A question of capacity and conflicting medical evidence

June 21, 2018 7:15 am

In assessing whether an employer has a valid reason to dismiss an employee for incapacity, the Fair Work Commission (Commission) will carry out an objective assessment of all available medical evidence at the time of employment.


  • Chris Papaioannou was employed by CSL Limited T/A CSL Behring (CSL) from 2008 to 2017 as a Plasma Receipt Operator.
  • In October 2016, Mr Papaioannou commenced sick leave due to an illness or injury. As a result of his illness/ injury, Mr Papaioannou was entitled to a generous salary continuance entitlement of 90% of his average weekly earnings payable up to 104 weeks under the CLS Limited CSL Agreement 2015 (CSL Agreement).
  • Mr Papaioannou had been absent from work for a period of 39 weeks and was in receipt of salary continuance payments. His treating psychiatrist provided an unclear prognosis and estimated a 6-month period for recovery.  CSL requested that Mr Papaioannou attend an independent medical examination (IME) to gain a better understanding of his capacity to return to work and his likely return date.
  • CSL’s occupational physician drafted a report in consultation with Mr Papaioannou’s treating psychiatrist and concluded: 

“I think it optimistic to anticipate that [Chris] will be well enough to commence and sustain a graduated RTW program within the next approximately 12 months. Beyond that timeframe, assuming adequate response to treatment, he may possibly recover sufficiently to trial a very graduate return to work…The prognosis for his illness is considered guarded, and I think it optimistic to anticipate a durable return to work- even on a part-time basis- much before about 12 months, and even this is uncertain…It is not possible to predict with any degree of confidence just when he will have capacity to sustain a return to work, but at this stage I would be cautiously hopefully that this could occur within 12 to 24 months.”

  • Relying on its IME, CSL terminated Mr Papaioannou’s employment.  Notably CSL’s notice of termination stated:

“On the basis of the medical evidence available to it, CSL has now formed the view that you do not have the capacity to perform your pre-illness duties now or in the foreseeable future. CSL has not reviewed any information which would enable us to form a different view.”

  • Mr Papaioannou brought an unfair dismissal claim in the Fair Work Commission.


Commission’s Decision at First Instance

Commissioner Ryan following the approach adopted by the Full Bench in Lion Dairy & Drinks Milk Ltd v Norman [2016] FWCFB 4218 (Lion Dairy), determined that based on the medical evidence there was a valid reason for termination of Mr Papaioannou’s employment. However, because the dismissal denied the Mr Papaioannou the benefit of the terms of the CSL Agreement, which were intentionally designed to be generous and designed to specifically cover long periods of absence by the employee – the dismissal was harsh.

Commissioner Ryan ordered that Mr Papaioannou be reinstated to the position that he occupied immediately prior to the dismissal, that he receive payment for lost remuneration and that an order be made that there was no break in his continuous employment.


On Appeal to the Full Bench  – Conflicting authorities

Granting permission to appeal, the Full Bench identified that it was in the public interest to resolve the tension between two conflicting Full Bench authorities as to the correct approach to be taken by the Commission when determining if there was a valid reason for the dismissal related to the person’s capacity, within the meaning of s 387(a) of the Fair Work Act 2009 (Cth).


Approach 1: The Lion Dairy Approach

The Lion Dairy approach applied by Commissioner Ryan:

 …In cases such as the present, the Commission is not in a position to make an expert medical assessment. An employer is entitled, and expected, to rely on expert assessments. If there is some apparent conflict in medical opinions it will usually be incumbent on the employer to resolve that conflict…”  [Emphasis added]

In practice, the Lion Dairy Approach means that in a capacity case, provided that the employer has reasonably relied upon medical evidence that is the end of the matter and the Commission will only interfere if the employer’s reliance on a medical report was unreasonable (for example if the report was made by an unqualified expert or vague and not categorical with respect to the employee’s capacity).

Approach 2: The Jetstar Approach

The approach outlined by the majority in Jetstar Airways Ltd v Neeteson-lemkes [2013] FWCFB 9075 (Jetstar):

Section 387(a) … required the Commissioner to consider and make findings as to whether, at the time of dismissal, [the employee] suffered from the alleged incapacity based on the relevant medical and other evidence before her and, if so, whether there were any reasonable adjustments which could be made to her role to accommodate her. Those findings then need to adjustments which could be made to her role to accommodate her. Those findings then need to be considered and treated as matters of significance in the process of deciding whether [the employee’s] dismissal was, to use the general rubric, unfair”.

On Appeal, the Appellant (CSL) submitted that the Lion Dairy approach should be adopted, in preference to that advanced in Jetstar. The Respondent (Mr Papaioannou) adopted the contrary position.

Assessment of Medical Evidence as to Incapacity: Jetstar vs Lion Dairy – Which one do we follow? 

The Full Bench led by President Iain Ross, held that the correct approach to follow when determining the capacity of an employee is the Jetstar approach.

The Full Bench held at [75]-[77]:

“The approach advanced by the majority in Lion Dairy is inconsistent with the weight of authority and the proper construction of section 387(a) of the Fair Work Act 2009 (Cth). It is with respect, plainly wrong. Contrary to the proposition advanced in Lion Dairy, there is no basis to leave the resolution of any conflict in medical opinion to the employee. The Commission is frequently called upon to resolve evidentiary conflict, including the assessment of expert evidence

… In a dismissal related to the person’s capacity, s.387(a) requires the Commission to consider and make findings as to whether, at the time of dismissal, the applicant suffered from the alleged incapacity. Such findings are to be based on the relevant medical and other evidence before the Commission”.

The Full Bench concluded that in adopting the Lion Dairy approach, Commissioner Ryan erred.  On that basis, the appeal was upheld and Commissioner Ryan’s decision at first instance was quashed. 

The matter was remitted for re-hearing to Commissioner Platt.


In his decision of 4 July 2018, Commissioner Platt accepted CSL had a valid reason to dismiss  Mr Papaioannou because he was “unable to meet the requirements of his contract of employment due to his lack of capacity“.

There was no dispute that Mr Papaioannou was unable to fulfil the duties of his role at the time he was dismissed but the area of contention between the parties was when Mr Papaioannou would have been fit to return to work. Mr Papaioannou’s treating psychiatrist said he could have returned to work in about 6 months but CSL’s occupational physician suggested it was more like 12-24 months.

Commissioner Platt, however, held that the dismissal was unfair because CSL denied Mr Papaioannou of the benefit to a further 20 weeks of salary continuance benefits he would have otherwise been entitled to under the CSL Agreement, had his employment not been terminated by CSL.  Mr Papaioannou had met the condition precedent for this entitlement. Commissioner Platt ordered reinstatement and relied on the evidence of Mr Papaioannou’s treating psychiatrist who concluded that he would have been fit for a graduated return to work.  CSL was also ordered to pay Mr Papaioannou 20 weeks lost pay at 90% of his average earnings which is the equivalent of what he would have received under the salary continuance scheme.


  • Section 387(a) of the Fair Work Act 2009 (Cth) (Act) involves an assessment of whether there was a valid reason for the employee’s dismissal, relating to the employee’s capacity or conduct. It is not a subjective test. The provision does not require an assessment as to whether the employer believed on reasonable grounds that there was a valid reason for the dismissal, but whether (based on the evidence available at the time of the dismissal) there was a valid reason.
  • The assessment of capacity will therefore be determined by the Commission based on its assessment of the evidence before it.
  • If the Commission is not satisfied that there is a valid reason, it won’t be required to consider the other factors which go to procedural fairness and other circumstances leading to the dismissal that are referred to in section 387 of the Act.

How does this affect employers?

  • To successfully establish that there was a valid reason for the dismissal, in unfair dismissal claims relating to incapacity, employers will need to provide credible evidence as to why the employee lacks capacity and be in a position to refute contrary evidence that could be put to the Commission by the employee in a subsequent hearing.
  • In practice, the employer’s evidence must be robust enough to justify its decision to terminate and withstand the scrutiny of the Commission when weighed against conflicting evidence.
  • If there is conflicting expert evidence (usually medical), the employer cannot simply rely on its own evidence to justify a dismissal but ought to seek to resolve the conflict before any such decision is made by:
    • seeking clarification from the experts relating to their opinions or findings; and
    • obtaining further expert opinion from an independent occupational physician or other relevant medical specialist.
  • It is incumbent on the employer to resolve the conflict by ensuring that experts are also provided with a list of the inherent requirements of the employee’s position and if relevant, any reasonable adjustments that have been made by the employer.
  • Employers should then ensure that any further medical opinion be put to the employee for consideration, giving them an opportunity to respond via their treating doctor before making a decision about the employee’s capacity to perform the inherent requirements of their position.

CSL Limited T/A CSL Behring v Chris Papaioannou [2018] FWCFB 1005 and CSL Limited T/A CSL Behring v Chris Papaioannou [2018] FWC 3908

For further information, please do not hesitate to contact Serena Billing, Director on 0438197331.

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