A recent High Court ruling highlights the significant legal and financial consequences that can arise if an employer fails to uphold procedural fairness in the workplace, particularly when such failures contribute to an employee’s psychiatric injury. 

With a $1.44 million payout awarded to the employee, this decision underscores the need for businesses to carefully assess the foreseeability of harm when handling disciplinary matters.  

Employers must ensure that workplace policies and employment contracts are not only well-drafted but also adhered to in practice, as deviations from established procedures can lead to serious repercussions, both from a legal and reputational standpoint. 

Case background: Employee behaviour on a work-related trip 

Mr Adam Elisha was employed by Vision Australia as an Adaptive Technology Consultant from September 2006. In March 2015, while on a work-related trip to regional Victoria, an incident occurred at his hotel. The hotel’s proprietor alleged that Mr Elisha behaved aggressively and intimidated staff. This allegation was later supported by two Vision Australia employees who stayed at the hotel afterward and reported the matter to Mr Elisha’s manager. The manager, already aware of previous concerns about Mr Elisha’s behaviour, initiated an investigation. 

On May 19, 2015, Mr Elisha was formally informed of a serious complaint against him and was issued a stand-down letter. He was required to attend a disciplinary meeting two days later, conducted in accordance with Vision Australia’s enterprise agreement. 

During the meeting, Mr Elisha denied the allegations. However, Vision Australia decided to accept the hotel proprietor’s account over Mr Elisha’s, citing past allegations of aggressive behaviour. Notably, these prior incidents were considered in the decision-making process but were not disclosed to Mr Elisha during the meeting. On May 29, 2015, Vision Australia terminated Mr Elisha’s employment for serious misconduct. 

Mr Elisha subsequently lodged an unfair dismissal claim, which was settled for the maximum allowable compensation – six months’ pay, totalling $27,428.68. 

In August 2020, he pursued further legal action in the Supreme Court of Victoria, seeking damages for psychiatric injuries, including major depressive disorder and an adjustment disorder with depressed mood, which he claimed resulted from his termination. The claim eventually escalated to the High Court of Australia.  

The High Court ruling  

The critical question in this case was whether Vision Australia and Mr Elisha, at the time of entering into the employment contract, should have reasonably foreseen that a serious breach of disciplinary procedures and termination of employment could lead to Mr Elisha developing a serious psychiatric illness. 

The High Court found that: 

• A severe breach of disciplinary procedures that causes significant injustice to an employee, as occurred in this case, presents a serious risk of leading to psychiatric illness.  
• This risk was reasonably foreseeable by both Vision Australia and Mr Elisha when the employment contract was established. 
• Vision Australia’s scope of liability for damages relating to a breach of contract included psychiatric injury.  
• Vision Australia Ltd must pay dismissed employee Mr Elisha $1.44 million, inclusive of damages for psychiatric injury resulting from his wrongful termination.  

What this case means for employers in Queensland 

Fair disciplinary processes matter 

Disciplinary processes must comply with procedural fairness requirements in applicable enterprise agreements, policies and legislation, including unfair dismissal laws in the Fair Work Act. 

Foreseeable harm must be considered 

Employers need to recognise that serious procedural breaches can have significant mental health impacts on employees, which could result in awarded damages for psychiatric injury.  

Contracts must be clear 

There must be a clear distinction between documents that are intended to impose legally binding contractual obligations, and internal policies and procedures.  

Be aware of legal and financial risk 

If an employer’s actions create undue stress or harm, courts may hold them accountable, potentially leading to financial penalties and reputational damage. 

How can Business Chamber Queensland help? 

Psychosocial hazard risk management process: Business Chamber Queensland provides expert support to businesses in identifying, managing, and mitigating psychosocial hazards through a proactive and structured approach. Our Psychosocial Hazard Risk Management Process helps businesses implement effective risk controls to ensure a safe and legally compliant workplace. 

Comprehensive workplace investigations: We can also conduct comprehensive workplace investigations to determine the root causes of psychosocial risks, provide practical recommendations to resolve issues, prevent recurrence, and ensure that findings align with best-practice employment law and workplace safety standards. 

Workcover assistance: Our team can provide guidance on employer obligations when managing claims, support employers with claim assessments to determine validity and appropriate next steps and assist businesses to develop preventive strategies to reduce the likelihood of future claims. 

Business Chamber Queensland members with HR services as part of their membership can reach out at any time on 1300 731 988. For all other Queensland businesses, the team also offer cost-effective consulting services to help businesses navigate HR or workplace challenges, and to help them put the policies in place their workforce needs to thrive.