In Comcare v Martin (2016), an employee made allegations of bullying against her supervisor, which were found to be unsubstantiated. She later made a workers' compensation claim when the employer refused her application for a permanent move to another role.

Following the allegations of bullying, the employee undertook a temporary role and reported to a new supervisor. Her application to be moved permanently to that position was unsuccessful. The employee "broke down" upon hearing the news, which meant she would be returned to her previous role under her former supervisor, who she had accused of bullying. The employee sought medical treatment and was said to be unfit for work due to a psychological illness. Her claim for workers' compensation was refused by Comcare and she appealed to the Administrative Appeals Tribunal of Australia (Tribunal).

Workers' compensation claim

While workers' compensation legislation is slightly different in each jurisdiction, generally an employee will be entitled to receive workers' compensation payments if:

  • he or she has suffered an injury or illness; and
  • the injury or illness is work-related, i.e. employment is a significant contributing factor.

Under the legislation, a mental injury is not compensable if the injury was caused by reasonable management action.

Reasonable management action

The Tribunal said one of the operative causes of the employee's psychological condition was the failure to obtain the new permanent position, which was reasonable management action. However, the former supervisor's involvement in the decision-making process meant that the action was not carried out in a reasonable manner and compensation was awarded.

On one of the appeals, the High Court dealt with the legal question of causation, which it found was incorrectly applied by the Tribunal. The matter was remitted back to the Tribunal to be determined according to the correct law. The High Court reminded the parties that the purpose of the exclusion of mental illness caused by reasonable management action was to "ensure that the wide range of legitimate human resource management actions, when undertaken in a reasonable manner, do not give rise to eligibility for workers' compensation".

Lessons for employers

Most legitimate management or administrative actions, such as performance reviews or attending to disciplinary matters, will not be compensable under workers' compensation. However, it is important to remember that the steps leading up to that action, and the circumstances surrounding it, must also be undertaken reasonably.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.