‘Not a master-servant relationship’: Employers need to clean up their dismissal processes

After a recent High Court decision ordered an employer to pay over $1.4 million to a former employee who claimed psychiatric injury, correct dismissal processes have never been more important.

HR Leader recently spoke to Aaron Goonrey, partner and head of employment for the Asia-Pacific region at global firm Pinsent Masons, about the recent High Court decision that overturned a century-old precedent.

The case involving Vision Australia and its former employee Adam Elisha found that the employer was in breach of Elisha’s contract in how it investigated alleged misconduct. This investigation and the defective disciplinary process were described as both a “sham” and “disgrace” by one of the judges who oversaw the case.

Due to this, Elisha alleged that he sustained a severe psychiatric injury. After a long legal process, Elisha was awarded $1,442,405 in damages. Goonrey believes the decision is important as it now opens the door for employees to at least make the argument that a psychiatric injury comes by way of their employer’s action or inaction.

“This decision is important because it does let or allow employees to potentially make the argument that [they] have suffered a psychiatric injury as a result of [their] employers actions. Whether or not that’s a breach of contract is a completely different story,” said Goonrey.

“[That] is one of the takeaways that both lawyers and lawyers advising their clients should be looking at and considering very carefully, particularly given the new year. It’s overturned a very long-held precedent that you couldn’t get psychiatric injury damages for the manner of dismissal.”

Despite Goonrey agreeing that a new precedent has been set based on the High Court’s decision, he was reluctant to believe that it would be a catalyst for an avalanche of employee wins based on employer actions when it comes to psychiatric injury. The reason is that, unlike a physical injury, getting the proof and documentation can be more strenuous.

“In terms of psychiatric injury claims, particularly that arise in the workplace and as a result of the employment relationship, it will probably be harder or more challenging for employees to prove that because it’s not readily available.

“So, you as an employee would need to get more medical evidence as opposed to, for example, breaking your arm or something like that, which is quite evident,” said Goonrey.

At the same time, Goonrey believes the decision acts as somewhat of a wake-up call for employers, ensuring that they understand their own policies, contracts, and processes before they dismiss an employee.

“I think what the High Court references in their decision, the majority is actually spot on in terms of the way you deal with an employee as an employer; you have to deal with them not in a master-servant relationship, but in a fair and reasonable way,” said Goonrey.