The undoing of a hug

20 November 2019

An employer's redundancy process that brought about an adjustment disorder was reasonable administrative action, and that defence should be given its widest possible interpretation in the employer's favour.

In issue

  • Whether the employer's actions in bringing about a proposed redundancy amounted to reasonable administrative action.

The background

The worker was employed as the Workers Compensation Claims Manager for Allianz.

Her claim was for an adjustment disorder which she says occurred on 7 and 8 March 2018 when she 'was informed on the 7th March that I had to attend a meeting on the 8th March relating to restructure and impact to my role and future at Allianz. This meeting on 8th March caused me to suffer stress related illness because it was conducted unfairly.'

Liability for the worker's claim was disputed by the employer, represented by Barry.Nilsson., on the basis that the worker's condition arose from the employer's actions in implementing a proposed redundancy, claiming that amounted to reasonable administrative action or reasonable action to bring about the cessation of the worker’s employment (the s25(1A) defences).

The relevant timing was as follows:

  • On 7 March 2017 the worker's supervisor telephoned her at work and asked her to attend an offsite meeting on the following day;
  • The meeting occurred offsite on 8 March 2017 during which the supervisor ran through the proposed changes to the management structure which included a proposal that the worker's role be made redundant and 2 new roles be developed;
  • The worker was informed that she did not have the skills to qualify for the new roles;
  • A representative from human resources informed the worker during the meeting that they would assist with redeployment;
  • The worker was asked to take time to consider the proposed changes and then provide feedback 5 days later;
  • The worker was informed at this stage that the changes were proposals and not definite.

The decision

The employer was excused from liability as the Tribunal held that the worker's condition arose from actions which fell within the s25(1A) defences. A costs order was made in the employer's favour.

The finding was that the worker's incapacity arose on 7 March 2018 even though she attended work on that day, and on the subsequent two days and was not certified as incapacitated for work until 10 March.

The Chief Commissioner relied upon the decision of Arnotts Snack Products Pty Ltd v Yacob [1985] HCA 2 noting the worker’s evidence was that on 7 March she was very anxious, found it very difficult to concentrate on normal business activity and suffered a number of symptoms. The Chief Commissioner did not accept there was no incapacity in relation to the performance of her ordinary duties on 7 March, despite there being no evidence that she did not actually complete her work on that day.

The telephone call on 7 March was therefore the substantial cause of the worker's condition and fell within the s25(1A) defences.

No weight was given to the opinion of the worker's expert witness psychiatrist Dr Eric Ratcliff that the incidents on 8 March 2018 were causative; the reason being that his opinion did not take into account the history of symptoms including that the worker hugged her supervisor at the end of the meeting on 8 March. The Chief Commissioner considered the hugging would be unlikely to take place if the worker suffered an adjustment disorder at that meeting.

In his decision the Chief Commissioner confirmed that there is no reason to read down the provisions in the Act that exist for the benefit of the employer, and they should be given their widest possible construction in accordance with their purpose.

The decision also reviews the term 'substantially' in the s25(1A) context noting its differences to the use of the same word in s25(1).

Ultimately the Chief Commissioner was not required to make a finding on whether the Hart v Comcare [2005] FCAFC 16 principal (that an employer has a defence to a claim where: there are multiple substantial causes of a psychiatric illness and only one of those causes fits within the s25(1A) defences) applied but his discussion suggests that the principal may apply to the Tasmanian legislation.

Implications for you

The Act still provides strong defences for employers and the medical evidence is not the be-all and end-all in stress claims. And in circumstances where there are multiple factors causing a psychological condition and only one of those fits within the s25(1A) defences, the employer should consider the Hart v Comcare principal.

M. v Allianz Australia Services Pty Ltd (No 2) [2019] TASWRCT 35

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