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An employee who was absent for two years due to a work-related psychological injury was unreasonably sacked for not completing a performance improvement program, a commission has ruled.

NSW Personal Injury Commission Member Paul Sweeney acknowledged the Department of Education had held concerns about the teacher's performance for many years, but he said it was "highly improbable" it could have fairly assessed him while he was suffering from a compensable psychological injury.

"While I accept that the [employee] was undoubtedly unfit to teach, the course adopted by the [employer] ignored his proven psychological injury..."