Medical capacity and inherent requirements

When an employee can’t currently do the job because of injury or illness, “valid reason” stops being about proving what happened and starts being about a structured, three-part medical question — and almost every mistake in these cases comes from skipping one of the three parts.

What you’ll be able to do

• Apply the three-part inherent-requirements test, and explain why the order of the three questions matters.
• Weigh competing medical evidence — treating practitioner against independent medical examiner — the way the Commission actually weighs it.
• Judge whether an employer has waited long enough before dismissal for incapacity becomes defensible, and spot when “we should have been given more time” is not, on its own, a winning argument.

Capacity, not conduct

Capacity is a distinct category of valid reason under s.387(a) from conduct. It covers an employee’s ability to do the work they’re employed to do, including an inability to perform the inherent requirements of the job [2021] FWC 3122 at [74] — because of an injury, illness or other disability. Nothing here turns on fault. The question is whether the person can do the job, not whether they’re to blame for not being able to.

The three-part test

The leading formulation, applied across this corpus, comes from a Full Bench of the Commission and asks three separate, ordered questions:

All three questions are assessed by reference to the facts as they existed at the time of the dismissal — not with hindsight, and not by reference to events afterwards. In one matter, a treating doctor’s subsequent certificates issued after the dismissal couldn’t be taken into account in assessing the employee’s future capacity, because that question has to be answered on what was known when the decision was made [2020] FWC 3684 at [67]. On the facts in that matter, the Commission found no reasonable adjustment could accommodate the employee’s incapacity either [2020] FWC 3684 at [73].

The first question is about the substantive role, not a modified one. The inherent requirements of a role are ascertained objectively, by what the job actually requires — not a temporary light-duties arrangement, and not the employee’s own view of which tasks matter. The focus is on the job’s essential elements, not its peripheral tasks [2022] FWC 1871 at [39]. In one matter, a forklift operator argued he should be allowed to keep driving and nothing else; the Commission rejected this because driving the forklift was only one part of the role, and manual tasks like shovelling spillage and climbing ladders remained inherent to it even though they happened less often than driving.

Safety can itself be an inherent requirement. Performing duties without unreasonable risk to the safety of fellow employees is, as a matter of law, an inherent requirement of employment [2022] FWC 786 at [103]. This matters in physically demanding or safety-critical roles: an employer isn’t limited to asking “can they physically do the movements” — it can properly ask “can they do them safely.”

Weighing the medical evidence

Most of these cases turn on whose medical opinion the Commission accepts, and the pattern across the corpus is fact-specific rather than a fixed hierarchy between a treating practitioner and an independent medical examiner (IME).

An unchallenged, thorough IME is hard to beat. In one matter, an employer obtained a Fitness For Duty report from an occupational physician who examined the employee, consulted his treating doctors directly, and reviewed his full medical history. The employee didn’t produce any medical evidence of his own to challenge it, despite being under the care of six different practitioners [2022] FWC 1871 at [33]. An uncontradicted, well-founded expert report will usually decide the question.

But a long-standing treating practitioner’s evidence can outweigh episodic specialist reports. In another matter, the Commission gave substantial weight to a GP’s consistent, two-year view that the employee was permanently restricted from a key part of his role, over additional reports from a psychologist and psychiatrist who had seen him only intermittently [2022] FWC 786 at [221]. Frequency and continuity of contact carry real weight, not just seniority of qualification.

Two reports can look like they conflict without actually conflicting. An employee received one report saying he was fit for duty and another saying he wasn’t, and understandably felt whipsawed. The Commission explained the reports weren’t really in conflict: they were commissioned by different entities, for different purposes — one examined physical fitness only, for a workers’ compensation insurer; the other considered both physical and psychological fitness, at the employer’s specific request [2023] FWC 1125 at [16]. Before treating two medical opinions as genuinely conflicting, check what each doctor was actually asked to assess.

The Commission makes its own finding on the medical evidence — it doesn’t just defer to the employer’s view of it. In a capacity-related dismissal, the Commission is required to make its own findings as to whether the employee suffered the alleged incapacity at the time of dismissal, based on the medical and other evidence actually before it [2023] FWC 1125 at [15], drawing on the reasoning of a Full Bench in CSL Limited T/A CSL Behring v Chris Papaioannou [2018] FWCFB 1005 — not in this corpus as a direct record, but the quote is confirmed against the quoting decision. A good medical report doesn’t win the case by itself; it wins the case because the Commission, independently, finds it persuasive.

WHS obligations and fitness-for-duty directions

An employer with a genuine concern about an employee’s capacity isn’t limited to waiting for the employee to volunteer medical information. A direction to attend an IME, or to provide medical information, can be a lawful and reasonable direction — the Full Federal Court has held an employer has a right to request an employee attend an IME where there is a genuine indication of a need for it and the request is reasonable [2023] FWC 2906 at [93]. That reasoning (from Blackadder v Ramsey Butchering Services Pty Ltd, not in this corpus as a direct record) sits comfortably alongside an employer’s own WHS duty to satisfy itself an employee can do a role safely before letting them resume it.

Failing to comply with such a direction, without a satisfactory explanation, can itself become part of a valid reason for dismissal. In one matter, an employee had been absent for over two years with an unchanged prognosis [2023] FWC 2906 at [100], was directed on three separate occasions to attend an IME or a show cause meeting, and didn’t comply with any of them. The Commission found the directions lawful and reasonable and was not satisfied the dismissal was unfair [2023] FWC 2906 at [136].

For advisers: a fitness-for-duty direction should (a) identify a genuine, articulable concern about capacity or safety, (b) be proportionate — telehealth, reasonable notice, and a genuine chance to respond, not an ambush, and (c) be followed through consistently if ignored, with each step documented.

How long does an employer have to wait?

There’s no fixed rule — the Commission looks at what’s reasonable on the facts, not a set number of weeks or months. A few consistent threads run through the corpus:

• “Within a reasonable time frame” is itself a recognised basis for dismissal. One employer’s termination letter put the question directly: was there a reasonable prospect of the employee performing the inherent requirements of his role within a reasonable time frame [2020] FWC 5557 at [56]? On facts showing over a year’s absence with no medical evidence of an end point, the Commission found a valid reason for dismissal related to capacity [2020] FWC 5557 at [68].
• An uncertain end date weighs more heavily than a long elapsed time. What tends to matter most isn’t simply how many weeks or months have passed, but whether the medical evidence gives any indication of when capacity might return. Absence with a clear, approaching recovery date is a different case from absence with no prognosis at all.
• “A few more weeks” needs its own evidence, not just an assertion. An employee argued that if the employer had waited a little longer, his doctor might have revised her opinion. The Commission rejected this: he’d already been absent for nearly three months on unpaid leave, the clinical opinion was clear, and the company had already afforded him a reasonable time to recover [2023] FWC 1125 at [23]; the dismissal was found not unfair [2023] FWC 1125 at [20] and the Commission ultimately found the company had a good and substantiated reason to dismiss [2023] FWC 1125 at [27].
• Once incapacity is current and permanent on the medical evidence, alternatives to dismissal don’t have to be exhausted first. An employee argued his employer should instead have extended his leave without pay, or tried redeployment. The Commission found both arguments failed: extending unpaid leave would have been of no utility given the medical evidence of permanent incapacity [2026] FWC 554 at [57], and it wasn’t persuaded redeployment was appropriate in any event [2026] FWC 554 at [59]. The underlying incapacity finding carried the case [2026] FWC 554 at [35], and the application was ultimately dismissed [2026] FWC 554 at [61].
• Patience earns the employer credit on the “fair go” side of the ledger, even where it doesn’t have to be shown. Keeping a role open through a long absence, even at real operational cost, tends to count in the employer’s favour when the Commission stands back and assesses the whole picture [2024] FWC 880 at [54].

Disability discrimination risk — a brief flag

A capacity dismissal connected to injury or illness can also engage disability discrimination risk under s.351 of the general protections regime, which is covered in depth in Module 2. The short version for this module: running the three-part test properly, on genuine medical evidence, and genuinely considering reasonable adjustments, is also the best insurance against a parallel discrimination claim — the two risks are reduced by the same careful process, not by separate ones.

How these dismissals fail

Adviser checklist

Practice scenario: the Harlow Home & Garden storeroom

Decisions cited

Check each paragraph reference against the published decision on the FWC website before relying on it. Jetstar Airways Pty Ltd v Neeteson-Lemkes, X v Commonwealth, Blackadder v Ramsey Butchering Services Pty Ltd and CSL Limited T/A CSL Behring v Chris Papaioannou are cited as quoted in later decisions and still need checking in the original. The row for Palibrk v XL Express is marked “partial”: it confirms only the valid-reason finding on capacity, not this decision’s overall conclusion on harshness.