Worker’s redundancy found to be unreasonable management action

27 August 2021

The Queensland Industrial Relations Commission recently considered that the termination of a worker’s employment was found to be neither reasonable management action nor reasonably taken.

In issue

  • The case considered whether an employer had acted reasonably in terminating a long-standing worker’s employment, and consequently, whether the exclusion under section 32(5) of the Workers’ Compensation and Rehabilitation Act 2003 (WCRA) was enlivened.

The background

The appellant, was employed by Steritech Pty Ltd (the employer) in the position of Irradiation Supervisor. In 2017 and 2018, the appellant required time off work due to a non-work related medical condition. Upon his return to work in around August 2018, the appellant was summonsed to a meeting with management where he was informed that his position had been made redundant effective immediately. The appellant suffered a Major Depressive Disorder as a result, and it was not disputed that his employment was a major significant contributing factor to the psychiatric injury. What was in dispute in the case was whether the employer’s conduct was ‘reasonable management action’, and therefore whether the injury was an excluded injury under section 32(5) of the WCRA.

The appellant first lodged an application for statutory compensation with WorkCover Queensland on 31 October 2018. WorkCover rejected the application, saying that the decision that the appellant’s position was redundant constituted reasonable management action taken in a reasonable way, therefore enlivening the exclusion under section 32(5). The appellant applied for a review of the decision to the Workers’ Compensation Regulator (the Regulator). The Regulator confirmed the decision of WorkCover. An appeal against the decision of the Queensland Industrial Relations Commission (QIRC) was commenced by the appellant on 6 November 2019.

The legislation

It is relevant to set out the exclusionary provision under section 32(5) of the WCRA, which provides in respect of an injury sustained by a worker that:

(5) Despite subsections (1) and (3), injury does not include a psychiatric or psychological disorder arising out of, or in the course of, any of the following circumstances –

(a) reasonable management action taken in a reasonable way by the employer in connection with the worker's employment;

(b) the worker's expectation or perception of reasonable management action being taken against the worker;

(c) action by the Regulator or an insurer in connection with the worker's application for compensation.

Examples of actions that may be reasonable management actions taken in a reasonable way -

  • action taken to transfer, demote, discipline, redeploy, retrench or dismiss the worker
  • a decision not to award or provide promotion, reclassification or transfer of, or leave of absence or benefit in connection with, the worker's employment.

The decision at trial

The appellant submitted to the QIRC that the termination of his employment was made in an unfair and unreasonable way given the employer (1) had formed a negative view of his work performance (2) did not give consideration to moving the appellant to another role and (3) neither consulted with, nor notified, the worker of the possibility of redundancy at any time prior to the meeting. The appellant was particularly critical of the manner in which his redundancy was communicated to him, particularly noting that:

  1. He had no advance notice of the meeting held in August 2018, nor the purpose of the meeting.
  2. He had only a few months before the meeting been given an impression by his supervisor that his job was safe, and had no inkling of his position being redundant.
  3. He was not given the opportunity to have a support person at the meeting even though his supervisor knew it would be a complete surprise of his redundancy.
  4. The employer had no redundancy or termination policy.

The QIRC found that although it was reasonable for the employer to form a view about the appellant’s work performance, the fact that there was no evidence to show that those concerns had been put to the worker prior to the meeting constituted unreasonable management action.

It was also determined that there ought to have been an appropriate consultation process before reaching a definitive view as to the redundancy, and the employer’s failure to do so constituted unreasonable management action.

However, the QIRC was most critical of the manner in which the appellant was informed of the redundancy meeting in August 2018. It found that the employer’s failure to notify the appellant of the reasons for the meeting and giving him the opportunity to bring a support person had the effect of ‘blindsiding’ him. This conduct was found to be neither reasonable management action nor taken in a reasonable way.

Ultimately, the QIRC allowed the appellant’s appeal, setting aside the decision of the Regulator and accepting the worker’s application for compensation under the WCRA.

Implications for you

The case highlights that although section 32(5) of the WCRA provides that termination of employment can be excluded ‘management action’, it is still important for an employer’s actions in formulating a view regarding employment and carrying out the termination to be reasonable and reasonably taken.

Scott v Workers’ Compensation Regulator [2021] QIRC 110

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