Statistics suggest that approximately 45% of Australians aged between 16 and 85 will experience a mental illness at some point in their life.[1] As a result, there is a greater awareness of mental illness in the community at large, and employers are increasingly confronting myriad complex issues during each stage of the employment relationship, from recruitment right through to dismissal.

In recent cases from across the country, courts and tribunals have highlighted the importance of both considering the impact of workplace investigations on employees’ mental health and the consequences of failing to do so.

This article considers three such cases and their implications for employers.

Case 1: Failing to act in a timely and determinative manner costs employer $1.5 million

Ms Robinson was a Director of Nursing for the Cape York Health Service based in Weipa, Queensland (the Health Service). Ms Robinson alleged that she was subjected to repeated managerial mistreatment by the Health Service’s CEO, which caused her to develop a psychiatric injury, to the extent that she was unable to return to work.

The Queensland Supreme Court found that the Health Service had breached its duty to take reasonable care by failing to take ‘timely and determinative action’ on complaints made against Ms Robinson by an employee, and by Ms Robinson against that same employee.[2] By failing to investigate complaints, or failing to find the complaints were vexatious, the CEO (and vicariously the Health Service) allowed the issue to cause conflict, uncertainty and humiliation within the workplace.

The Court found that the risk of serious psychiatric harm was reasonably foreseeable to the Health Service given Ms Robinson’s concern about the complaints against her. Notably, the Court commented that a reasonable employer would have considered that its response to complaints bore heavily upon the probability of injury occurring to its employees. Justice Henry stated as follows:

In an era when the potentially grave psychological harm done by workplace harassment and bullying is well known, unjustified blaming, humiliation, belittling, isolation, undermining and contemptuous disregard of an employee by a CEO was conduct collectively raising a foreseeable and not insignificant risk of psychiatric injury.[3]

The Court awarded Ms Robinson damages of $1,468,991.11, including general damages and damages for past economic loss, loss of superannuation and future economic loss/expenses.

Case 2: Employer liable for employee’s major depressive disorder following workplace investigation

The New South Wales Workers Compensation Commission found Woolworths Limited (Woolworths) liable for a major depressive disorder which an employee developed following a workplace investigation into his conduct.[4]

Woolworths conducted a workplace investigation after the employee repeatedly failed to follow protocols and procedures for entering and exiting the store, which led to allegations of stealing.[5] The investigation ultimately concluded that the allegations of stealing were not substantiated. Despite this, the employee was subsequently placed on a performance improvement plan as he had failed to comply with the company’s policies and procedures.[6] The employee continued working for approximately one month after the workplace investigation, until a colleague told the employee that some staff members had asked why he had not been sacked because he had been stealing from the store.[7]

The employee subsequently applied for workers’ compensation for permanent impairment, claiming that he was so distressed from hearing the comments, being ostracised at work and having his reputation ruined, that he could not work anymore. The employee claimed that other employees being made aware of the investigation caused him injury. Further, the manner in which the employer conducted the investigation (which included having police search his car in front of other employees) resulted in the circulation of rumours even after the employee had been cleared of the allegations.[8]

Woolworths argued that the investigation and disciplinary process constituted ‘reasonable action’ under section 11A of the Workers Compensation Act 1987 (NSW), which provides a defence against claims relating to injury arising wholly or predominantly from disciplinary action. Woolworths contended that the process should be considered as a whole, arguing that the colleagues’ awareness of the stealing allegations, as well as the effect this had on the employee, was part of that process.

Arbitrator Egan agreed that the allegations, record of interview and the implementation of a performance improvement plan did in fact constitute reasonable action.[9] However, he found that the gossip and co-workers’ awareness of the allegations did not reasonably constitute a part of the disciplinary process.[10] Arbitrator Egan accepted that the distress of being questioned by a colleague about the allegations and being told of others’ knowledge, created the employee’s perception that there was a ‘pack of dogs’ mentality and that his reputation was ruined.[11] It was accepted that this perception was the main factor causing the development of his illness. Ultimately, Arbitrator Egan found Woolworths liable for the employee’s injury.

Case 3: High Court set to decide whether employers owe a duty of care to employees during workplace investigations

The importance of considering employees’ wellbeing during workplace investigations is set to take centre stage in an upcoming appeal, in which the High Court will consider whether an employer owes a duty of care to an employee when conducting a workplace investigation. The decision could have significant and widespread implications.

The High Court granted an employee special leave to appeal the decision in Govier v The Uniting Church in Australia Property Trust.[12] This decision concerned the liability of a disability services provider when one of its employees attacked a colleague (Ms Govier), who then required hospitalisation (Incident). Ms Govier feared she would die during the attack and subsequently developed chronic post-traumatic stress disorder and depressive disorder.

Immediately after the Incident, Ms Govier telephoned her supervisor and advised him that she had been attacked by a colleague, that she had telephoned the police, and that she was going to hospital. Following this, the employer immediately commenced an investigation. On the same day as the Incident, the employer prepared and delivered a letter to the Ms Govier’s home which required her to attend an investigative interview on the following day and directed her not to discuss the incident with any other person. The letter also outlined that Ms Govier was stood down on full pay pending the determination of the investigation. Ms Govier received this letter while she was still in hospital as a result of the Incident.

Ms Govier did not attend the interview and presented a medical certificate to her employer which stated that she was unfit for work. However, two weeks later, the employer wrote another letter to Ms Govier claiming that she had refused to attend the interview and that its preliminary finding was that she had engaged in violent and inappropriate behaviour against her colleague. Ms Govier was given five days to show cause as to why termination of her employment was not warranted. Ms Govier never returned to work and her employment was ultimately terminated.

Ms Govier claimed damages for the aggravation of her psychiatric injury, arguing that the content of the two letters aggravated her chronic, post traumatic and major depressive disorders, and, had she not received the letters, her injuries would not have been so severe.

At first instance in the District Court of Queensland, Ms Govier argued that the decision by her employer to issue the letters in connection with the workplace constituted a breach of a duty of care owed by the employer. Ms Govier was unsuccessful and appealed to the Queensland Court of Appeal (QCA). The QCA ultimately agreed with the District Court, finding that no damages were payable because the employer did not have a duty to avoid such harm in the course of investigating the incident. The QCA followed the authority of State of New South Wales v Paige[13] (Paige). In that case, the NSW Court of Appeal found that the appellant did not owe a duty of care to conduct its disciplinary procedures so as to avoid psychiatric harm to the respondent.[14]

In the High Court, it will be alleged that the employer knew or ought to have known that sending the first letter immediately after the incident would aggravate Ms Govier’s psychiatric injuries. It will also be argued that Ms Govier’s injuries were reasonably foreseeable in the circumstances. The appeal seeks to clarify the application of the rule in Paige to workplace investigations in which the employer has control over the investigative process, as distinct from the facts in Paige where the issue turned on a disciplinary regime governed by statute.[15] The High Court is expected to hear the appeal early this year.

Mental illness in the workplace is an area for all employers to bear in mind when conducting workplace investigations.

Each of the three cases discussed above demonstrate the potential for flawed workplace investigations to cause psychological injury or exacerbate pre-existing mental illnesses. It is therefore crucial for employers to ensure that workplace investigations are conducted sensitively and in a timely manner. Employers should, as far as practicable, keep investigations confidential and have regard to any potential mental health issues suffered by employees.

In addition to the broad takeaways outlined above, we suggest that when undertaking workplace investigations employers should:

1. Ensure that employees, particularly senior employees, have the requisite knowledge of company policies and are appropriately trained on how to effectively manage workplace investigations.

2. Deal with allegations as soon as practicable – delay can significantly increase the risk of mental health problems arising for those involved in the allegations.

3. Ensure employees involved in the investigation are aware of their confidentiality obligations.

4. Carefully consider which employees need to be involved and made aware of the investigation and ensure the information is contained to just those employees and that all other matters related to the investigation are kept confidential.

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.