A two-part series | Substance matters - Employee drug use in a modern workforce
In Part One of this series, we discussed the evolving landscape regarding medicinal cannabis use in Australian workplaces, emphasising the need for employers to adapt their policies to accommodate this growing issue. The rise in the availability and use of medicinal cannabis has created legal challenges for employers related to workplace safety, discrimination, and privacy, necessitating a careful balance to be struck between ensuring a safe and productive work environment and respecting employees’ rights. Read Part One here.
Part Two below explores the enforceability and challenges of ‘zero tolerance’ policies for illicit drug use amongst workers in light of recent Fair Work Commission (FWC) authorities highlighting the pitfalls that may arise from termination of employment under outdated or improperly implemented alcohol and other drug (AOD) policies.
Drug use is at an all-time high, with the increasing prevalence of illicit substance use and availability being complicated by society’s broadening acceptance of them. The use of recreational drugs can impact employee conduct by impairing their judgement or slowing reaction times. Substances which affect a person’s ability to work safely can put lives at risk and lead to devastating consequences in the workplace.
Much like the use of medicinal cannabis, the impact of illicit drug use, whether inside or outside the workplace, is relevant for employers who seek to maintain safe and productive workplaces, especially in safety-critical operations. The risks associated with employees attending for work after using illicit drugs presents legal and reputational risks for the employer, regardless of whether an incident or injury actually occurs.
A seemingly obvious solution, and one which has been historically popular, for employers would be to adopt strict zero tolerance approaches to illicit drug use in their AOD policies. However, recent FWC authorities have emphasised the emerging complexities of managing drug-related issues in the workplace, noting legal risks and deficiencies associated with implementing a “black and white” no-tolerance approach.
We examine the implications of these developments for employers and their policies and provide some practical guidance on how employers can review their practices to reflect the key legal risks emerging from the changing landscape.
Prevalence of Illicit Drugs in the Community
Illicit drugs encompass a broad range of substances, including legal medications used without a valid prescription, unlawfully obtained psychoactive substances, and opioids used outside of medical or legal frameworks. According to the 2022–2023 National Drug Strategy Household Survey (NDSHS), an estimated 10.2 million people (47%) aged 14 and over in Australia had illicitly used a drug at some point in their lifetime, and an estimated 3.9 million (18%) had used an illicit drug in the previous 12 months. These figures were similar in 2019 (43% and 16%, respectively) but have notably increased since 2007 (38% and 13%, respectively).[1] The most common illicit drug continues to be cannabis, followed by cocaine and hallucinogens. Pain-killers and opioids used for non-medical purposes were the fourth most commonly used illicit drug.
The NDSHS also found that the prevalence of cocaine use was much higher in Australia compared to other countries in 2019. Data from the Organisation for Economic Cooperation and Development (OECD 2023) showed that 2019 estimates for cocaine use in Australia were among the highest of all available countries.[2] These statistics illustrate that illicit drug use has increased over time, and that drug use is a persistent and pervasive practice in our community.
What Is ‘Zero Tolerance’?
A zero-tolerance approach to illicit drug use is, by far, the most commonly adopted position across Australian employers. As the name suggests, zero-tolerance means that any positive result from an illicit drug test will result in the termination of employment. Variants of the approach include strike systems or automatic discipline (rather than termination) in response to a positive test result.
This position is largely premised on the assumption that an employee who reports for work and returns a positive test for an illicit substance above stipulated levels poses a risk to safety, regardless of whether the employee shows obvious signs of impairment at the time they return a positive test or used the substance outside of work.
Employers use strict AOD policies as a tool to manage the possibility of employees attending for work and testing positive for an illicit drug which may pose risks to the employer’s business. These risks include damage to business reputation, relationship with clients or customers, and the risk of litigation or prosecution for injuries caused to others or safety-related incidents in the workplace for breach of legislative requirements relating to ensuring employees’ fitness for work.[3]
Is Zero-Tolerance Still Enforceable?
Zero-tolerance remains a lawful, and enforceable policy position available to employers[4], however only if established, maintained, and implemented properly. Deficiencies in policy drafting, training, testing, and/or communication, or inconsistent implementation, can lead to the reinstatement of an employee dismissed under a zero-tolerance approach.
Employers who wish to meet their obligations under strict work health and safety laws by implementing a such an approach must ensure that they address the below challenges and considerations to confidently stand behind their policies.
Impairment
The issue of ‘impairment’ and how it should be dealt with when an employer is administering their no-tolerance AOD policy continues to arise as a key issue in the FWC. The question of whether an employer can dismiss an employee for breach of the AOD policy, despite the employee showing no signs of impairment at work has been the subject of debate and controversy in several FWC cases, as testing methods and standards can produce different outcomes and interpretations.
As discussed in Part 1 of this series, workplace drug testing is generally conducted via oral or urine tests. Oral fluid testing and urine testing differ in their detection methods and ability to indicate recent drug use, which has significant implications for assessing employee impairment. Oral testing is more effective at identifying recent drug use, arguably making it a better indicator of potential impairment. Alternatively, urine tests have a broader detection window, identifying drug metabolites from approximately 24 hours up to several days post-use (or even longer in some cases), making them effective for detecting historical or chronic drug use, but potentially less indicative of current impairment levels.[5]
It is the view of the FWC that there is no direct scientific test for impairment arising from the use of prohibited drugs which may be used by employees in their own time.[6] Random drug testing is more likely to indicate past use rather than present impairment, by establishing that an employee who returns, for example, a positive result for a prohibited drug such as cocaine, has an inactive metabolite in their system as a result of the person’s body processing the drug.[7] However, there is no reliable scientific test for establishing impairment.[8]
Employee impairment is a key focus for employers that seek to maintain a safe workplace in line with their legal obligations. Accordingly, the concept frequently appears in AOD policies in the form of recitals, justifications, and references to the ‘severity’ of a positive test result (e.g. high-range detection levels).
Despite this focus from employers and safety practitioners, it is not necessary to establish impairment to justify a lawful employment termination. In Sydney Trains V Reece and Goodsell [2024] FWCFB 401 (Sydney Trains), the Full Bench held that “a finding as to whether a particular employee dismissed for breaching a drug and alcohol policy was or was not impaired at work, may be relevant to the question of whether a dismissal is unfair but a conclusion that a dismissal is not unfair does not require a finding that there was a risk of impairment.” (emphasis added) [9]
If the concept of impairment is introduced into or relied on in an AOD policy, an employer will likely be accountable for establishing that such impairment existed and that the decision to terminate employment as a result of the AOD policy breach was not unjust, harsh, or unreasonable in the event of an unfair dismissal claim being brought by the employee.
In the absence of requirement to establish impairment, and the noted practical difficulties of doing so, there is a reasonable question as to the benefit of including impairment as a relevant consideration in an AOD policy.
Where an employer chooses to use impairment as the cornerstone of its AOD policy, the employer must ensure that it is testing for impairment through the most reliable indicator of potential impairment and any hangover effects, which likely involves oral fluid testing. However, employers must keep in mind that oral fluid testing cannot conclusively demonstrate impairment or non-impairment. For example, where an employee shows no obvious signs that they are impaired, and nevertheless test positive for illicit drug use, such as cannabis use, the employer is placed in a difficult position as they may not be able to conclusively determined whether the employee is actually impaired as a result of the cannabis use.
Understanding Testing and Standards
While a zero-tolerance approach is still enforceable, it is critical that employers understand and communicate the testing standards that are applied to employees. In Sydney Trains and Witherden v DP World Sydney Limited [2025] FWC 294 (DP World), dismissed employees were reinstated with compensation after being dismissed due to positive test results that identified ‘inactive metabolites’ associated with cocaine use.
In Sydney Trains and DP World, the Fair Work Commission held that dismissals under a zero-tolerance approach were unfair because each employer had not sufficiently explained to the relevant employee that:
- any positive test (including for inactive metabolites) poses an unacceptable risk regardless of impairment at work, or whether the drug was consumed at work or in the employees’ own time outside of work; and
- “it tests for inactive metabolites as well as ‘drugs’, and that detection of these will result in a positive test even after the parent drug has left the employee's system and the person is not regarded as being intoxicated”[10].
Alternate disciplinary outcomes
A zero-tolerance approach can be significantly undermined by policy language that directly or indirectly contemplates an alternative outcome to dismissal. For example, a reference to ‘disciplinary consequences up to and including termination’ implies that a disciplinary outcome that allows continued employment is available under the AOD policy.
In DP World, the contemplation of an alternate disciplinary outcome under the relevant policy was a contributing factor to the Fair Work Commission’s decision that a dismissal was harsh and that reinstatement was appropriate.
A summary of the Sydney Trains and DP World decisions is below:
Sydney Trains v Reece and Goodsell at [114].
Woodgate v Queensland Rail Transit Authority T/A Queensland Rail [2024] FWC 3165, and Hawken v Patrick Stevedores Holdings Pty Limited [2024] FWCFB
https://orasure.com/documents/whats-the-buzz/march_2022/Whats_the_Buzz_2022_March_Impairment.pdf; https://innovation.premierbiotech.com/lets-compare/
Sydney Trains v Reece and Goodsell at [156].
Sydney Trains v Reece and Goodsell at [156], Sharp v BCS Infrastructure Support Pty Limited [2015] FWCFB 1033 at [24].
Sydney Trains v Reece and Goodsell at [113].
Sydney Trains at [100].
Witherden v DP World Sydney at [132].
Sydney Trains v Reece and Goodsell [2024] FWCFB 401
In this case, the Full Bench upheld the Commission’s reinstatement of an employee who was found to have traces of cocaine in his system after a period of leave. The Commission’s original decision was that while the employer had a valid reason to dismiss the employee (for breach of the AOD policy), the dismissal was harsh and the employee ought be reinstated given various mitigating factors including the fact that there was no risk of impairment. As expected, Sydney Trains cited its no-tolerance AOD policy as justification for the dismissal and appealed the decision arguing that there is no requirement to establish risk of impairment at work.
On appeal by Sydney Trains, the Full Bench agreed that the dismissal was unfair, but clarified that an employer does not need to establish impairment risk to conclude that there is a valid reason for dismissal - a positive drug test indicating a breach of an AOD policy may constitute a valid reason for dismissal, particularly in safety-critical industries.
Nevertheless, the Full Bench found that Sydney Trains failed to provide clear and comprehensible training to employees about its AOD policy, particularly regarding the implications of testing for drug use, meaning the policy was inadequately explained. The employer should have made clear that it’s no-tolerance policy means that any positive test (including for inactive metabolites) poses an unacceptable risk regardless of impairment at work, or whether the drug was consumed at work or in the employees’ own time outside of work. This lack of clarity supported the conclusion that the dismissal was unfair.
Witherden v DP World Sydney Limited [2025] fwc 294
In Witherden v DP World, the employer dismissed a stevedore after he returned a positive reading for inactive cocaine metabolites following a random on-site drug test. DP World had a no-tolerance approach to drugs and alcohol in its AOD policy and the employee admitted to using cocaine 24 hours before his rostered shift.
The FWC found that while there was a valid reason for dismissal for breach of the AOD policy, the dismissal was harsh and unreasonable, and made orders for reinstatement and continuity of employment. Although the employer had a no-tolerance approach, having regard to the language of the AOD policy, a breach of the policy itself did not automatically result in dismissal. Also, while the stevedore was generally aware of the AOD policy, DP World had never explained the significance of drug cut-off levels and how the Australia Drug Standards apply. The information available to the stevedore and other employees about the AOD policy was inadequate because it “did not explain that it tests for inactive metabolites as well as ‘drugs’, and that detection of these will result in a positive test even after the parent drug has left the employee's system and the person is not regarded as being intoxicated.”[11]
The FWC also stated that while DP World claimed that it was not the intention of the AOD Policy to test for impairment, this was “inconsistent with the AOD Policy’s reference to high range detection levels and these being regarded as a serious breach of the Policy.”[12]
In finding that the dismissal was unfair, the Commission took into account a number of mitigating factors, including the stevedore’s cooperation with the disciplinary process and his remorse. Further mitigating factors included that the stevedore did not consume cocaine on the day he attended work (and was not intoxicated at that time), he was not involved in any safety incidents, he had only received two warnings in his 25 years of service, and he had never previously breached the AOD policy.
Witherden v DP World Sydney at [132].
Witherden v DP World Sydney at [171].
Immediate action items
Employers cannot exercise complete control the out of hours conduct engaged in by their employees, including the use of illicit drugs. However, employers can implement lawful and reasonable policies and procedures to control the risks associated with employees’ access to workplaces who are attending, or are at risk of attending, work impaired by drugs, or with detectable concentrations of drugs in their system.[13]
1. Have a comprehensive AOD policy in place which is clear and intelligible, practical and enforceable, tailored to the industry, and reviewed and updated regularly.
The AOD policy should:
- set out the employer’s expectations and standards regarding illicit drug use and reflect the employer's work health and safety obligations;
- outline the testing methods and procedures, including the frequency, timing, location, and selection of testing, and the rights and responsibilities of the employer and the employees in relation to testing;
- be explicit about what is being tested for (including whether inactive metabolites and/or impairment are included and whether hangover effects will be picked up), and define the terms and concepts used in the policy, such as ‘metabolites’, ‘cut-off levels’ ‘impairment’ and ‘fitness for work’. Where impairment is assessed, the policy should document it and the particular safety risks inherent in specific roles, and the potential impact of impairment as a result of those risks;
- clearly specify the disciplinary and remedial actions that may be taken in the event of a breach of the policy, and the factors that will be considered in determining the appropriate response.
2. Communicate the policy regularly and provide informative training to the workforce on the policy and its implications.
Providing comprehensive training to managers and employees is a critical aspect of effectively implementing the AOD policy. Clear and straightforward training materials should explicitly explain what is tested for (including whether use, impairment and/or inactive metabolites are tested for), how testing is conducted, what threshold levels mean, and what constitutes a breach of the AOD policy. For zero-tolerance approaches, training should emphasise that a zero-tolerance policy means any positive test result poses an unacceptable risk, regardless of whether the employee was impaired at work or consumed the substance in their own time – and employees should be on notice that the AOD policy is intended to manage risks associated with hangover effects, if this is what is intended.
Employees must fully understand the policy, particularly sections relating to the employer’s stance on impairment and whether and how this is being tested, the significance of drug cut-off levels and how the Australian Drug Standards apply. Ultimately, if an employer intends to test for impairment, it should consult with employees to ensure clarity and fairness in policy enforcement. Employers should also consider consulting employees about the length of time that measurable traces of drugs or metabolites at or around cutoff levels may remain in a persons’ system even after the effect of the drug has worn off.
3. Consider all relevant information and mitigating circumstances when addressing a breach of the AOD policy.
The FWC has made it clear that while a breach of an AOD policy may of itself provide a valid reason for dismissal, there will be cases where other mitigating circumstances, such as an unblemished employment history, demonstrated remorse, potential or lack of impairment risk, and prior compliance with the AOD policies, must be considered.[14] These circumstances might even include a general lack of understanding of the policy in the workplace. Each positive drug test should be carefully assessed on its own merits given that we have seen the FWC favour a balanced and nuanced approach and rule in favour of employees where the harshness of a dismissal outweighed the validity of the reason.
Key takeaways
The legal and practical complexities surrounding illicit drug use at work, and especially, outside of work, requires employers to take a considered and intentional approach to developing and administering AOD policies and taking disciplinary action.
Matters should be considered on a case-by-case basis. A positive drug test needs to be contemplated on its own merits along with mitigating factors, the content of the AOD policy and likelihood of risk of impairment, should this be a relevant consideration for an employer. By proactively reviewing policies, implementing informative training, and educating and consulting with employees, employers can navigate this evolving landscape while ensuring workplace safety and legal compliance.
Please contact any of our Employee Relations and Safety team if you would like assistance regarding drug and alcohol policies and the management of illicit drug use in the workplace.
Sydney Trains v Reece and Goodsell at [155].
Sydney Trains v Reece and Goodsell at [117] and [157].
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