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It was "extremely harsh" to dismiss a senior manager who was taking leave due to a psychological injury, after being falsely accused of financial mismanagement, the Fair Work Commission has ruled.

Attributing the financial issues to the manager was "entirely without foundation", according to Deputy President Judith Wright, who found she was "blameless" regarding the circumstances of her dismissal.

The executive manager of Tamworth Dementia Respite Service was dismissed in April last year. She subsequently claimed unfair dismissal, but her case was thrown out in August, after Deputy President Gerard Boyce found the termination was a genuine redundancy.

A full bench overturned this decision in October. It found that in circumstances where the manager was covered by a modern award, the Deputy President had wrongly concluded the employer had no consultation obligations...