Placing an overworked, stressed and under-resourced employee on a performance improvement plan contributed to the employer owing him one million dollars in workers’ compensation.

A significant 2015 workers’ compensation case, which was heard by the Supreme Court of Queensland in a four-week trial last December, acts as a timely reminder for employers to address resourcing issues as quickly as possible.

Shortly after a payroll supervisor was employed to “fix the staff and fix the [payroll] system” at a local government organisation, three experienced members of his team took prolonged sick leave, due to conflict within the team and issues concerning their performance.

The payroll supervisor then worked excessive hours to manage an “unusually demanding workload”, as well as a “higher than usual risk of errors occurring in the payroll unit”, according to Justice James Henry of the Supreme Court of Queensland.

Henry noted that although there was some temporary support provided to the payroll unit, the assistance was insufficient to meet the team’s requirements, which necessitated highly technical skills.

The supervisor asked for additional permanent staff members to join his team, but said his requests received no response or were met with confusion as to why, apart from “general workload”, the unit needed extra staff.

The supervisor noted that his stress was increased by the expectation to attend what he described as “non-essential” work meetings.

Other employees at the organisation observed that the supervisor appeared tired, stressed and withdrawn. The supervisor also disclosed to his manager that he lived with a pre-existing mental health condition.

The supervisor’s psychological health deteriorated to such an extent that he developed a tremor in his right arm and a severe stutter, which worsened when he discussed work matters. Henry also found that his depression, anxiety, post-traumatic stress disorder symptoms were exacerbated due to work-related stress.

“The judge found that the employer should have been aware of a reasonable risk of psychiatric injury… the line had been crossed.” – Kelsey Hunter, Senior Legal Counsel, Source.

The payroll supervisor was eventually stood down for two days and asked to attain a medical clearance in order to resume work. He returned to work but never provided a fit for work certificate. This was never chased up by the employer. 

Henry noted that when the risk of payroll mistakes manifested, with the discovery of apparent errors at the end of the financial year in mid-2015, the blame was pinned on the payroll supervisor, when it should have sat with the organisation due to the “extraordinary work pressure which had been on him and his unit”.

As a result of these errors, the supervisor was placed on a formal performance improvement plan (PIP).

In his testimony, the supervisor said he felt unsupported throughout the PIP meetings, and the manager responsible for his employment is said to have told various people that he wanted the employee to leave the organisation.

“I was just continually kicked until I broke completely,” the payroll supervisor said.

He claims his psychological health continued to suffer until he finished at the company in September 2015. He hasn’t returned to the workforce since.

The supervisor claimed $1.3 million in workers’ compensation, and was awarded almost the full amount – a total of $1.1 million – due to the employer’s negligence.

Workers’ compensation pay-out

Kelsey Hunter, Senior Legal Counsel at Source, says that the quantum of damages in this case was “unusually high”.

“There is a high bar for negligence cases. The individual needs to make out a number of factors – the existence of a duty, a breach of that duty, loss to the individual, and then prove that any loss or injury was caused by the employer’s breach. 

“The employee was able to [prove that in this case]. This was helped by the medical evidence which showed that the employee would not have experienced his injuries ‘but for’ the employer acting in the way that it did.”

She says another significant factor in the amount of damages awarded is that the supervisor hadn’t worked since filing his workers’ compensation claim. The supervisor provided evidence that he would have worked up until retirement age of 67. He was in his early 40s when the workplace incidents transpired.

“That’s why it’s such a big award in damages,” says Hunter. “The employee was unfortunately injured to such an extent that the court accepted he would not be able to work – or only work in a reduced capacity – for some 23 years.

“The employee is therefore able to claim not just for general damages, but for future and past earnings, superannuation, special damages including medical expenses and travelling costs to medical practitioners, and interest on those amounts. It all adds up.”

What counts as “excessive work hours”?

One of the key considerations in the case was whether the employee worked excessively long hours, as he claimed.

“The judge looked into what is an excessive workday or excessive work,” says Hunter. “The evidence showed that the employee was initially working about 30-60 minutes more per day and the judge found that wasn’t excessive,” says Hunter.

“However, during a later 14-week period, the supervisor was working about 12 extra hours a week for 14 weeks, including on the weekends.”

Henry found the hours worked in that 14-week period to be excessive, and that the employer was aware of the overtime being worked.

Photo: Pexels, cottonbro

When assessing whether the hours were excessive, Henry noted the employer should’ve been attuned to the fact that the supervisor, who typically worked a 9-day fortnight and took every second Friday off, asked to cash out those rostered days off.

“He said he wasn’t able to use them because of the current workload. Eight days were [paid] out, so that’s at least a 16-week period. The employer was aware that the hours were excessive to such an extent that he wasn’t able to [take his usual days off].

“There were also notes from HR saying they had concerns for the health of the team, and that the employee wasn’t coping,” says Hunter.

“Many people observed him being tired, upset, withdrawn, and generally not himself.”

However, excessive hours alone, in addition to the supervisor’s change in behaviour, were not sufficient to find the employer had breached its duty of care.

“When employees see someone is withdrawn and tired, it could be because, for example, they’re disappointed in something that’s happened at work,” says Hunter.  “It doesn’t necessarily follow that there was a foreseeable risk of psychiatric injury.”

Pre-existing mental health issues

Henry distinguished between the reactions of “a person of ordinary fortitude” as opposed to an employee who lives with a pre-existing mental health condition.

He said that demanding hours alone would not cause “psychiatric injury to a person of ordinary fortitude”. 

However, the fact that the employer became aware of the supervisor’s pre-existing mental health illness when he disclosed to his manager that he was taking antidepressants was a major factor contributing to the judge’s ruling.

“He came to [his manager’s] desk, showed her the antidepressants and cried,” says Hunter. “It was at that stage that the judge found that the employer should have been aware of a reasonable risk of psychiatric injury… the line had been crossed.

“This is a really interesting case because it’s not a situation of an employee who had no pre-existing conditions before commencing work with the employer. 

“The pre-existing condition was mild, however, even so, that injury potentially increased the risk of psychiatric injury to this specific employee. This is relevant because the duty in negligence is specific to the individual, and not a generic test of psychiatric injury.”

 “When the employer knew the team had been overworked and understaffed, this should have [prompted] a natural and obvious query. In these circumstances, it was likely not reasonable for the employee to have been placed on a PIP.” – Kelsey Hunter, Senior Legal Counsel, Source.

Even before the employee informed the manager that he was taking antidepressants, there were alarming signs of distress.

“If you have an employee who is showing up to work, behaving differently, crying, and even starting to shake in the workplace, I would expect that a reasonable employer would be concerned about the employee’s wellbeing, and about their duties to provide a safe working environment.”

The organisation offered the supervisor access to the employee assistance program (EAP) via a letter, but Hunter says stating that EAP access is there for the employee ‘if necessary’ in such letters is “not always helpful”.

“Rather than writing, ‘If it’s necessary, you can reach out to the EAP,’ I’d suggest wording the letter in a way that says the EAP is there to help the employee. In some cases, the employer will also engage an EAP service to be there in the room, or in the next room, when they’re having a stand down conversation, so they can then have a warm handover for [the employee] to speak with [a mental health professional].”

It would also be prudent for the organisation to send a letter to a medical examiner which outlines the basis of the employer’s concerns and observations, she says.

“It’s also good to [ask the medical examiner], ‘If this employee can return to work in some capacity, what are some things that can be put in place to help them?’ There are reasonable adjustments that could have been made, such as ensuring the employee wasn’t working more than X number of hours per day and/or had additional support to perform their role.”

Make sure you know your legal obligations to employees who have a pre-existing mental health condition. AHRI’s course, Introduction to HR Law, can be tailored to your organisation’s needs. Enquire today.

Performance improvement plan was unfair

The reason the employer’s case fell down was largely because of the imposition of the PIP, says Hunter.

The supervisor was not consulted to explain the payroll errors, but instead placed on a PIP without much additional discussion.

Hunter says there were a number of alternative approaches that could have resulted in a more favourable outcome for both the employer and supervisor.

“The employer could have told the employee about some of the alleged errors in his team, and then asked him if he could explain any causes for these potential errors.

“The uncovering of these errors could have prompted a cultural review of the payroll team at large, particularly given the errors were made by various members of the team.”

She adds this could have led the employer to reflect upon what additional resources or support could have been provided to the team to improve their performance.

“Instead what they did was count up all the errors, attribute them to this specific employee as the leader of the team, and place the employee on a PIP, while communicating to the employee that there was no coming back from the errors.”

The Court also ruled that it should have been clear to the employer that these errors were due to understaffing.

“The judge made it very clear that there was no agitation by the employer as to what gave rise to these errors. When the employer knew the team had been overworked and understaffed, this should have [prompted] a natural and obvious query. In these circumstances, it was likely not reasonable for the employee to have been placed on a PIP.”