Employee who suffered psychiatric injury is awarded damages which resulted from an employer’s failure to follow its own disciplinary procedures.
In the recent ruling of Elisha v Vision Australia Limited [2024] HCA 50, the High Court has allowed an appeal awarding AUD 1.4 million in damages to an employee who suffered a major depressive disorder, resulting from a breach of a disciplinary procedure which was incorporated within the employee’s contract of employment.
Background
- Mr Elisha was employed by Vision Australia Limited (Vision Australia) from September 2006. Mr Elisha’s employment contract contained clauses in which Mr Elisha agreed to comply with all “Vision Australia Policies and Procedures” as well as “all other Company Policies and Procedures”.
- Accordingly, the High Court determined that a policy, known as the “2015 Disciplinary Procedure”, was incorporated into Mr Elisha’s employment contact. The High Court further noted that Mr Elisha and Vision Australia were both bound by this policy.
- In 2015, Mr Elisha was subject to a complaint made by the manager of a hotel, which he was staying at while travelling for work. The manager complained that Mr Elisha had been aggressive and intimidating when he phoned reception at 12:30am to make a noise complaint.
- The complaint eventuated in a disciplinary meeting between Mr Elisha, his manager at Vision Australia, and a member of the “People and Culture” department, to discuss what Vision Australia described as serious misconduct.
- Prior to the disciplinary meeting, and in accordance with the 2015 Disciplinary Procedure, Mr Elisha was given a written notice outlining the alleged misconduct.
- However, prior to the disciplinary meeting, Mr Elisha’s manager advised the People and Culture department, and senior management of Vision Australia, that Mr Elisha had a “pattern of aggressive behaviour”, although no evidence of this behaviour was ever provided.
- Mr Elisha’s manager also accepted the hotel manager’s version of events without question, and advised senior management that his conduct was “gross misconduct and should be addressed accordingly”.
- Importantly, the allegation that Mr Elisha had demonstrated a pattern of aggressive behaviour was never put into the written notice, nor was it discussed during the disciplinary meeting. Mr Elisha was never afforded the opportunity to respond to this allegation.
- Despite vehemently denying the allegations, Mr Elisha’s employment was terminated following the disciplinary meeting.
- Mr Elisha subsequently suffered a major depressive disorder resulting in an inability to work for the foreseeable future.
The Decision
- By failing to allow Mr Elisha the opportunity to respond to the allegation, that he had demonstrated a pattern of aggressive behaviour, the High Court ruled that Vision Australia failed to follow the 2015 Disciplinary Procedure, which resulted in Vision Australia being in breach of the employment contract with Mr Elisha.
- It was determined that the “secret slurs” made by Mr Elisha’s manager prejudiced the conduct of the disciplinary meeting, and had those remarks not been made, then Mr Elisha’s employment would not have been terminated.
- Further, it was held that the psychiatric injury was caused by Vision Australia’s breach of contract, and that the liability for the injury was not too remote.
- This is the first time the High Court has ruled that psychiatric injury is a type of injury that can result in damages being awarded to employees for a breach of contract.
Key Take Aways
- Employers must ensure strict compliance with all workplace policies, particularly when it concerns the possible termination of an employee’s employment.
- Consider whether it is necessary to incorporate workplace policies and procedures within your company’s employment contracts.
- Be mindful of the impact a workplace investigation and disciplinary procedure can have on your employees.
- Always ensure employees have the opportunity to respond to all allegations which may be considered when deciding whether their employment will be terminated.
Please contact us if you require any advice or assistance concerning all matters relating to Australian employment law and workplace investigations.
* * *
If you’re looking to invest or establish operations in Australia, then feel free to let our London-based Australian qualified lawyers know and we can discuss how we can assist.
Australian legal advice in the European time zone
Did you know that Sheltons Group Legal provides Australian legal services from our London office through Sheltons’ own Australian incorporated law firm?
Our lawyers are based in Sheltons’ London office to cover South Africa and all of Europe – simply to avoid the immense inconvenience of the time difference, an affliction that persists for the majority of the year.
What can Sheltons Group Legal offer?
Our qualified Australian solicitors (lawyers) are typically able to assist and provide advice in the following areas, amongst others:
- employment law
- intellectual property
- drafting and review of commercial agreements
- legal due diligence, and
- commercial and company law.
Further details
Please see here for further details: www.sheltonsgroup.com/australia/#Legal
