The Victorian Supreme Court recently issued a stunning decision awarding an employee over $600,000 comprising $210,000 for pain and suffering and the balance for lost past and future income, despite the employee having a significant pre-existing psychiatric illness and a finding that no bullying had occurred.  

This blog builds on the insights in our blog from earlier this month Damages in sexual harassment and bullying claims – the stakes are rising.

What does the decision in Wearne mean for employers?

The facts in Wearne v State of Victoria are set out at the end of the blog.

The decision means that employers must not only manage the risk of psychological injury by perceiving bullies as major financial and reputational liabilities and acting in accordance with that conviction, but also manage the risk of compounding existing illnesses or injuries suffered by their employees by exposing those employees to less than ideal management that may not go so far as to constitute bullying.

Ignoring the red flags can have expensive consequences. In the decision, the judge placed a 30% discount on the payout for vicissitudes (essentially acknowledging that external life factors contributed to the employee’s injury). But the decision still effectively placed the onus on the employer to identify and monitor vulnerable employees to ensure work stressors did not exacerbate existing conditions.

How can you manage your risk?

Ensuring mental wellbeing at work requires employers to put in place preventative and responsive measures: 

  • Preventative measures could include implementing a mental health and wellbeing policy, training and initiatives aimed at reducing workplace stressors and providing support to employees to facilitate good mental health.
  • Responsive measures could include clear processes for how complaints are handled, triage systems to identify when matters needs to be referred to treating physicians and implementing measures to minimise the risk of ongoing harm during investigations (such as temporary reassignment of tasks, separating the parties or granting leave).

Both preventative and responsive measures should be monitored for effectiveness and regularly reviewed.

Understanding that even when a complaint is not substantiated, that does not mean that no action is needed on behalf of the employer. Whether a complaint is substantiated or unsubstantiated, a risk assessment process to determine the level of current and future risk and implementation of control measures should occur including a return to work plan (if applicable) that is developed in consultation with the worker, the business and treating physicians. For unsubstantiated complaints, measures such as mediation counselling and changing working arrangements should be available for resolving outstanding issues where appropriate.

When it comes to vulnerable employees (such as those with known pre-existing mental health conditions or particular vulnerabilities) they should be identified, offered support and monitored (consistent with any relevant obligations under discrimination and privacy law). This may include monitoring incident reports, workers compensation claims, patterns of absenteeism, personal leave, staff turnover and records of grievances to establish regular patterns or sudden and unexplained changes. Feedback from managers and workers should also be regularly sought. In this case, the employee had been identified as vulnerable through her employment record (particularly leave record) and internal measures of control could have been implemented to avoid further injury and liability.


The decision in Wearne v State of Victoria

This case turned on whether the employer, a state government department, discharged its duty of care to the employee by properly considering her pre-existing condition (anxiety) when dealing with conflict between the employee and her manager.

The conduct of the manager complained of by the employee included excessive and unreasonable criticism, micro-management, inconsistent directions and humiliating feedback. The court found that the manager’s conduct did not constitute bullying but reflected an interpersonal conflict, and conduct that was ‘at times overly harsh and insensitive’ and ‘rigid and inflexible’. Further, the court recognised that the employee ‘struggled to adjust to changes in work practices and that there were forceful stressors in her personal life’ which included the death of her former husband. The expert evidence, which the Court accepted, suggested the employee would be unlikely to be able to work again.

It was ultimately held that the employer acted unreasonably when it refused the employee’s request to move to another department and in failing to intervene in the conflict on the basis that no formal complaint had been made. The Court found that the employee’s pre-existing psychiatric injury gave rise to particular obligations on the department to provide a place of work that did not cause harm to the employee’s health and well-being. The department’s breach of its duty of care was then found to have caused an exacerbation of the employee’s injury.