By Mike Toten Freelance Writer
An employee suffered a psychiatric injury after he discovered that co-workers had overheard a Director telling him he would be demoted and receive a pay reduction because of poor job performance. He suffered panic attacks and a decline in mental health as a result. The Queensland District Court described the employer’s conduct as “negligent”, noting that it was aware that the employee had a history of mental health issues. The resulting payout to the employee was $301,000 plus $95,000 received from WorkCover.
Facts of case
The meeting took place in a small open-plan office, and co-workers overheard it, including employees that he supervised. The employee received no prior notice of its purpose or contents. He claimed he was humiliated by it, even more so when a co-worker told him he had overheard it.
The employee did not return to work after the meeting. There was evidence that his mental health deteriorated significantly after the meeting, including an exacerbation of his pre-existing panic disorder.
The employee claimed that the employer should have taken reasonable precautions to protect his health and wellbeing, and this should have included holding the meeting in a private and confidential location, and informing him of the reason for it in advance. He also claimed that the meeting was not conducted in a calm manner, with the Director raising his voice at him (which of course was then overheard by others).
The employer was already aware that the employee could easily become anxious or stressed, but claimed it did not believe that the meeting would cause him to suffer a psychological injury. The proposed demotion was part of a company restructure, and the Director claimed that he was too pressured by events to be able to deal with resistance to it from employees.
Decision
The Court commented that, given the employee’s past history, it was foreseeable that a meeting not conducted privately nor with prior warning of content could cause a vulnerable employee to suffer psychiatric injury. It regarded the precautions suggested by the employee as standard ones for a manager to follow when proposing to inform an employee of job performance deficiencies and then demote him.
Therefore, the Director breached his duty of care towards the employee, and the employer was vicariously liable for that conduct.
The Court awarded net damages of $301,000, after discounting $95,000 already paid as workers’ compensation. Its opinion was that his future work prospects would be restricted to part-time work in low-stress work environments.
What this means for employers
When conducting a performance review or disciplinary meeting with an employer, make sure you use a private location that cannot be witnessed or heard by others. Notify the employee in advance of the purpose and general content of the meeting, and invite him/her to have a support person present.
The situation was exacerbated in this case because the employee was known to be potentially “vulnerable”, but the above precautions apply to all employees.
