Stress claims - still a reality despite High Court ruling

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Stress claims - still a reality despite High Court ruling

Employers will be celebrating the recent High Court work related stress decision which has drawn a line in the sand, not only for the growth of these claims, but also for the law of negligence.

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Employers will be celebrating the recent High Court work related stress decision which has drawn a line in the sand, not only for the growth of these claims, but also for the law of negligence. But the case also raises some challenging questions.

Stress claims make up a small portion of workers compensation claims, but their incidents and costs are increasing rapidly. Indeed, Comcare last year predicted that claims for psychological injury in the Federal sphere would rise by 38%.

Background

In the recent High Court case of Koehler v Cerebos (Aust. Ltd) the worker claimed psychiatric illness.

She had been employed for three days a week as a merchandising representative and, despite repeatedly telling management that changes had to be made and her comments that the work expected of her had changed, no changes were made to her work.

The District Court of Western Australia found that the employer had breached its duty of care to the woman. However the full Court of the Supreme Court of Western Australia, and subsequently the High Court, confirmed that 'the employer could not have reasonably foreseen the worker was exposed to a risk of psychiatric injury as a consequence of her work duties'. Ironically, while the worker made regular complaints to her employer, such complaints were directed to whether the work could be done; however, none of the complaints related to the difficulties she claimed were affecting her health.

The question of foreseeability in this case was treated by the High Court as turning on 'whether there was any material available to the employer that should have alerted it to a specific risk of psychiatric injury to the worker'. The High Court confirmed that the full Court was correct to conclude that a reasonable person in the position of the employer would not have foreseen the risk of psychiatric injury. There were two significant reasons for this. Firstly, the employee agreed to perform the duties which were the cause of her injury and secondly, the employer had no reason to suspect that the employee was at risk of a psychiatric injury.

Questions arising

The High Court noted that it may be right to say that there was general knowledge that some recognised psychiatric illnesses may be triggered by stress. It is, however, a further and much larger step to say that all employers must now recognise that all employees are at risk of psychiatric injury from stress at work.

If the employee finds the workload or position that he or she has voluntarily accepted excessive, to the point that he or she suffers a psychiatric illness, is that employee entitled to recover damages for negligence from his/her employer?

The impact of the case

The case is to some extent good news for employers. However, a case involving workplace stress could be more fatal to employers where employees have complained of their deteriorating health. Employers are therefore put on notice. The above case is not the iceberg that sank the Titanic of stress cases, but more particularly is a delineation between those stress cases that will be successful and those that will fail.

In this regard employers should be conscious of dealing with stress cases and mindful of any complaints relating to psychiatric illness. If an employer is required to modify the employee’s duties, is he or she bound to engage additional workers to help a distressed employee?

A contract of employment stipulates the work which the employee is to be paid to do, noting the employee’s pay could be reduced if the employee’s work is reduced in order to avoid the risk of psychiatric injury. What should an employer do if the employee does not wish to vary the contract of employment?

Further, if an employee is known to be at risk of psychiatric injury, may the employer dismiss the employee rather than continue to run the risk? Would dismissing the employee contravene general anti-discrimination legislation? The case raises as many questions as it answers and cases for everyday stress are still with us despite the High Court’s ruling.

* Graeme Traves is a Partner in the Brisbane office of Abbott Tout Lawyers.
Tel: 07 3032 5740
Email: gtraves@abbotttout.com.au

More information is available at Abbott Tout's website.

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