal illness or injury …”.

18 Clause 6.2.3(b) provides that personal leave accrued but not taken each year “is to be available to the employee for the duration of employment …”.

19 Clause 6.2.4 provides that “An employee is entitled to use the full amount of their personal leave entitlement including accrued leave for the purposes of personal illness or injury …”.

20 Clause 7.6 of the applicable Nursing/Midwifery (South Australian Public Sector) Enterprise Agreement 2016 provides for an enhanced rate of accrual of personal/carer’s leave of 120 hours per year, as compared with 96 hours per year under the Award………………………… Section 6(1)(d) of the Long Service Leave Act 1987 (LSL Act) provides that a worker’s continuity of service is not affected by a worker’s absence from work on account of illness or injury.

22 Section 18 of the Return to Work Act 2014 provides in general that if a worker has been incapacitated for work in consequence of a work injury, their employer “must provide suitable employment for the worker”, subject to the employer establishing that it is not reasonably practicable to do so. A worker’s right to suitable employment is supplemented with rights to occupational rehabilitation services.

23 Section 24 of the RTW Act sets out the type of rehabilitation services that may be provided to a worker who has suffered a compensable injury, with these including assistance in training or retraining, and providing equipment, facilities and services to assist a worker to cope with any injury in the workplace. Further, a compensating authority “must take reasonable steps to ensure that a reasonable level of recovery/return to work services are provided to an injured worker taking into account the nature and extent of the worker’s injury, the circumstances of the injury and any other relevant factor”: s 24(4).

24 Whether a contract of employment has been frustrated is a question of fact.[7] The impossibility to partly perform the contract of employment must satisfy an objective test, rather than the subjective opinion of a decision maker. All of an employee’s contractual and statutory rights must be exhausted before any further contractual performance becomes impossible. Termination for frustration is not a matter of managerial discretion. Here the respondent has decided to terminate for frustration, rather than assert the contract has ended due to frustration.

25 In this case, the respondent’s notice of intention to terminate of 12 June was expressed to be justified by the applicant being unfit to perform “all the inherent duties of your position without limitation or restriction”. The respondent accepts this is not the correct test for frustration of a contract of employment at common law or under its HR policy, but it submits frustration was still established on the correct principle.

26 The respondent was also bound by a number of other HR policies. Clause 3.2 of the respondent’s HR Manual describes the “inherent requirements of the position” to be the essential activities, or core duties, of a job, without referring to all of the requirements of a job. “Inherent requirements relate to results, or what must be accomplished, rather than means, or how it is accomplished.” The policy specifically recognises role modifications, “when considering whether an employee with a disability or medical incapacity would be able to perform the inherent requirements of their role.”[8]

27 Clause 3.1 of the HR Manual acknowledges the respondent’s obligations under the Equal Opportunity Act 1984 (SA) and the Disability Discrimination Act 1992 to make “reasonable adjustments”, to an employee’s “role and/or work environment where this will enable them to perform the essential requirements of a position,” but short of “unjustifiable hardship” to the employer.[9]

28 Clause 4.1 of the HR Manual deals with the medical assessment of an employee’s capacity to perform duties. If there is reasonable doubt of an employee’s capacity clause 4.1.2 states that any management action “will need to be guided by medical evidence of the employee’s capacity to (safely) perform the inherent requirements of their position.”

29 Clause 4.1.3 states that medical information may be obtained by requesting that from treating medical practitioners, with the consent of the employee. Clause 4.1.4 deals with requiring an independent medical examination of the employee for this purpose. The policy states that this step “should not be taken lightly”, but would be considered appropriate where, in part, “the employee does not consent to their treating medical practitioner providing the information required by the manager …”.

30 I understand the applicant’s reasons for challenging the dismissal decision are as set out below. These have been distilled from the various documents filed by and the submissions made by her. These have required some interpolation as the applicant did not have the benefit of any legal advice in the hearing process.

31 First, the decision to terminate was not justified by the principles of frustration of contracts, either at common law or in accordance with the respondent’s own policy. She was working her usual shifts without incident prior to being suspended in July 2017 for misconduct allegations about sleeping at work in June 2017, with those allegations later withdrawn. Her suspension from work was extended in September 2017 due to concerns about her health, although she was not incapacitated for her usual modified duties. She was also fit to perform partially sedentary nursing duties that are not ‘heavy duties’, but none were offered. She also had a number of contractual and statutory rights that were far from exhausted if suitable duties were not going to be provided. These included taking accrued leave in order to continue addressing the functional capacity concerns, just as she did when taking leave for a non-work related hernia operation in 2016.

32 The applicant’s request to the Interim CEO to use her accrued paid leave and then unpaid leave if required, in accordance with the respondent’s written HR policies was unreasonably ignored. The leave rights included about 200 hours of accrued sick leave, 350 hours of accrual annual leave, 200 hours of accrued long service leave, a right to be considered for leave without pay during a temporary period of medical treatment and a right to access temporary incapacity benefits under her occupational superannuation entitlements. The uncontroversial purpose of the leave request was to allow her time to seek treatment for her health conditions, and to recover from planned bariatric surgery, as was known by the decision maker before terminating the applicant. Her outstanding rights demonstrate that continued performance of her contract was not impossible.

33 Second, the respondent unreasonably claimed reliance on one medical opinion from one of its preferred advisors, and without seeking any opinions as to treatment options, prognosis or restrictions from any of the applicant’s treatment providers, contrary to its own written HR policy. The decision maker was incorrectly told by her advisors that the applicant had refused to authorise her GP to provide any requested information about her work capacity, despite being provided the applicant’s written permission to do exactly that. Objectively there was no refusal to allow access to the treating practitioners. Nor was there a reasonable basis for this error. Ms Chin and her advisors simply ignored the applicant’s written permission.

34 The applicant contends the dismissal decision could not be justified by the medical opinion the respondent claimed to rely on: from Dr Floyd an Occupational Physician. That is because Dr Floyd correctly said there were prospects for recovery from the planned treatment, and recommended alternate light duties while she worked on weight loss, psychological treatment and continued with CPAP therapy. Dr Floyd did not recommend any restrictions for full time work, other than the provision of more suitable lighter duties. Dr Floyd confirmed that point in a second report. Prior to making the dismissal decision Ms Chin was made aware that the applicant was booked in for bariatric surgery in October 2018. Dr Floyd offered no opinion about long term incapacity.

35 The respondent failed to provide Dr Floyd’s first report to the applicant for 7 months, and then only with the letter outlining the respondent’s intention to terminate her. It did not provide Dr Floyd’s second report at all. It then unreasonably allowed only 14 days for any response to the proposal that she be dismissed. The respondent withheld the report of Dr Floyd and deliberately avoided seeking advice from treating providers about the management plan and prognosis in order to carry out its predetermined decision to dismiss.

36 Third, the decision amounted to unlawful discrimination contrary to the Equal Opportunity Act 1986 based on her being significantly overweight. The applicant asserts deliberate unfavourable treatment by managers, as compared to colleagues who did not have any similar physical disabilities. For example she was singled out and was forbidden from sitting while performing any nursing duties, and was refused any reasonable aids and accommodations to perform her duties, despite their use being supported by a staff physiotherapist. That is, reasonable job modifications were prohibited in an attempt to punish the applicant for being overweight, or to force her to cease work.

37 The applicant was also unfavourably treated due to her disability by the respondent ignoring or refusing her request to take her leave entitlements as an alternative to dismissal, in contrast to a colleague who was given leave without pay for 18 months to address a health issue.

38 The respondent also refused to make reasonable adjustments to her work by rejecting the recommendations of aids costed at about $1350, without consulting the applicant, and in deciding that using a chair to occasionally sit on in the ward was “too time consuming”.

39 Further, the respondent did not consider any suitable alternate lighter nursing or administrative positions despite falsely claiming to have done so. The respondent only considered physically demanding standing ‘heavy’ nursing roles in one small unit, without taking into account any information as to likely duration of treatment plans and prognosis from any of the applicant’s treating medical officers.

40 Fourth, the respondent impermissibly partly justified the termination decision by the applicant’s failure to make improvements in her health since 2012. This amounted to a denial of natural justice, as the assertion implied the health issues were permanent, but it had not been raised with the applicant before she was dismissed.

41 Fifth, as was known by the respondent, a significant component of the cause of the health issues relied on to terminate was asserted by the applicant to arise from her employment. This meant the description of the health issues as not being work related was unreasonably asserted. As they were work related ‘injuries’ the applicant had additional rights to work place modification, occupational rehabilitation services and to be provided with suitable duties. These rights should have been investigated and recognised. The right knee pain was caused by falling out of an opening lift at work. Some of her inability to lose weight was due to reported personal distress experienced as a result of disrespectful and unreasonable actions taken against her by colleagues on her ward, and by the respondent’s management. The unreasonable actions include an extremely long period of suspension of 16 months, during which the applicant was deliberately isolated by being directed to not speak to any colleague about her suspension, thereby aggravating her psychological condition.

42 Ms Chin was also informed by the 8 August submission that the applicant’s psychological health had deteriorated since being suspended, and that her physical health had been significantly affected by the state of her psychological health.

43 Ms Chin dismissed the evidence that some of the health concerns may have been work related, including the applicant’s assertion to that effect. She instead unreasonably declared them to all be non-work related, without any supporting evidence.

44 Ms Chin was however alert to at least the possibility of the conditions being compensable, as she took into account the possibility of them being work related as an additional reason to justify dismissing the applicant for frustration.

45 The applicant seeks re-employment in a different ward. In the event of a finding of harsh, unjust or unreasonable dismissal the respondent opposes reinstatement for the same reasons it dismissed her, and because her health has not significantly improved since the dismissal.

46 For the reasons that follow, I have concluded that the dismissal was harsh, unjust and unreasonable, and that the applicant is to be re-employed.

………………………..Applicant’s submissions

174 The applicant’s submissions were generally to the effect as summarised at the start of these reasons. They were made with general references to the large amount of evidence and transcript. She made a number of additional submissions which I now attempt to summarise.

175 The applicant feels the action taken against her did not follow the respondent’s own HR policies because it was designed to achieve her dismissal. She felt this was done in retaliation for her own unanswered complaints of being bullied by certain other staff in Ward 2A. That is why there was no attempt to obtain any information from her treatment providers, as the respondent’s own policy states should have happened. The respondent’s explanation of not doing so because she did not cooperate in 2016 was plainly untrue because she did cooperate fully then and again in 2017. There could not have been any mistake in 2017 given her unsolicited written permission to Dr Floyd, which was passed to at least Mr Heffernan, Mr Schermer and Ms Chin.

176 The respondent’s avoidance of seeking any medical information from her treaters meant it did not find out about the treatment plans in place or other possible treatment plans. This lack of centrally relevant information allowed the respondent to assume and assert long term incapacity for all suitably and safely modified RN1 nursing roles due to her obesity, the knee pain and heel spur. Its assumptions were not supported by Dr Floyd or by any other medical evidence. Dr Floyd did not answer the respondent’s question regarding long term prognosis.

177 Further, the respondent’s exclusion of the applicant from the discussions with Ms Harris and from consideration of potential suitable and safe job modifications in a lighter nursing or admin role while she addressed her health issues, was part of its plan to dismiss her. These omissions also show that the respondent was not considering whether the contract could be part performed, and that it was only trying to build a case which would give the appearance of justifying her dismissal.

178 The applicant submits she was not in denial about her obesity problem. That is why she first sought expert medical advice about possible surgery in 2016 before the hernia, and again in 2018 after recovery from the hernia surgery. She stated as much to Ms Harris in June 2017. She rejects Ms Giorgio’s opinion that she was in denial about it.

179 She accepts that Dr Floyd’s opinion is correct to the effect that she could have continued at work in a full time capacity but in a more sedentary role, with some suitable modifications depending on the role, while she addressed her health issues.

180 The applicant rejects the respondent’s language of ‘supporting’ her in this humiliating and distressing process. The facts of her complaints being dismissed as retaliatory, her long suspension, the disregard of her written invitation to contact her doctors, and having her leave request of 8 August 2018 ignored is all proof to the contrary. She adds that no consideration was given to her 25 years of continuous service, or to her broad nursing experience in a variety of wards.

181 I record the applicant’s final submission as repeating previous submissions and including a late attempt to introduce new information about aspects of NALHN’s management of staff at the Oakden aged care facility prior to an external enquiry, and about a 2013 report into the suspension procedures of the respondent by the Commissioner of Public Employment. None of that can be admitted or considered at this concluding stage of the proceedings.

Respondent’s submissions

182 The respondent submits the Court does not need to make any finding as to the applicant’s functional capacity at the time of dismissal. It is only required to determine if the respondent’s conclusion that the applicant was unable to perform the “inherent requirements” of her normal job in the short to medium term was “fair and reasonable”.[79] It submits that only the short to medium term is relevant, as this “by default” means the long term.[80]

183 The respondent submits that its investigation of the applicant’s incapacity was appropriate, and that a conclusion of frustration of the employment contract was the objective outcome. That conclusion was properly made on the grounds of the applicant being permanently[81] unable to perform the “inherent requirements” of her job as a Registered Nurse within a reasonable time frame, and after a search for a suitable alternate role without success.

184 The respondent submits it had no obligation to allow the applicant to take her sick or other accrued leave before dismissing her, in accordance with its HR Manual, as she was considered to be permanently unable to return to work in her normal or in any alternate role with adjustments. Further, the decision maker did not need to comply with its own policy.

185 Regarding the common law principles of frustration of employment contracts as summarised in Giancaspro, it submits these still support the dismissal decision. It contends that at the time of dismissal the applicant’s physical incapacity was likely to continue for such a long period that further performance of work obligations would be impossible or radically different from those undertaken by her and accepted by the employer, having regard to all the terms of the contract of employment as to incapacity and sickness, the 25 years of the permanent employment, and the duration of the incapacity.

186 The respondent relies on the applicant’s evidence of her functional limitations including: gross time management issues, inability to do CPR, limited mobility and shortness of breath due to obesity, arthritis in her right knee, and that she has been unfit for her usual job since the dismissal.

187 It submits that all the modifications and adjustments developed and used by the applicant for some tasks were not reasonable, and were all properly banned.

188 The respondent submits that the only information provided by the applicant in response to its show cause letter was advice regarding the bariatric surgery planned for October 2018. It criticises the applicant for not providing any other information in relation to her knee complaint, the plantar spur, shortness of breath, ankle swelling, palpitations, or obstructive sleep apnoea, and that she failed to submit her own medical reports. The absence of any medical reports from her own treating practitioners led to a conclusion that no further information would have assisted her position.

189 The respondent submits the applicant previously refused to provide consent for her GP to provide information to the employer in 2016, and this prior refusal was sufficient to justify not seeking her consent to get information from her treating practitioners in 2017.

190 In any event, information from the applicant’s treatment providers would have made no difference as the Interim CEO said she would always rely on independent medical advice anyway.[82]

191 The respondent submits that with the benefit of hindsight, the applicant’s continuing unfitness for work since the dismissal means the correct decision was made.

Consideration

192 The legal question to be answered is whether, on the balance of probabilities, the dismissal is harsh, unjust or unreasonable: s 108(1) FWA. The applicant bears the onus of proof.

193 The respondent does not rely on any basis for its dismissal decision other than the frustration of the contract of employment due to non-work related physical impairments.

194 In determining whether any further performance of the applicant’s employment contract was ‘frustrated’ at the point of dismissal, I have adopted the helpful summary of the principles of frustration as set out in Giancaspro. Those principles are consistent with s 5 of the Frustrated Contracts Act, which contemplates part performance.

195 I reject the respondent’s submission that the only issue is whether it was a fair and reasonable decision for the respondent to decide that the applicant was unable to perform the inherent requirements of her job in the short to medium term. That approach does not reflect the test for frustration of an employment contract. It disregards the questions of suitable job modifications and a temporary alternate role, the applicant’s 25 years of service, her substantial accrued leave balances, the leave without pay policy and the context of known steps to improve her health and functional capacity. If that limited question is the correct test, based on the known and reasonably available facts, I conclude that Ms Chin’s decision was not fair or reasonable for the reasons that follow.

196 While most of the relevant facts are not in dispute a number of findings do need to be made.

197 In my assessment the applicant initially seemed confused by the legal process, and had difficulty with separating evidence from comment or submission. Given the breadth of issues prior to the suspension, and the matters raised in the respondent’s documents, including a reference going back to 2012, but which did not result in any disciplinary action, it is not surprising she was confused. The applicant also wanted to challenge the reasons for Mr Heffernan’s notification to AHPRA and the information he provided to it, as well as the motivation of certain colleagues in making complaints about her, but that is all beyond the scope of this legal hearing. However during the course of the trial she was able to focus of the relevant evidentiary and legal issues arising from her dismissal. Despite these difficulties her evidence was very detailed and was given in an earnest and humble manner, with her consistently deferring to the respondent’s authority. The applicant’s cross examination of the respondent’s witnesses was polite and respectful. I accept her evidence as truthful and reliable.

198 The respondent’s witnesses, other than Ms Harris and Ms Hubbard, appeared to struggle with the concept that they were required to answer specific questions, which were not simply an opportunity to generally argue the respondent’s case. Despite this reservation I generally accept their relevant evidence.

199 Much evidence was led by both parties about peripheral matters that were not relevant to the reasons for dismissal. This includes the manner of certain colleagues’ interactions with the applicant, and her prior complaints of being bullied. Findings are not required on these issues.

200 Nor do any findings need to be made about the claimed work relatedness of the applicant’s health issues as those legal questions are to be decided in the separate workers compensation proceedings. The applicant’s assertions to the respondent of some of them being work related is relevant however. The respondent described and treated all health issues as being unrelated to work. It did so by dismissing her reported experience and by not making any factual or medical investigation of the applicant’s assertions.

201 I find there was no reasonable basis to the respondent’s assertion they were each non-work related. That assertion was no more than a self-serving declaration, which avoided the respondent having to consider the applicant’s potential additional rights under the Return to Work Act. I note the absence of any evidence of why an investigation, including seeking the treating GP’s opinion, into the work relatedness of the conditions could not have taken place. The lack of a formal workers compensation claim, in a period of no lost time and no lost income, is not a sufficient reason to dismiss the applicant’s assertions.

202 In relation to the medical consent issues, I accept the applicant’s evidence that she did return the signed consent form to Ms Wilson’s pigeon hole in 2016, as requested. There is no evidence that supports her stating she would refuse to do so. Her stated actions in doing so are consistent with her discussions with Ms Wilson, and with the terms of her unanswered email to Ms Wilson of 16 November. I find the form likely went astray after it was placed in an unsecured pigeon hole and that it was not physically brought to Ms Wilson’s attention. If there had been any follow up of this ‘informal’ request by Ms Wilson, I find it likely that another copy of the internally missing form could easily have been completed by the applicant.

203 I find Mr Heffernan’s statement to the CEO that the applicant refused to provide her authority to seek information from her treating practitioners, and his evidence that she did not engage with their requests to access her GP, was incorrect in relation to both the 2016 hernia absence and the 2017 suspension. The only basis to his claim to this effect was a verbal report from Ms Wilson. It is not consistent with the applicant’s email of 16 November, which he saw at the time. Mr Heffernan also knew there had been no follow up of Ms Wilson’s request for the form, and no response to the applicant’s email of 16 November.

204 Mr Heffernan also knew there was no request in 2017 or in 2018 despite being aware of her unsolicited written offer to provide access to her GP. His assertion of non-cooperation by her is directly inconsistent with this unanswered written offer provided to him, the HR officers and Ms Chin. It is also not disputed that no other officer of the respondent asked the applicant to authorise them seeking relevant information from her GP.

205 I find the respondents’ responsible officers failed to comply with the policy that medical information should first be sought from the employee. Ms Chin’s evidence of not knowing why information was not sought from the applicant’s treating doctors after she had volunteered her permission to do so in 2017 highlights this flawed process. But I do not need to make findings as to what motivated this glaring omission and Mr Heffernan’s serious errors of fact about the applicant’s cooperation. It is sufficient to conclude they were plainly wrong, and had no reasonable basis.

206 I find, as was reported to the applicant’s line manager Ms Smith-Sparrow, as reported to Dr Floyd in 2017, and as notified to Ms Chin in August 2018, the applicant had taken a number of significant steps to address her obesity and exercise tolerance issues. These included effectively treating her sleep disorder and seeking surgical, exercise, dietary and psychological treatment for her obesity.

207 I reject the respondent’s submission that the applicant’s own evidence is that she could not perform CPR on a patient on the floor. That was not the effect of her evidence. It was that she could do so with a towel rolled under her sore knee, as she did in the refresher exercise, and that if she had to, she could sit on the floor with a patient for 30 minutes, although that was an extremely unlikely event in a busy hospital. I accept she did acknowledge inefficiency from her restrictions, but that was all due to her weight and physical limitations, for which she was actively seeking effective treatment.

208 I find there was no reasonable basis for Ms Chin to conclude that the heel spur was significantly incapacitating or that the condition would cause long term incapacity. The issue only arose from the applicant’s report to Dr Floyd in 2017. In turn Dr Floyd reported that the applicant “generally copes well” with it. Nor was the heel spur even mentioned in Ms Chin’s June 2018 notification of intention to dismiss.

209 I find there was no medical evidence that supported Ms Chin’s conclusion that the applicant was unlikely to regain sufficient functional capacity to be fit for at least a reasonably and safely modified lighter nursing role. As Ms Chin did not consider any actual time frame, for unknown reasons, I find there was no medical evidence that sufficient or partial recovery within 12 months was unlikely. I base this finding on 12 months as that was the period set out in the policy, but without concluding that was the only period of relevance. The period to consider also included the additional period of entitlement to temporary incapacity payments under Super SA, or longer if any of the impairments are compensable.

210 If the respondent had enquired in accordance with its own policy about any treatment plan for the heel spur or knee pain it would have found out that the applicant had discussed both matters with her GP, and had been told of possible treatments. This readily available information would have demonstrated that neither condition was then likely to be permanent, although that remained as a future possibility.

211 In addition to not enquiring about current treatment plans, Ms Chin either misunderstood or dismissed significant known steps the applicant had already taken. The dismissal letter’s statement that she had never seen a “psychologist or psychologist” was not consistent with advice on 8 August 2018 that she was “consulting with her GP and a Psychologist”[83] about her mental health that had deteriorated since she had been stood down, or with Dr Floyd’s earlier November 2017 report that she had a referral to a psychologist.

212 I accept the applicant’s evidence of why her health has not significantly improved since her dismissal, although I accept her weight has significantly reduced. I accept the limited progress was substantially due to the adverse psychological impact of the wrongful dismissal and the protracted legal process, together with an inability to pay for medical services. I find it likely that had she not been dismissed, her health would be better. I conclude that the lack of progress in this period is largely due to the conduct of the respondent, and is not the result of any failing by her.

213 While it remains a possibility that the applicant may not recover from the health set-backs caused by her suspension and dismissal, and improve her pre-suspension functional work capacity, such that she will not regain fitness for a suitably modified lighter nursing role, that conclusion cannot be reached at this point in time. To conclude that she will not regain that fitness because she has not done do since her dismissal would unfairly disregard the additional adverse personal impact of the unreasonably protracted suspension and the wrongful dismissal, and would effectively reward the respondent for the poorly made decision to dismiss. With the claim of wrongful dismissal now vindicated, there are additional prospects for improvement.

214 There is no good reason why the applicant should not now be afforded the opportunity to access the employment rights denied by the dismissal while her recovery takes place. If re-employed she would also have considerable leave entitlements to draw on, as well as the benefit of the leave without pay policy, and the ability to apply for incapacity payments under her superannuation scheme, if leave from work is needed.

215 I find Mr Heffernan’s statement to AHPRA of August 2018 that the applicant did not provide her employer with copies of her undertakings to AHPRA to be incorrect. He never asked her for them, and there is no dispute that she did provide them to her then unit manager.

216 I find the respondent’s responsible officers did not actively look for an available alternative nursing or admin position consistent with Dr Floyd’s and Ms Harris’ recommendations, or for one which might become available within a few months between June and November 2018.

217 I accept Mr Heffernan’s evidence that he did not look for an admin role because he did not consider the applicant to have the ‘aptitude’ for that type of work. I find his subjective view in this regard was not a reasonable view given its vagueness, his failure to disclose or put any specific concern to the applicant and there being no consideration of any additional training for such a role.

218 I find Mr Heffernan did not consider a partly sedentary nursing role with the possibility of modifications, as advised by Dr Floyd, and that any alternate fully sedentary role he considered was only in one of six nursing divisions in the LMH and not elsewhere within the respondent’s much larger organisation. Nor was there any consideration given to a part-time role.

219 I add that there is no doubt that light nursing roles do exist, as was eventually conceded by Mr Heffernan. In addition to the identified nursing roles in diabetes and respiratory medicine, the well-known category of vaccination nursing is partly sedentary.

220 I find the respondent’s responsible officers rejected Ms Harris’ expert opinion that some use of WOW’s by the applicant on the ward was appropriate. They did so for unknown reasons, but not by reference to any medical opinion. They also rejected the expert recommendation of Dr Floyd regarding providing a partially sedentary role in the short to medium term, but again not by reference to any medical opinion. The evidence does not support a finding that all modifications and aides used by the applicant were unsafe or unreasonable.

221 I find the applicant was instructed in the PIP that she had to stop sitting on chairs while attending to a patient’s medication or taking observations. The evidence is unclear as to whether she was verbally instructed to always be standing when dealing with patients, but that point makes no difference to the fact she was prevented from sitting for certain routine nursing tasks. One of the given reasons, that it is too time consuming to move chairs for this purpose, is unreasonable. The fact that no aids or modifications could be used any longer by the applicant demonstrates that the applicant was not being reasonably supported. The banning of all modifications and aids she had long used did not, and could not, support or assist the applicant to perform her nursing duties. That prohibition was contrary to the respondent’s own anti-discrimination policies and obligations, and appears to be designed to make the applicant’s duties more difficult.

222 I find the respondent’s applied concept of the ‘inherent requirement’ of a RN position is not consistent with its own policy. For unknown reasons the important qualification of role modification has been omitted. Similarly the cl 3.1 HR policy requirement to consider ‘reasonable adjustments’ has been omitted.

223 The significance of these facts is that Ms Chin incorrectly believed a thorough search had been undertaken for suitable alternate lighter nursing or admin duties within NAHLN. I add that the search for temporary alternate roles should have been within the respondent’s organisation as a whole, not just limited to the northern Adelaide region, as there is no reason in evidence as to why it was impossible to look more broadly.

224 As a result Ms Chin was incorrectly informed that no suitable alternate role was available on a full-time or part-time basis, while the applicant addressed her health issues. Such a suitable role may in fact have been available. The respondent has not proven such a role was unlikely to have been available.

225 The applicant’s contract of employment incorporated the terms of the Award and EA clauses set out above. These provided an unqualified entitlement to take accrued sick or personal leave if unfit for work by personal illness or injury. I find the nature of the applicant’s health concerns which led to her suspension and dismissal entitled her to take that leave, once the respondent adopted the position that she was unfit to work due to them.

226 I find the applicant also had the benefit of the respondent’s written HR policy that she could apply for and be granted up to 12 months leave with or without pay to address an incapacitating health issue. While she did not have an entitlement to that full period of leave as of right, in contrast to a right to take all her sick leave, she was entitled to have her application considered in accordance with the objective of the policy, and to a response. For completeness, I find she also had a right to be considered for up to 18 months leave without pay for this purpose, as this period could be approved by Mr Heffernan although it was beyond the terms of the written policy.

227 Based on Mr Heffernan’s evidence I find it likely he would have granted the leave request of August 2018 if that had been brought to his attention.

228 I find Ms Chin’s stated reason for not granting paid leave to be non-responsive to the request. The respondent’s decision to remove the applicant from her active duty was not a valid reason to deny the leave. Dr Floyd’s opinion that the applicant was unfit for her full unrestricted heavy duties for the short to medium term was also irrelevant. The possibility of the employment contract continuing, by allowing the applicant to take her accrued leave and to access unpaid leave within the limits of the written policy, while she addressed her health issues, was acknowledged by Ms Chin. This “option” as Ms Chin described it, demonstrates that further part performance of the contract was certainly possible.

229 Ms Chin’s stated lack of awareness of the application for leave without pay resulted from an unreasonable failure of the respondent’s internal processes because Ms Chin and her HR advisers did receive the written request, and Ms Chin even reproduced selected parts of the letter containing the leave request in the dismissal letter. Ms Chin was the responsible decision maker, even if someone else provided a draft of her letter.

230 Ms Chin’s failure to respond to this request, when coupled with Mr Heffernan’s evidence that the leave would have been granted on her request, as he did for a colleague of the applicant for 18 months, further demonstrates that frustration had not been established.

231 I accept the applicant’s unchallenged evidence that she could apply for payments of income support through her occupational superannuation scheme Super SA. I accept Mr Heffernan’s evidence that he granted leave without pay to a nurse for 18 months while she accessed those incapacity payments. While any such application had to satisfy certain regulatory requirements of the scheme administrators, which are not the subject of dispute in this case, it is clear that the applicant had an important right to apply for those payments while still employed, and that her contract could have continued while she at least applied for those benefits, assuming that by then she had exhausted her 750 hours of paid leave entitlements.

232 I reject the respondent’s submission that no such income support entitlement was proven. She did not need to prove an actual entitlement, nor could she, due to her dismissal. What is significant is there being no contest that temporary incapacity payments can be applied for by an employee who is a member of Super SA, as the applicant was, and that a colleague in comparable circumstances was granted that opportunity by Mr Heffernan.

233 I find the applicant was entitled to apply to take her accrued annual leave or LSL, just as she successfully did in 2016 when she took a large amount of paid LSL while off work for the hernia surgery and recovery. It was far from impossible to grant either form of leave when they were requested by the applicant.

234 Nor did Ms Chin give any consideration to the applicant’s 25 years of continuous service, and her accepted use of job modifications for many years. These are relevant contextual considerations to the likely length of a recovery period, with a much longer period appropriate in these circumstances than would be considered reasonable for a short term employee, or one in a probationary period.

235 An additional aspect of Ms Chin’s reasons separately makes the dismissal decision harsh and unreasonable. That is her part reliance on a conclusion that the applicant’s health had not sufficiently improved despite attempts since 2012.[84] Ms Chin implied that she saw the health issues as permanent due to their lack of improvement since 2012. This is unfair because the applicant was not forewarned that was a consideration used to justify the dismissal, and it disregards all the substantial steps the applicant had taken to improve her health from 2016 onwards.

236 The respondent submits the present circumstances are similar to those described in Drabsch v Transadelaide[85]. As in that case, the present employer submits it made a reasonable decision that the applicant was unfit to perform her job satisfactorily and safely.[86]

237 Mr Drabsch was dismissed about four months into new employment as a bus driver. He had previously suffered a foot injury, which became painful again while driving buses. Two doctors advised the employer that Mr Drabsch was unsuited to driving buses due to the risk of further aggravations, although there was no finding as to the likely duration or seriousness of an aggravation. A range of medical opinions were presented at trial, with some suggesting there was no incapacity for bus driving. The worker disputed that he was incapacitated for driving. He was not seeking any treatment. In upholding the dismissal the Commission found the employer had made a fair and reasonable decision “that the long-term prognosis for the applicant’s foot condition was such that his employment could not be sustained without risk to the applicant …”, and that returning to bus driving would create an “unacceptable risk” of unspecified consequences.[87]

238 In my opinion Drabsch does not support the respondent’s position. Accepting the validity of the vague finding of “unacceptable” risk, that case was based on significantly different facts. First, the issue of incapacity for bus driving was based on a “long-term” prognosis made at the end of an initial probationary period, unlike the applicant’s circumstances which were only considered in the short to medium term, and in a context of 25 years’ service, 750 hours of accrued leave entitlement and a policy of discretionary access to unpaid leave for 12 months. Second, Mr Drabsch disputed any incapacity and was not seeking any form of treatment, unlike the applicant who accepts she was partially incapacitated for some duties and who notified her employer of the significant steps she was taking to improve her work capacity.

239 I accept the applicant’s criticism of not being provided Dr Floyd’s first report and Mr Adcock’s report until June 2018 as being unreasonable. Mr Schermer’s explanation of his unexplained ‘oversight’ for some of that period and then his positive decision to not send them for many weeks is unsatisfactory. This resulted in completely unnecessary stress to the applicant, and disadvantage in understanding and countering the respondent’s reasons for the proposed dismissal.

240 The failure to give a copy of Dr Floyd’s second report at all was also unreasonable. That is because that report focused solely on Dr Floyd’s opinion that the applicant was then still fit for her normal hours of duty, but in a partly sedentary and less heavy role. As this opinion was not consistent with the frustration conclusion, it should have been provided in fairness to the applicant. I do not need to rule on why that report was not released, just that its deliberate non-disclosure was inappropriate.

241 While these were unfair and unreasonable aspects of the respondent’s processes they do not render the dismissal decision harsh, unjust or unreasonable. That is because Dr Floyd’s two opinions did not support the frustration decision, as was correctly understood by the applicant when she did receive them, Mr Adcock did not give a prognosis, and Ms Chin was not going to place any weight on treating medical advisors’ opinions anyway. These failures were incidental to the fundamental absence of evidence to demonstrate that part performance of the contract while the applicant exercised all her relevant rights, was then impossible. They did however combine with the seven months of isolation and contribute to the applicant’s deteriorated mental health following the suspension decision.

Remedy

242 The respondent submits that in the event the primary application is successful, there should be no order for reinstatement or re-employment, and that compensation should be limited to the value of the accrued sick leave entitlements that were forfeited by the applicant when she was dismissed. In my view this submission amounts to a wholly inadequate and unjust remedy. The sick leave should never have been forfeited. Recognition of that right is one small correction to the respondent’s conduct, but it is not appropriate compensation for the wrongful loss of her employment of 25 years.

243 In response to the Applicant’s submission that she should be re-employed in a different position, the respondent submits there is no other suitable position she can be employed in due to her incapacity for work. In my opinion this submission does not deal with the complexity of the circumstances, nor is it consistent with the finding of no proper search for a suitable alternate role. It instead assumes permanent or long term incapacity for all suitable work, which is not a finding of the Court.

244 The respondent’s submission that re-employment would result in “a material productivity burden”[88]on the respondent or colleagues incorrectly assumes no improvement in capacity and that no suitable lighter nursing duties are available. I also reject the notion of a productivity burden on colleagues, as it remains the employer’s responsibility to ensure a reasonable distribution of work and the provision of adequate staff. It also remains the case here that any marginal productivity loss while the applicant improves her capacity, is swamped by the huge amount of resources wasted by the respondent’s own decision making.

245 The respondent’s submission also fails to take account of the adverse impact the protracted suspension and litigation has had on the applicant. It is now about four years since her suspension from work and about three years since her dismissal. In that time her mental state has worsened and she has been certified as incapacitated for her normal work by reason of this condition. The wrongful dismissal has been the substantial cause of this worsening. Her capacity for work, unaffected by the foreseeably adverse effects of the wrongful dismissal, is yet to be medically determined.

246 There are real prospects for improved capacity to perform lighter nursing work, with some modifications or adaptations. This is based on the applicant’s evidence of her new insight about her eating habits and the resulting reduced work capacity, together with her motivation to take further steps to address her weight and psychological health, while she continues CPAP therapy.

247 There is also a possibility the applicant may not recover sufficient capacity to safely perform suitable lighter nursing or administrative duties, and that after allowing a reasonable time of 12 months or longer for sufficient recovery, the applicant may not be able to return to work at all. However the evidence does not support a likely conclusion to that effect.

248 Nor did the respondent search for a suitable position in any unit other than the division of medicine at the LMH. If, during the period of suspension, a search of light duties with some modifications had been undertaken over the respondent as a whole, the result is unknown. A future search for the appropriate position, once the applicant’s capacity improves with the resolution of this case, may well produce a suitable position.

249 While the prognosis is unclear, it cannot reasonably be concluded that within 12 months of being re-employed, and accessing paid and unpaid leave for up to 12 months, or longer, she will not recover sufficient capacity to return to work in a suitable lighter position on a temporary basis while her capacity further improves.

250 In my view the applicant’s outstanding workers compensation claims for the right knee condition and for psychological injury do not bear on this issue. Those claims were not filed until after the dismissal, and their outcome is unknown. If the injuries are properly compensable, the applicant has additional rights to be provided suitable employment, but that cannot be assumed to be an additional factor that favours re-employment.

251 The previous performance improvement plan is not an impediment to re-employment. Any valid performance issue related to the health concerns can continue if considered appropriate in light of these reasons. The previous unreasonable ban on all aids and modifications, as included in the PIP, would need reviewing in light of these reasons. There is no concern about misconduct, disobedience or competence.

252 The respondent complained that some strong comments made by the applicant about certain colleagues in this proceeding indicates she should not be re-employed by the respondent. I disagree. The applicant did make a number of strong criticisms of the actions of certain managers, and of the respondent’s decisions. But much strong and irrelevant personal criticism of the applicant was also raised by some of the respondent’s witnesses.

253 The validity of much of the applicant’s relevant criticism has been accepted, while other criticism has not been accepted or was made in relation to historical bullying complaints. I accept the applicant had great difficulty understanding how a proper application of the respondent’s HR Manual’s policies could have resulted in her dismissal, and that her explanation of a corrupt conspiracy was not a fanciful hypothesis given the detailed sequence of events. I also take into account the departure of the decision maker Ms Chin, the applicant’s expressed respect for most of her colleagues, her respectful manner of cross examining the respondent’s witnesses, and her submission to and obedience to the managerial hierarchy, despite her complaints.

254 It is clear that the applicant had been trying to transfer out of Ward 2A for a number of years before her suspension. Her transfer out was not previously supported by management, yet the managerial witness who worked with the applicant, but not the previous unit manager, Ms Smith-Sparrow, said the applicant should not return to that ward for morale reasons. While I expect the ward managers would accept and respect the Court’s ruling for these published reasons, additional interpersonal difficulties would likely arise if she was to return to the same ward. These have the potential to cause a worsening of the applicant’s mental state. In all the circumstances it would be far preferable for her to return to a different ward.

255 I also consider it appropriate for her to return to a different division to the one Mr Heffernan works in. His central role in this regrettable process, and his resulting loss of objectivity, puts him in an invidious position in the event he is again required to manage her. He has made a number of serious errors in advising his superiors and AHPRA regarding the applicant’s co-operation in providing access to her medical advisors, and in providing her AHPRA undertakings. He has not disputed calling the applicant a retaliatory reporter, without there being any proper investigation of her complaints. His initial statement that he would not have her back in the hospital further demonstrates his loss of objectivity, and that he should not be further involved in her management. A return to a different division is clearly called for.

256 The respondent further submits that in the event of an order for re -employment no additional order should be made for the payment of wages lost since the date of dismissal. That submission is said to be supported by the respondent’s inability to find an alternative position for the applicant.

257 I reject this submission because there was no proper search for a modified light nursing or administrative duties position in the division of medicine at the LMH, or elsewhere in the respondent’s many other health units. Nor was the applicant allowed to take her leave entitlements while she addressed her health issues as an alternative to dismissal. Had the applicant not been wrongly dismissed for frustration in November 2018, it is likely that she would have been temporarily reassigned to lighter duties while she addressed her health issues, with an additional possibility that she would have taken periods of accrued leave, including some of the 200 hours of sick leave that were wrongly forfeited on dismissal. The respondent should however get credit for the five weeks pay in lieu of notice. The applicant’s certified incapacity since the dismissal has also been significantly contributed to by the unreasonably protracted suspension and the wrongful dismissal.

258 I conclude that the justice of the case is best served by the applicant being restored to where she would have been, had the respondent not wrongly dismissed her for frustration. That is a position of facing a temporary reassignment to a lighter nursing or admin role, possibly on reduced fractional time, and with an ability to take her accrued leave entitlements and leave without pay, while she continues to address her health issues.

Conclusion

259 The dismissal for frustration of the contract of employment was not justified by the respondent’s own HR policies or by the applicable common law principle. The applicant’s contract of employment was not incapable of part performance while she addressed her health concerns, after being notified by the respondent of them in September 2017, although her future capacity for work was uncertain. The health concerns were not reasonably determined to be non-work related, with the applicant’s workers compensation claims yet to be judicially determined. The contract was capable of continued part performance while the applicant’s uncertain long term capacity for work was being addressed, irrespective of whether she remained at work on modified or alternate duties or took leave, or a combination of both.

260 I conclude the dismissal was harsh, unjust and unreasonable.

261 The applicant is to be re-employed forthwith in a suitable nursing role outside of the LMH’s division of medicine.

262 The precise role to be performed by the applicant is to be determined after consideration of her current medical capacity, her treating practitioners’ opinions and any other advice, and after consultation with the applicant.

263 The applicant is to be paid all wages, less five weeks, and superannuation contributions, and credited with all leave entitlements from the date of dismissal until present and continuing in accordance with s 109.

264 I will hear from the parties as to the quantum of these entitlements, and the terms of final orders.”

Geselle v Department for Health and Wellbeing [2021] SAET 167 delivered 3 September 2021 per Lieschke DP