The purpose of workers’ compensation is to provide valuable protection to workers and employers in the event of a workplace-related injury and/or accident.

Laws regulating workers’ compensation in Australia outline that a worker is entitled to compensation for any personal injury or disease, or an aggravation of an injury or disease, occurring during the course of employment. But what happens when you’re considering terminating an employee on workers compensation in NSW? Owen Hodge Lawyers can help you to navigate this complex area of employment law.

Terminating an employee on workers compensation NSW

Workers Compensation Laws

According to legislation, the definition of ‘worker’ includes:

  • workers who are working full-time on a wage or salary
  • part-time workers
  • casual or seasonal workers
  • workers on commission
  • piece workers
  • working directors.

Owen Hodge, the expert employment lawyers in Sydney, offer the following advice to employers considering terminating an employee on workers compensation (NSW).

Workers Compensation Law in Sydney

The main purpose of workers compensation legislation is to facilitate an employee’s return to work after a workplace-related injury or illness. The laws concerning workers compensation are different in each state and territory. The employer’s obligations are set out under the relevant state or territory’s legislation.

The main pieces of legislation regulating workers compensation in the Commonwealth and New South Wales (NSW) are:


  • Safety, Rehabilitation and Compensation Act 1988; and
  • Safety, Rehabilitation and Compensation Regulations 2002;


  • Workers Compensation Act 1987;
  • Workplace Injury Management and Workers Compensation Act 1998; and
  • Workers Compensation Regulation 2010.

Terminating an Employee on Workers Compensation NSW

Dismissing or terminating an employee on workers compensation NSW may be a breach of law. Most of the legislation throughout Australia prohibits an employer from dismissing an employee who is absent on workers’ compensation until after a specified time period has passed.

As per Section 352 of the Fair Work Act 2009 and regulation 3.01 of the Fair Work Regulations 2009, an employer must not dismiss an employee because the employee is temporarily absent from work due to an illness or injury of a prescribed kind.

A ‘prescribed kind of illness or injury’ exists if the employee provides a medical certificate for the illness or injury, or a statutory declaration about the illness or injury, within 24 hours after commencement of a reasonable absence period.

An injured employee who is absent for more than three months is not protected from dismissal under these provisions, since an absence of more than three months is not considered reasonable and therefore does not fall within the remit of a ‘prescribed kind of illness or injury’. This means, he or she is no longer protected from dismissal under these provisions.

The employee may be protected from termination under a specified state or territory workers compensation legislation if the reason for the employee’s dismissal is primarily due to his or her absence on workers compensation.

Dismissal and Workers Compensation NSW

The main legislation governing termination of an employee on workers compensation in NSW is the Workers Compensation Act 1987 (the Act). As per Section 248 of the Act, an employer is guilty of an offence if the employer terminated an injured worker because the worker was not fit for employment as a result of the injury and such dismissal happened during the relevant period of 6 months after the worker first became unfit for employment (except cases stipulated under sub-section 248(2)(b),(c) &(d)).

Section 241 of the Act further empowers an injured worker to make an application for reinstatement to his employer in the event of his dismissal from work. If the employer fails to reinstate the worker in his employment, the worker may apply to the Industrial Relations Commission for reinstatement.

For the purpose of reinstatement, it is normally presumed that an injured worker was dismissed because he or she was unfit for employment as a result of the injury received. This presumption can be overturned if the employer can satisfy the Industrial Relations Commission that the injury was not a ‘substantial and operative cause’ of such dismissal. However, a Reinstatement Order may not be passed if the reinstatement application to the employer was made more than 2 years after the dismissal.

Workers Compensation Lawyers

Employers considering terminating an employee on workers compensation (NSW) should take extreme caution. We recommend seeking professional advice to gain clarity as to how an employee is protected under the prevailing dismissal laws of a state. Our team at Owen Hodge are expert workers compensation lawyers in Sydney and can guide you in the event you have any query related to the existing employment and dismissal legislation.

For more information, contact one of our expert Sydney compensation lawyers.

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