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Capacity is the employee's ability to do the job as required by the employer.[1] Capacity also includes the employee's ability to do the work they were employed to do.[2]
The appropriate test for capacity is not whether the employee was working to their personal best, but whether the work was performed satisfactorily when looked at objectively.[3]
The concept of capacity in s.387(a) as a basis for a valid reason for dismissal goes beyond the physical capacity or skill of the employee, and encompasses situations where employees do not have or maintain the necessary licence, certification, qualification, approval or accreditation to lawfully perform the inherent requirements of their job.[4]
Inability to perform the inherent requirements of the position may be a valid reason for the termination of an employee. This issue was considered in J Boag & Son Brewing Pty Ltd v Button: [5]
The situation may arise where an employer dismisses an employee as a consequence of a mandatory assessment by a third party which removes the capacity of the employee to perform an inherent requirement of the job, including where a tradesperson who is required to be licenced has the license cancelled, where a professional fails to maintain their mandatory certification to practise, where a court imposes a custodial sentence on an employee, and when a host employer refuses to accept labour from an employee of a labour hire agency.[6]
In a situation where an employee’s capacity to perform the inherent requirements of their job is affected by the actions of a third party, the employer still has an obligation to treat the employee fairly.[7]
Where an employee cannot perform the inherent requirements of their job and there is no reasonable scope for the employee to be redeployed into another role, it is likely that there will be a valid reason for dismissal based on the employee’s capacity.[8]
The Fair Work Act 2009 protects an employee from being dismissed due to a temporary absence for illness or injury for up to 3 months, or up to 3 months in total over a 12 month period, or where an employee is on paid personal/carer's leave for the duration of the absence.[9]
After 3 months it becomes a question of whether the employee is likely to return to their duties in the short or medium term.[10]
Medical evidence could have a bearing on the adequacy of the reason for termination.[11]
Where an employee has been dismissed for poor performance, another relevant criterion is whether or not they were warned about their performance.[12]
Fichera v Thomas Warburton Pty Ltd [2012] FWA 4382 (Gooley C, 24 May 2012).
The employee was a Branch Manager at a branch that had low sales and was underperforming. It was found that the employee was incapable of providing the necessary leadership to improve the performance of the branch and this was a valid reason for dismissal.
Note: The employer however failed to follow its own performance management process and warn the employee that his employment was at risk. This rendered the dismissal unfair.
Birdi v Rail Corporation NSW T/A RailCorp [2011] FWA 7728 (Harrison C, 10 November 2011).
Permission to appeal refused in [2012] FWAFB 1404 (Watson VP, Richards SDP, Cloghan C, 24 February 2012).
It was found, on medical evidence, that the employee was unable to perform the inherent requirements of either his current role as a train guard or in any other non-safety critical role. This was a valid reason for dismissal and the termination was not harsh, unjust or unreasonable. The application was dismissed.
Ermilov v Qantas Flight Catering Pty Ltd, PR953449 (AIRC, Cartwright SDP, 18 November 2004).
There was conflicting medical evidence about the employee's capacity to perform the role. It was found that physical incapacity caused by a work-related injury amounted to a valid reason for dismissal.
Permission to appeal was refused and the application was dismissed.
Harte v Forbes Australia Pty Ltd T/A Hunt Boilers [2011] FWA 6948 (Bissett C, 18 October 2011).
The employee was employed as a technician and was injured at work. He was subsequently placed on office duties. His substantive position required both site-based and office-based duties. The employee was unable to perform the inherent requirements of his job. This was found to be a valid reason for the applicant's dismissal.
It was found that the employee's dismissal was not harsh, unjust or unreasonable.
The employee was employed as a brewery technician and suffered a congenital health issue that placed him on restricted duties. After numerous medical investigations the employer terminated the employment contract on the basis that the employee could not perform the inherent requirements of his substantive role and for breaching policy in relation to a drink driving offence.
It was found that the appropriate test for capacity involves the consideration of the inherent requirements of the substantive position and not the modified position. It was also found that the employee had breached a reasonable policy of the employer concerning drink driving. The application was dismissed.
Applicant v Department of Defence [2014] FWC 4919 (Deegan C, 22 July 2014).
The employee was employed by an agency known as the Australian Signals Directorate. He was required, as a condition of his employment, to hold a Top Secret Positive Vetting (TSPV) security clearance. After receiving a number of reports about the employee's behaviour, a review was conducted to determine if the employee should have his security clearance altered or revoked. As a result of the review the employee's security clearance was revoked. He was advised he would not be able to apply for a new clearance for a period of five years. The employee was dismissed because he did not hold an essential qualification, the TSPV security clearance.
The Commission was satisfied that there was a valid reason for the employee's dismissal. The holding of a TSPV clearance was an essential requirement of the employee's employment. The loss of that qualification was a valid reason for the dismissal.
DA v Baptist Care SA [2020] FWCFB 6046 (Hatcher VP, Simpson C, Hunt C, 20 November 2020).
The employee was a Child and Youth Support Worker, his role required him to work with children. In 2018 the provisions of the Children and Young People (Safety) Act 2017 (SA) (CYP Act) came into effect. The CYP Act requires that a person must not be employed in a licensed children's residential facility unless the person has undergone a psychological or psychometric assessment of a kind determined by the Chief Executive of the Department.
Baptist Care required all of its Child and Youth Support Workers to enter into new contracts of employment which incorporated the relevant requirements of the CYP Act. On 8 July 2019 the assessor PsychCheck sent Baptist Care a Statement of Suitability for the employee which assessed him as currently psychologically unsuitable. On 9 July 2019 the employee was required to attend a meeting with Baptist Care and, at that meeting, he was given a letter requiring him to show cause why his employment as a Child and Youth Support Worker should not be terminated as a result of his assessment as unsuitable. On 30 July 2019 the employee’s employment was terminated by Baptist Care.
At first instance the Commission found that there was a valid reason for the employee’s dismissal as a Child and Youth Support Worker because he was unable to fulfil an inherent requirement of his job, namely an assessment of psychological suitability that allowed him to undertake the care of children under the guardianship of the State. The employee appealed this decision.
The Full Bench held that the situation that led to the employee’s dismissal was not novel, and reflected circumstances sometimes found in other unfair dismissal cases. The concept of 'capacity' in s.387(a) as a basis for a valid reason for dismissal goes beyond the physical or skill capacity of the employee, and encompasses situations where employees do not have or maintain the necessary licence, certification, qualification or approval. The Full Bench held that where an employee cannot perform the inherent requirements of their job and there is no reasonable scope for the employee to be redeployed into another role, it is likely that there will be a valid reason for dismissal based on the employee's capacity.
The Full Bench found that the employee was dismissed because the fact that PsychCheck had assessed him as being currently psychologically unsuitable meant that it was not lawful under the CYP Act for Baptist Care to continue to employ him in a children's residential facility.
Ambulance Victoria v V[2012] FWAFB 1616 (Watson SDP, Hamilton DP, Booth C, 15 March 2012).
The employee was absent from work for a long period of time for medical reasons. It was found that there was no clear finding on medical evidence that the employee was unable to perform the inherent requirements of the position.
Note: On appeal it was found that there was no error in the first instance and the appeal was dismissed.
Balfours Bakery v Cooper [2011] FWAFB 8032 (Giudice J, Hamberger SDP, Spencer C, 2 December 2011).
The employee suffered a shoulder injury. He made a claim for income protection insurance and had access to 2 years' income protection. He then made a WorkCover claim. The employer dismissed the employee and claimed that the injury prevented him from returning to work and that he had been dishonest in making both the insurance claim and the WorkCover claim.
It was found that this was not a valid reason for the termination and that the employee's dismissal was harsh, unjust or unreasonable. Permission to appeal was refused.
Dundovich v P & O Ports, PR923358 (AIRCFB, Ross VP, Hamilton DP, Eames C, 8 October 2002).
An employee with a work-related injury participated in a return to work program but was dismissed at the conclusion of the 2 week program.
It was found that there was no valid reason for the employee's dismissal.
[4] DA v Baptist Care SA [2020] FWCFB 6046 (Hatcher VP, Simpson C, Hunt C, 20 November 2020) at para. 28.
[6] DA v Baptist Care SA [2020] FWCFB 6046 (Hatcher VP, Simpson C, Hunt C, 20 November 2020) at para. 19.
[7] DA v Baptist Care SA [2020] FWCFB 6046 (Hatcher VP, Simpson C, Hunt C, 20 November 2020) at para. 32.
[8] DA v Baptist Care SA [2020] FWCFB 6046 (Hatcher VP, Simpson C, Hunt C, 20 November 2020) at para. 28.
[12] Fair Work Act s.387(e).