Worker successfully claims compensation for a stress condition after being stood down and later terminated

20 August 2019

The Worker was stood down pending an investigation into alleged breaches of an employer’s Code of Conduct. The Worker developed a stress condition and sought compensation. The Employer argued that the injury was not compensable under the Act because it is a disease caused by stress which wholly or predominantly arose from disciplinary action.

In issue

  • The decision considers whether the Employer had a defence to the claim pursuant to sub-section 5(4) of the Act, namely on the basis that the stress condition was predominately caused by the Worker's expectation of discipline.

The background

On 13 August 2013 the Worker was called to a meeting with her supervisor and the Employee Relations Manager who, informed her, in a general sense, of allegations made against her about conduct which, if true, would be a breach of the Employer’s Code of Conduct. The Worker was informed that the allegations were to be investigated and that she would be required to attend an interview as part of the investigation and she was told that because the allegations were so serious she was to be stood down on full pay until the matter was resolved. The Worker’s security pass and company telephone were taken from her (ultimately she was provided with another phone which contained her personal contacts). She was then escorted to her desk to collect her personal belongings and accompanied home in a taxi.

On 13 August 2013, the Worker, suffered stress (more particularly 'generalised anxiety disorder').

In the week following 13 August 2013, the foreshadowed interview was organised for 12 September 2013. The meeting was held at the office of PricewaterhouseCoopers, who provided services to the Employer. The Worker had asked that it be held at her solicitor's office. That request had been refused. The meeting was lengthy. The Worker’s employment was ultimately terminated on 19 November 2013.

The decision at Arbitration

On 10 January 2018, Arbitrator Ekanayake awarded the Worker compensation. He did so because he found that:

  • The Employer’s process was not discipline.
  • Although an expectation of a matter mentioned in s5(4) of the WCIM Act was a factor contributing to the Worker’s stress, her stress (and therefore disease), did not wholly or predominantly arise from that expectation. Rather, the Arbitrator found that the Worker’s stress predominantly arose from her perceived loss of reputation, sense of injustice, and need to 'clear her name'.
  • In the event that he was wrong in his conclusion that the meeting on 13 August 2013 was not discipline, he was satisfied that the Employer’s conduct, from 13 August 2013 until the Worker’s termination, as a whole was unreasonable and harsh.

The decision on appeal

The Employer appealed the Arbitrator’s decision to the District Court. The Employer argued that the Worker’s injury was not compensable under the Act because it is a disease caused by stress which wholly or predominantly arose from disciplinary action which it was then taking against her which was not unreasonable and harsh, or alternatively, from her expectation of discipline or dismissal.

The Judge dismissed the appeal. The Judge found as follows:

  • There was evidence before the Arbitrator from which he could reasonably come to the conclusion that the process in which it was then engaged was not discipline and therefore no error of law was made in coming to that conclusion.
  • The Arbitrator accepted the Worker’s own evidence and the supporting medical evidence to the effect that the Worker’s stress did not arise predominantly from her anticipation of being disciplined, or being transferred or dismissed (or from her anticipation of any other matter in s5(4)(a) or (b) of the Act). Rather, he found, based on the evidence before him that her stress arose from her concerns about having been treated unjustly, from her need to save face (which was a cultural concern) and to restore her good name. There was no error made by the Arbitrator in making the findings.

Implications for you

The decision highlights the difficulty employers can have in defending liability for stress claims under sub-section 5(4) of the Act.

Woodside Energy Ltd v Kieronski [2019] WADC 64

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