Dismissing an Employee in Custody: Lessons for Employers

| September 3, 2026

Brett Holzheimer v Engage Marine Pty Ltd [2026] FWC 3070 (13 August 2026, Commissioner McKinnon)

A recent Fair Work Commission (Commission) decision is a timely reminder that even where an employee is unable to attend work, dismissing them can still be unfair if the employer relies on the wrong reasons or gets the process wrong. In Holzheimer v Engage Marine, the Commission ordered the reinstatement of an employee who was dismissed while held on remand on serious criminal charges. 

The employee, a sailor of around four years, was arrested and held on remand on serious stalking and domestic violence charges. Unable to communicate freely from prison, he had his brother contact his employer, Engine Marine, on his behalf. The brother provided misleading information — including requests for sick leave and leave without pay — without disclosing the arrest. The employer eventually discovered the true position through media reports and terminated Holzheimer’s employment on eight weeks’ notice. 

What the Commission Decided 

The Commission found the dismissal was harsh, unjust or unreasonable, and therefore unfair.  

The termination letter stated the dismissal was based solely on the employee’s inability to attend work for an indefinite period. However, the evidence showed Engine Marine had also been heavily influenced by the misleading information and by the serious criminal charges themselves, including concerns for the safety of female staff. The Commission drew a clear distinction between these reasons. 

Reinstatement was ordered, together with an order for partial lost remuneration in the amount of 20 weeks’ wages, and an order for continuity of service. The Commission considered reinstatement appropriate because the dismissal was premature, the process had been tainted by reliance on the criminal charges, and the dismissal had left Holzheimer without meaningful work on his eventual release on bail. 

Key takeaways for HR and Business Owners 

• The presumption of innocence matters. You cannot dismiss an employee simply because they have been charged with a crime, no matter how serious the allegations or how damaging the media coverage, while the charges remain unproven. 

• Inability to attend work can be a valid reason. Where an employee is imprisoned or on remand, their indefinite inability to fulfil the employment contract can justify dismissal, but the decision must rest on that capacity issue, not on the alleged (and unproven) conduct that put them in custody. 

• Consistency is key. Make sure your documented reasons genuinely align with your actual reasons. Shifting or mixed reasoning during the process can render an otherwise defensible dismissal unfair. 

• Follow a fair process. Give the employee a genuine opportunity to respond, even where communication is difficult, and avoid acting prematurely before the position is clear. 

The Bottom Line 

A valid reason to dismiss is not enough on its own.  

Employers must be able to show that the reason actually relied on was sound, that it was applied consistently, and that a fair process was followed.  

Where an employee is in custody, focus on the capacity to perform the role — not on unproven allegations — and document the reasoning carefully before acting. 

Supporting Fair and Defensible Dismissal Decisions 

Dismissal decisions are rarely straightforward, particularly where an employee’s capacity, conduct and personal circumstances overlap. 

IRiQ Law can provide practical advice and support throughout the disciplinary and termination process, helping employers navigate procedural fairness and make well-informed, defensible decisions. 

If you are considering terminating an employee or managing a complex workplace matter, contact our team for guidance.