Psychological claims are a highly disputed area of Workers Compensation in NSW. We are seeing an increasing number of claims being declined under Section 11A of the Workers
Compensation Act 1987.
Section 11A acts as a defence for an employer. Whereby no compensation is payable for a psychological injury that is 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. 1
This defence was raised in the matter of Cahill v Hume Community Housing Associated Company Ltd [2024] NSWPIC 551.
BACKGROUND
During her employment, Ms Cahill (the Applicant) experienced an increased workload, breakdown of relationship with management which lead to belittling conduct and an overall lack of support. This caused a deterioration in her psychological health, leading her to lodge a workers compensation claim. The insurer declined the claim under s11A. 2
The insurer raised the dispute stating the Applicant’s injury was wholly or predominantly caused by reasonably action taken or proposed to be taken by or on behalf of the employer with respect to performance appraisal and/or discipline. 3
DETERMINATION
Element one = Wholly or predominately caused
When making her determination, Member Snell was required to consider the three elements of the Section 11A defence. This first being the ‘wholly and predominantly caused’ aspect which is ultimately a test of causation. 4 The Member noted that what is relevant to the issue of causation is the workers perception of real events at work. 5 Quoting Deputy President Roche, Member noted ‘A workers reaction to events will always be subjective and will depend upon his or her personality and circumstances. It is not necessarily to establish that the worker’s response was rational, reasonable and proportional…’. 6 When considering the evidence, specifically the Applicant’s statement, treating GP records and independent medical report, the Member accepted that her injury was not caused by one incident but rather it developed over a period of time during her employment. 7 This included a large workload and an overall lack of support. Due to the above, Member Snell accepted that the Applicant’s employment was the main contributing factor to her injury.
The Member accepted that the injury was multi-factorial in nature which meant the Section 11A defence raised by the Respondent could not apply. For completeness, the Member continued to consider the other elements. 8
Element two = Actions or proposed actions with respect to performance appraisal and/or discipline.
In this jurisdiction, it has been held that performance appraisal should be formal, similar to an examination, rather than a continuing assessment over a period of time. 9 Given this, the Member was satisfied that there is no evidence indicating that the Applicant was subject to performance appraisal during the meeting with her manager. As such, she determined that actions in relation to the meeting were not considered performance appraisal. 10
In terms of discipline, this concept has been interpreted broadly such as ‘learning by instruction and the maintenance of that learning by training, exercise or repetition’. A narrower meaning of punishment has been characterised but it is clear that this must be considered secondary to the broader meaning. 11 The Member also pointed out that any discipline extends to the entire process of the employer including the investigation and not just the incident itself. 12 In this case, the Member felt that it was clear that the Applicant was only informed during her meeting that a grievance had been raised that was to be
investigated. Considering the circumstances, the Applicant was not subject to any discipline in her meeting. 13
The Member ultimately concluded that the identified action relied on by the Respondent did not fit within the definition of performance appraisal or discipline.
Element three = Reasonableness
When considering reasonableness, you must consider the entire process rather than on the action itself. This does include a consideration of the circumstances surrounding the action. 14 The test is an objective one which ultimately is a question of fact. 15
In this case, the Member highlighted that while certain steps taken by the employer were reasonable, including informing the Applicant of the grievance, it was not evident that the Applicant was provided with the opportunity to have a support person with her nor offered EAP support during the meeting. This is important as her manager had recognised that the meeting would have been upsetting for the Applicant. 16
The Member held the view that any meeting where an employee is informed by management of a grievance against them which is so serious that it requires an investigation, it is appropriate for that person to be offered EAP support and the opportunity to bring a support person. 17
Noting this, the Member did not accept that the action taken or proposed to be taken by Hume Community Housing with respect to performance appraisal and/or discipline was reasonable.
The commentary for Member Snell is very insightful about the practical application of Section 11A. In particular, she highlights the necessary consideration for Employer’s when thinking about relying on this defence. Cases like the present highlights the attempt to deny a valid and legitimate claim which ultimately leaves workers dealing with the consequences.
If you or anyone you know are challenged with a Section 11A dispute, please contact our firm for legal assistance or further information. For comprehensive legal support and information about our services, visit our website.
1 Workers Compensation Act 1987, s 11A(1).
2 Ibid.
3 Cahill v Hume Community Housing Associated Company Ltd [2024] NSWPIC 551, [8] (‘Cahill’).
4 Cahill, [93].
5 Cahill, [94].
6 Attorney General’s Department v K [2010] NSWWCCPD 76, [54].
7 Cahill, [98] – [106].
8 Cahill, [110].
9 Cahill, [111]; Dunn v Department of Education and Training [2000] NSWCC; Irwin v Direction-General of Education NSWCC 14068/97 (‘Irwin’).
10 Cahill, [112]-[113].
11 Cahill, [114]; Kushwaha v Queanbeyan City Council [2002] NSWCC 25.
12 Cahill, [115]; Northern New South Wales Local Health Network v Heggie [2013] NSWCA 225; 12 DDCR 95.
13 Cahill, [116]-[117].
14 Cahill, [120]; Department of Education and Training v Sinclair [2005] NSWCA 465.
15 Irwin.
16 Cahill, [123].
17 Cahill, [124].
