A recent Fair Work Commission (FWC) decision involving Coles has highlighted a legal grey zone many employers hope they never have to navigate: what happens when an employee is incarcerated and can’t come to work, or even respond to emails?

So, what does the Coles case tells employers? While it didn’t ultimately answer the big legal question, it does provide important lessons for business owners about risk, process, and communication.

The case in brief

A department manager at Coles was jailed in August 2025 on charges unrelated to her employment. While she was incarcerated, Coles attempted to contact her via email to advise that her inability to attend work may amount to a breach of her employment contract and that termination was being considered.

Because the employee was in custody, she didn’t see the emails. Her father (also a Coles employee) eventually passed the message on, and a lawyer responded requesting Coles delay any decision until her next court date. Coles says that letter never arrived. The company proceeded to terminate her employment for failing to respond by the stated deadline.

When the employee was released from jail, she discovered she had been dismissed and later lodged an unfair dismissal claim, five days outside the strict 21-day filing period.

The FWC dismissed the claim on procedural grounds due to the late filing, meaning the Commission never ruled on whether Coles was right or wrong to terminate her employment; the unanswered question that mattered the most. The Deputy President acknowledged the issue, but didn’t decide it.

Whether an employee’s incarceration frustrates their employment contract depends on the facts, including the likely length of absence and whether the employer needs to replace them.

In other words: there is no automatic right to terminate simply because an employee is in jail. That uncertainty is what leaves employers exposed.

Key takeaways for employers

1. Incarceration does not automatically end employment

An employee being unable to attend work due to incarceration doesn’t automatically mean their contract is “frustrated.” The law looks at duration, role criticality, replacement needs, and whether alternatives were considered.

2. Communication breakdowns create risk

Where normal communication channels are unavailable, employers must proceed carefully and document attempts to obtain clarity.

3. Process matters as much as outcome

This case turned on timing, not fairness. Had the claim been lodged on time, Coles’ decision-making would have been fully examined.

4. Inconvenience is not frustration of contract

Operational pressure alone rarely justifies termination.

Practical guidance for business owners

If an employee is incarcerated or suddenly unavailable:

  • Slow down before acting
  • Gather information about likely absence
  • Consider interim solutions
  • Document every step
  • Get advice early

Call to action

Situations like this are uncommon, but when they arise, the risks are high and the law is rarely clear-cut.

If you’re facing a complex or unusual employee absence, don’t rely on assumptions or precedent alone. Getting tailored advice early can help you avoid costly mistakes, protect your business, and ensure any decisions you make are fair, defensible, and commercially sound.

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