07 December 2021

Work-related psychological injury - a sensitive and complex area

Mick Franco

For reasons we all understand well, the last two years have seen major changes in how we work. With that has come challenges for both employers and employees in how to manage psychological wellbeing, highlighting the fact that workplaces are made up of human beings, who each respond to life’s – and work’s – challenges differently. From what we are seeing at Bartier Perry, councils are no exception.

In this article we look at psychological injury resulting from workplace events. Our intention is to provide general guidelines for responding to an employee claim for such an injury under section 11A of the Workers Compensation Act 1987 (the 1987 Act). In the process, we trust that the article will also provide useful insights into how to minimise the likelihood of such claims being made in the first place.

More than simply being upset

The 1987 Act defines psychological injury as a psychological or psychiatric disorder, extending to
include the physiological effect of such a disorder on the nervous system.

Simply being upset, hurt or even humiliated does not qualify as a psychological injury. A physiological effect must also result. Essentially that requires a psychological/psychiatric diagnosis.

Psychological injuries may be the result of:

a traumatic event such as a robbery
the workplace environment – interpersonal conflict, overwork and lack of training or resources, poor work processes, or poor supervision
poor performance management, disciplinary action, job transfer, promotion, demotion, retrenchment, dismissal or the provision of employment benefits.

Most claims for injury fall into the second and third categories. The third category triggers the possible application of section 11A(1) of the 1987 Act.

Onus is on employers

When relying on a defence under section 11A, it is important to know exactly what that section states:

No compensation is payable under this Act in respect of an injury that is a psychological injury if the injury was wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers.

In the event of a claim for psychological injury, and assuming such an injury is demonstrated, the employer may claim that section 11A(1) applies. More often than not, however, such efforts fail.

There are several reasons for this. One, there are often multiple work events responsible for the injury, some of which do not fall within the ambit of the section. That means an employer cannot establish that section 11A conduct was the predominant cause of the worker’s condition.

Secondly, it can be difficult to demonstrate that the relevant section 11A action was reasonable in the
circumstances.

Further, such a defence will almost certainly fail if the worker was the subject of any bullying, harassment, intimidation, discrimination or unfair treatment at work.

In assessing whether the section 11A defence is established, the Personal Injury Commission will, in part, consider the entire process surrounding the transfer, demotion, promotion, performance appraisal, discipline, retrenchment, dismissal, or provision of employment benefits. The overriding question is: were such employer actions reasonable in the circumstances?

What is meant by reasonable?

Reasonableness is a question of fact involving application of an objective test.

The defence will fail if the employer cannot demonstrate the action was reasonable in all the circumstances.

The focus is on the reasonableness of the causal action – that is, the action that led to the psychological injury – and not on the historical employment relationship. That history may provide background but is not determinative of whether the section 11A defence succeeds.

Assessing reasonableness involves weighing the rights, circumstances and health of the employee against the objectives and business requirements of the employer.

The fact that an action may be permitted under guidelines, policies or legislation does not in itself make it reasonable. However, failure by the employer to follow policy or procedures may nullify the defence.

Gathering evidence

To determine whether the section 11A defence applies, it is necessary to obtain an accurate account of the conduct, incident or event/s which caused the injury. Sources of important information to address that issue may include:

initial notification and claim form, medical certificates
clinical notes of treating GPs, psychologist or psychiatrist
sick leave records
personnel or HR file
grievance complaints, investigation and determination of the complaints
disciplinary investigations including complaints, correspondence, interview notes and reports of internal/external investigators
emails between the worker and supervisors/managers.

In gathering evidence the aim is to develop a chronology of relevant events and identify witnesses who can testify about those events from direct knowledge.

Further, developing a chronology will be important when tracking the evolution of the worker’s
psychological condition.

It is important to question descriptors such as bullying and harassment in the initial notification, claim form and medical certificates. These can be meaningless words when looking at the actual conduct complained of. We need to identify what actually occurred at work to assess whether a worker’s complaints are grounded in fact. That is, what happened? What was said or done to the worker, by whom, and where and when?

When representing a client in a psychological injury case, we may:

seek particulars of the injurious conduct, incident or events from the worker and NTD
seek a statement from the employee
seek statements from relevant representatives of the council
obtain copies of all relevant records held by the council
obtain complete clinical records of treating doctors
review historical sick leave records – this may disclose other doctors and different history.

It is important to identify non-work events and pre-existing medical conditions which may be relevant to the cause of the alleged psychological condition, and who has that information. Are there reasons for the claim other than work injury?

The potential for section 11A to apply should be considered at the start of the claims process. Ideally, the council should alert its insurer if it considers a section 11A defence may be available.

In summary

This article only touches on a few aspects of what is a complex and somewhat fraught area of workers compensation liability. Your workers compensation insurer will have conduct of management of the claim. To assist with assessing liability for a claim it may seek your co-operation with the following:

making an early assessment of the potential application of section 11A
that is, was the injury caused by employer action with respect to one or more of the prescribed actions: transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits or demotion or promotion? If so, assemble and build this evidence.
focus on causative events or conduct rather than labels such as bullying and harassment – what was in fact said or done to the worker, by whom, and where and when?

Assemble employer information in a logical, relevant and streamlined manner:

assemble evidence carefully, early and in detail
obtain copies of treating medical records
obtain independent psychiatric opinion
understand that the worker’s claim and evidence can change and be prepared to assemble further evidence.

To assist with collating relevant evidence your workers compensation insurer may well commission a factual investigator to obtain statements and other relevant information.

The bottom line is that to establish a defence under section 11A a council needs to prove: