How far is too far? Victorian Supreme Court clarifies what is expected of employers where there is a reasonably foreseeable risk of psychiatric injury

06 April 2022

The Court of Appeal refused an application of leave, finding that an employer did not breach its duty of care to prevent psychological injury, despite the injury being reasonably foreseeable.

In issue

The plaintiff was employed as an online insurance sales consultant between 2010 and 2013. From June 2012, the plaintiff suffered anxiety and depression due to pressure to meet sales targets. Between June 2012 and June 2013, the plaintiff took three periods of extended leave. During that time, his employer offered him a new role (with a pay reduction), sought psychiatric assessment, and facilitated a staggered return to four days of work per week as recommended by his treating health practitioners. After his employer suggested he cease work on income protection, the plaintiff did not return to work and his contract was formally terminated in 2017.

The background

The plaintiff commenced proceedings in the County Court, claiming damages for personal injury. He alleged (1) the employer owed a duty to take reasonable steps to protect him from the risk of psychiatric injury and (2) the risk of psychiatric injury was reasonably foreseeable, and that the employer failed to appropriately manage the risk.

The decision at trial

Judge O'Neill of the County Court concluded that by November 2012, it was reasonably foreseeable to the employer that the plaintiff was at risk of suffering a psychological illness, and therefore a duty of care arose in respect of that risk.

The plaintiff contended that this duty required the employer to modify his role, particularly performance targets, to mitigate the risk. The plaintiff’s suggested modifications sought to excuse performance of sales tasks that were common across the workforce.

The judge concluded that these modifications were not reasonable and that the steps taken by the employer were reasonable, and therefore breach was not established. Further, His Honour stated if a breach had been established by the imposition of unreasonable targets, he would not have been satisfied that the breach was causative of injury.

The issues on appeal

The application for leave to appeal concerned two issues. Firstly, the trial judge was in error in identifying the content of the duty of care, and consequently, finding there was no breach. Secondly, the finding against the plaintiff on causation was made in error.

The court noted that a risk of psychiatric injury as a result of performing work duties is not reasonably foreseeable by an employer, absent another reason for an employer to suspect that the worker is at risk of psychiatric injury.

The decision on appeal

The Court of Appeal rejected the plaintiff’s application for leave to appeal, finding there were no real prospects of success. The employer had taken all reasonable steps to discharge its duty. The court went on to say that when examining the content of a duty, regard must be had to the limitations imposed by contractual or other obligations. The employer’s duty was to take reasonable care to avoid the risk of psychiatric injury, within the parameters of the employment relationship as a sales consultant. It would have been unreasonable to expect the employer to excuse the plaintiff from performance targets as they are common across the sales workforce.

Implications for you

This case provides useful guidance for employers in sales-based, or target driven industries, to minimise the risk of psychological injuries to their employees. However, the Court made clear that an employer’s duty of care is unlikely to extend to creating an entirely new role for an employee who is experiencing performance related stress.

Shearer v iSelect Services Pty Ltd [2021] VSCA 328

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