A landmark Australian case is the first time a Commonwealth employer has been convicted for failing to manage psychological risks in the workplace. This article looks at the similarities between Australian and New Zealand health and safety law, and why the conviction and fine is something we could see our regulator look into.

Senior Associate Mike Mercer spoke to the NBR about workplace psychosocial, risks with a reminder to employers about the importance of being mindful of the impact a performance management process can have on a worker’s mental health. Click here to read the interview published today [paywall].

*Content warning: this update discusses a workplace incident involving suicide* 

Background

In July 2020, a 34-year-old worker tragically took his own life while on duty at an Air Force Base in New South Wales. In the six months prior, the worker had been placed on four ‘Work Plans’ as part of a formal performance management process. During the process, he showed increased signs of distress and ill-health. Despite these signs, supervisors did not refer the worker to mental health support, place him on leave, or take any other steps to mitigate the stress he was experiencing. 

Comcare, the Commonwealth Work Health and Safety regulator, concluded in its investigation that there were serious and foreseeable psychological risks connected to both the performance management process, and the supervisors’ conduct. Defence had pre-existing workplace policies dealing with psychological risks, however, Comcare’s investigation concluded the policies were not followed in practice.

Risk controls available to Defence included training supervisors in the identification and management of psychological hazards arising performance management processes. 

The decision

The New South Wales Local Court found that Defence had breached its primary health and safety duty^[2], and convicted Defence for failing to comply with that duty.^[3]

Ultimately, the Court imposed a $188,000 fine, which represents a substantial reduction from the maximum penalty of $500,000. Additionally, the Court imposed an adverse publicity order under section 236 requiring Defence to publicise the offence and its consequences. 

What this means for New Zealand employers

Although the prosecution took place in Australia, it has direct bearing for New Zealand employers because our Health and Safety at Work Act 2015 (HSWA) is modelled off Australia’s work health and safety laws. 

While there has not been a similar prosecution under New Zealand’s HSWA, the Employment Court findings in the FGH v RST cases offer similar takeaways.^[4] Ms H worked for RST, a government organisation where her role required her to process and review applications. Ms H had ADHD and suffered from an anxiety disorder which affected her work performance and her ability to cope with performance management. RST were aware of Ms H’s ADHD diagnosis, however, due to ongoing concerns with her performance she was put onto a Performance Improvement Plan (PIP) which exacerbated her ADHD and anxiety symptoms. The Court held that Ms H’s worsening anxiety was incorrectly interpreted by RST as Ms H opposing the performance management process.

In 2022 the parties came before the Employment Court again. This time, the case related to a disciplinary process commenced by RST arising out of three incidents where Ms H had allegedly made disparaging comments about her colleagues on social media. This time, RST commenced a disciplinary process but immediately paused this when it was notified by Ms H’s father that she had suffered from a serious mental health relapse.

It was clear in these two cases that where an employer is aware of ongoing health conditions further medical information should be sought to understand how these conditions may be impacted if a disciplinary process is commenced. While the decisions of FGH v RST related more to an employer’s obligations under the Employment Relations Act 2000, as opposed to health and safety duties, this approach indicates what may be expected of employers when dealing with psychological risk factors.

A reminder for employers

The Australian Defence conviction is not only a reminder of the importance of having policies that manage psychological harm in place,but also ensuring that adequate training and implementation give those policies life. Importantly, the case also highlights the risk of performance management processes exacerbating mental health problems, particularly where employers are ill-equipped to adapt those processes to a worker’s needs. For this reason, it’s important that employers are mindful of the impact a performance management process can have on a worker’s mental health.

WorkSafe, New Zealand’s regulator, states that psychological risks in the workplace are addressed by having systems that:^[5]

• proactively protect workers from harm (designing work that eliminates health risks, for example);
• support mental wellbeing; and
• restore workers’ health when harm occurs. 

We have also seen a similar recognition of psychological risks in New Zealand, with WorkSafe increasingly emphasising the importance of identifying and managing psychological risks in the workplace.^[6]

NZ businesses must be prepared 

This is the first time a Commonwealth employer has been convicted for health and safety breaches in relation to psychological risks, signalling that regulators expect psychological harm to be managed with real care. Given the strong similarities between Australia and New Zealand’s health and safety law, this case is certainly something we could see our regulator looking to. 

This case also demonstrates that effective health and safety management ultimately comes down to how we protect and support people.

Get in touch

If you have any questions about the content of this article, and how it may affect your business, please contact one of our health and safety experts.

With special thanks to Jimmy Mack, Summer Clerk, for his assistance in preparing this article.