<Large Organisation> can and will make shit like this fly, every time. There is obviously something more going on that OP didn't add, relations between employee and employer have clearly broken down if they are locked out of the office till they sign the document.

If you are taking off a lot of time as a result of a condition, having performance issues related to a condition etc. then clearly this is the way things are going to play out, irrespecitve of where you work or what you do. Australian employment laws allow it, and employer is going to use it ss an easy way to move on a worker.

It doest make it right, but being an asshole isnt enough, you have to actually be breaking the law to be doing something illegal.