WorkCover Case Study: When can you be compensated for a work-related psychological injury?

TGB’s Mal Byrne analyses a recent South Australian Workers Compensation Tribunal decision regarding workers compensation for psychiatric injuries. 

Update- The law in this area has now changed due to the enactment of the Return to Work Act 2014 (SA). For more information click here.

The law:

The relevant section of the Workers Rehabilitation and Compensation Act 1996 (SA) that governs the compensability of psychiatric injuries is Section 30A; which states:

An injury consisting of an illness or disorder of the mind is compensable if and only if –

a)The employment was a substantial cause of the injury; and

b)The injury did not arise wholly or predominantly from –

I.Reasonable action taken in a reasonable manner by the employer to transfer, demote, discipline, counsel, retrench or dismiss the worker; or

II.Decision of the employer, based on reasonable grounds, not to award or provide a promotion, transfer, or benefit in connection with the worker’s employment; or

III.Reasonable administrative action taken in a reasonable manner by the employer in connection with the worker’s employment; or

IV.Reasonable action taken in a reasonable manner under this Act affecting the worker;

The facts:

The recent SA Workers Compensation Tribunal decision of Cheriton & LGA Workers Compensation Scheme (District Council of Mount Remarkable) [2014] SA WCT 5 made on the 25th of February 2014 illustrates how the above section is applied.  The worker was the CEO of the District Council of Mount Remarkable.  He lodged a claim for work related psychological illness seeking wages and medical expenses.  He asserted that he became ill after the Council advised him that they decided to terminate his contract of employment early.

The Council conceded that the worker was suffering from an incapacitating psychological illness but argued that the claim should be rejected on the basis that the illness predominantly arose from the earlier decision of the Council not to offer the worker a further fixed period of employment.  As they regarded that decision as being reasonable, the Council argued that the claim should be excluded under Section 30A(b)(i).

The CEO had been employed in 2004 pursuant to a fixed term contract.  The Contract was renewed in 2008 for a further five year term expiring on 30 April 2013.  In mid 2012, the worker requested an extension of his employment.  On 9 October 2009, the Council decided not to offer the worker a further fixed term of employment.  However, on the day after the decision, the worker was contacted by a local journalist who sought his confirmation that the Council had taken the decision not to renew his contract and an article was subsequently published.  The Council contacted the Worker through an agent and offered him a severance payment if he left early.  The worker rejected the proposal and continued to perform his duties.  The Tribunal agreed that the Council’s action up to this point in time were consistent with the terms of the worker’s contract.  However, on 19 November 2012, the Council resolved at a meeting to terminate the CEO’s position as at 21 December 2012.  This was not consistent with the workers contract of employment.  The worker said that at this point, he began to experience psychological symptoms which then deteriorated to the point where he was hospitalised for two weeks in mid 2013.  The worker was diagnosed with a major depressive disorder.

Issues for determination:

The Tribunal pointed out that the issues for determination were as follows:

1.The correct identification of the diagnosis.

2.The cause or causes of the illness;

3.Which of the cause or causes of the illness was a predominant cause;

4.Has the worker proven that the predominant cause was not reasonable action taken in a reasonable manner with respect to his employment.

The Tribunal concluded that the worker had suffered a serious depressive illness in the nature of either a major depressive disorder or an adjustment disorder with depressed mood.  The Tribunal then had to determine what was the cause or causes of the illness and work out what was the predominant cause.  The Tribunal found the breach of confidentiality by Council was a cause as well as the decision on 9 October 2012, but the predominant cause of the illness was the action of Council on 19 November 2012 to end the applicant’s employment early as at 21 December 2012 after he rejected the package.  Having made that decision, the Tribunal then had to turn its mind to whether the action of Council to terminate the applicant’s employment early was reasonable.  The worker argued that it was not reasonable because of his contractual protection from early termination without notice and consent.  The Council responded by arguing the contract was not in fact terminated early, but instead, the worker was instead paid early without being required to attend between 21 December 2012 and 30 April 2013.  Council relied on the fact that the workers pay had been paid in advance right through to the end of 30 April 2013.  As the worker had been paid to 30 April 2013, the Council argued that there was no termination and that the decision of Council was therefore not inconsistent with the worker’s contract.

The Tribunal disagreed with the Council pointing out that the action on 21 December 2012 effectively ended the worker’s employment without his consent.  The worker was required to return his keys, logins, and other property and was denied access to the office and the use of the council supplied car.  His superannuation contributions and insurance cover ended.  The worker was told that his deputy would be acting CEO until a permanent appointment was made.  The worker’s position was advertised in the local paper.

Findings:

The Tribunal found that the Council’s decision was unreasonable as it was in breach of the worker’s contract of employment. Council argued that the termination decision was not unreasonable as a review report of the worker’s performance showed there was dissatisfaction and that the review process effectively put the worker on notice that early termination was likely to occur.  The Tribunal disagreed.  The Tribunal found there was no connection between the performance review process and the early termination decision.  The performance review report had a mixture of positive and negative comments but there was no indication in the report that the worker’s performance was so bad that termination was justified.  The review was not conducted in accordance with the contractual provisions dealing with termination and there was nothing in the report to indicate that early termination was warranted.

Test for compensability:

Hence, in section 30A cases, the test for compensability is a four stage process:

1. Has the worker suffered a diagnosable psychiatric illness?

2. What is the cause of the psychiatric illness?

3. If there is more than one cause, what is the predominant cause?

4. Is the predominant cause not due to reasonable action taken in a reasonable manner by the employer?

The first three are a question of medical evidence and the last one of fact.  It’s important to remember that both the action and manner of the employer must be reasonable too.  It’s no wonder that trials in these matters are often complex and lengthy.

For a free initial interview about your workers compensation issue, contact me or register online. Tindall Gask Bentley is South Australia’s largest personal injury law firm.