AREEA principal employee relations consultant Bill FitzGerald provides clarification on exclusion from liability where reasonable administrative action has taken place in bullying and workers’ compensation claims.

Bullying and workers’ compensation legislation provides exclusions from liability where the employer can demonstrate that it was involved in ‘reasonable administrative action’. This often occurs where it is identified that an employee’s behaviour is inappropriate or work performance is not up to scratch and the employer is attempting to take corrective action.

In a recent case heard before the Administrative Appeals Tribunal, an employee who had a history of stress-related issues suffered a psychological injury due to insensitive management, despite the Tribunal finding the management action taken constituted ‘reasonable administrative action’.

Between 2002 and 2004, an Australian Taxation Office employee took a number of weeks off work due to stress after two supervisors had criticised him in the course of his work. As a result, he was moved to a different team in 2008, but said the new manager disciplined him over minor issues and essentially micro-managed him.

The worker then proceeded to lodge a workers compensation claim for psychological injury, claiming it to have stemmed from the conduct of the managers. Comcare, however, denied liability, arguing the injury arose from reasonable management action, leading the employee to appeal the decision.

In considering the case, the Tribunal noted that the ATO worker had a history of stress-related issues and that the managers concerned were aware of the worker’s extreme sensitivity. The Tribunal was not satisfied that the managers conducted themselves in a reasonable manner, deciding that at the very least, the action was insensitive and ‘intimidatory’.

Deputy President Handley found the worker suffered a psychological injury as a result of unreasonable management by one manager in particular, even though the worker’s stressed condition was outside the boundaries of ‘normal mental functioning and behaviour’:

“It ought to have been apparent to Mr. M [manager] over the two years during which he was Mr. T’s team leader and in the light of the past history of managing Mr. T to which, presumably, Mr. M had access as his immediate manager, that Mr. T was sensitive to criticism of his performance,” DP Handley said.

“Mr. M should have taken this into account in the way he approached his management responsibilities.

“Mr. T’s evidence is that Mr. M’s conduct involved bullying, harassment and intimidation

“The impression I have formed is that Mr. M’s conduct was not reasonable. While management of Mr. T’s performance was, in the circumstances, reasonable administrative action, I am not satisfied that Mr. M conducted himself in a reasonable manner. At the very least, he was insensitive in managing Mr. T; more likely, his conduct was intimidatory.

“I therefore find that Mr. T suffered an injury arising out of, or in the course of, his employment by the ATO.”

Implications for Employers

While this decision does not mean employers are unable to take corrective action when required, it does highlight the need for employers to reasonably implement such action. Doing so will reduce the risk of actionable claims in which employers might find themselves unable to rely on the exclusion of liability.

Where is known or likely to be known that an employee will react adversely to criticism or any form of performance management then employers should adjust the approach to cater for this.

This may include providing full details of the performance or behavioural issue well in advance and offering the employee a support person to attend the interview relating to the corrective action.

The details of the expected standard of performance and behaviour should be clearly articulated by the employer, also depicting the steps and timelines agreed to in addressing the issue. The interview should be structured in a relaxed but business-like manner and the employee should be aware that his/her input will be properly considered.

This issue is sure to be addressed in regard to the Fair Work bullying jurisdiction as decisions are progressively handed down. In the meantime, AREEA consultants can assist with step-by-step advice in handling delicate employee matters, as well as provide bullying and harassment training for managers and supervisors. Contact your local AREEA office for more information.