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A Mental Health Injury: Court overturns 115-year-old precedent

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Toxic workplaces can quickly injure employee’s mental health. Creating a positive work environment is imperative for a sustainable and efficient workplace

Mental health injury and unfair dismissal: Australian workers gain new protections

The High Court of Australia has ruled that employees unfairly dismissed can now claim compensation for mental health injuries caused by an employer’s breach of contract. The landmark decision delivered on 11 December 2024 overturned a precedent that had stood for 115 years.

The employee in this case – Elisha v Vision Australia Limited [2024] – was awarded $1.44 million in damages. Prior to this decision, mental health injuries caused by an employer’s breach of contract were not compensated. The ruling means that employers now have a greater duty of care to prevent psychological harm during disciplinary processes or terminations.

The case centred on Vision Australia and its former employee, Adam Elisha. Mr Elisha began working for the not-for-profit organisation in 2006 as an adaptive technology consultant. His job involved visiting the homes of vision-impaired people across the country to help them set up their software and hardware systems.

Prior to his dismissal, Mr Elisha had seen a doctor and a psychologist to treat his anxiety and depression. The latter observed that he was suffering from workplace stress and had “interpersonal difficulties” with some work colleagues. They also noted that he had “significantly heightened sensitivity to particular sounds.”

Worker gets involved in ‘aggressive’ interaction

The key event that led to Mr Elisha’s dismissal took place on 23 March 2015. He was 34 years old at the time. He had been on the road for work and was staying in a hotel in rural Victoria. In the very early morning of that day, Mr Elisha got involved in an altercation with one of the hotel’s owners.

Vision Australia alleged that Mr Elisha had phoned the hotel’s reception at around 12:30am. When the hotel owner called back, he was alleged to have answered: “I have a noise in my room fix it.” The owner said she needed a couple of minutes to get to his room. Which prompted Mr Elisha to allegedly tell her “you better be.” When the owner arrived, he then pointed to a corner of his room and said there was a “clicking noise” coming from outside.

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No one has to tolerate abuse or bullying from their superior. It may feel like an endless cycle but employees do have general protections in the workplace to protect them against retaliation or revenge.

The owner said she could not hear anything. She said there were no maintenance staff available to check outside. At this point Mr Elisha allegedly said: “You’re the Manager you have to fix it, are you not able to do your job, are you not able to do any job, are you incapable of doing anything.” He then verbally attacked the owner for several minutes, standing between her and the door. Eventually, the owner agreed to move Mr Elisha to a new room at 1am. 

The next morning, Mr Elisha was alleged to have thrown his room keys on the reception desk in a “rude and dismissive” way. On the receiving end was the hotel owner, who said she felt “humiliated.”

Word of incident gets back to boss

Mr Elisha then went on leave from work, taking his family on a holiday to Vietnam. During this time, two of his colleagues stayed at the same hotel where the altercation took place. The owner told them about the altercation, who claimed that Mr Elisha had been “aggressive” and “intimidating” towards her. The two colleagues subsequently reported the incident to Mr Elisha’s manager.

Worker had exhibited ‘aggressive behaviour in the past’

The High Court heard that Mr Elisha’s relationship with his manager had been “strained.” Mr Elisha told the court that his manager had been “micromanaging” him and that she was “unpleasant to communicate with.” After hearing of the altercation, his manager emailed Vision Australia’s HR representative saying “Unfortunately, whilst this should surprise me, it doesn’t.”

The manager told the HR representative that she had “verbal reports to me about [Mr Elisha’s] aggressive behaviour in the past.” The manager noted that in one instance, Mr Elisha had “responded to me very aggressively” after she asked him to stop parking in the visitor’s carpark.

In another email to Vision Australia’s general manager, the manager reported that for some time Mr Elisha’s “behaviour has deteriorated.” Regarding his latest altercation, the manager told the general manager that “I feel that this is gross misconduct and should be addressed accordingly.”

The hotel’s owner was interviewed by the HR representative, who along with Mr Elisha’s manager, offered her their “sincere apologies.”  

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Dismissals are not always fair! Employers cannot dismiss employees for no reason or because they exercised a workplace right. Find out if you were unfairly dismissed today.

Worker stood down, faced with dismissal leading to mental health injury

When Mr Elisha returned to work on 19 May 2015 he was told a “serious” complaint had been made against him. He was handed a letter saying that he was being stood down from his role. Mr Elisha claimed to the High Court that he pleaded with his manager, saying “this is just not true, none of this happened.”

In the letter, Vision Australia alleged that Mr Elisha had violated multiple Vision Australia policies. The organisation said that he had “intimidated and humiliated” the hotel owner. Mr Elisha was invited to a meeting about his alleged misconduct. Prior to the meeting, he told Vision Australian that he “vigorously” denied any of the alleged misconduct. He claimed that he “never behaved in any verbally aggressive nor intimidating manner.” 

Worker ‘showed no remorse’ in meeting

On 26 May 2015 Mr Elisha met with his manager and a Vision Australia HR representative to discuss the allegations. Mr Elisha gave his side of the story behind the altercation. He claimed that the hotel owner’s complaint could have been due to an issue with his bill from a previous stay at the hotel.

Following the meeting, the manager reported that Mr Elisha “presented himself very arrogantly and showed no remorse.” The HR representative agreed with this observation. She noted that Mr Elisha “truly doesn’t think he has done anything wrong.” She said that he “appears quite comfortable with the idea that the staff member has fabricated it all.”

On the 29 May 2015, Vision Australia managers noted over email that the altercation “is the latest example in a pattern of aggression that [Mr Elisha’s manager] can attest to.” They also noted that Mr Elisha “demonstrates no awareness that he was/is aggressive. Which adds to the unacceptable risk.”

Dismissal leads to mental health injury

That same day, Mr Elisha was handed a termination letter from Vision Australia. The letter stated that “on the balance of probability” he had acted aggressively toward the hotel owner. The organisation stated that he was dismissed for serious misconduct.

Following his sacking, Mr Elisha was diagnosed with a mental health injury – specifically with major depressive disorder and an adjustment disorder. The psychiatrists who treated him deemed that he “no capacity for work in the foreseeable future.” They stated that his “issues with anger and frustration” were not present prior to his dismissal. They noted that Mr Elisha had “a very obvious and significant change” in his behaviour.

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Worker wins unfair dismissal payout, then sues for damages

Mr Elisha submitted an unfair dismissal claim with the Fair Work Commission in June 2015. This resulted in reaching a settlement with Vision Australia, who agreed to pay him $27,248.68. This was the maximum amount he was entitled to, equivalent to 26 weeks of pay.

In August 2020, Mr Elisha took Vision Australia to the Supreme Court of Victoria to sue for damages for his damaged mental health. He argued that the organisation had breached his employment contract. He claimed that his contract included Vision Australia’s disciplinary policy and procedure. Mr Elisha argued that the organisation had not followed its own disciplinary procedures, thereby violating his employment contract.

He also argued that his contract implied that Vision Australia would provide him with a safe workplace environment. Mr Elisha argued that the organisation was obligated to take reasonable care for his safety at work. Also, that if it did not take reasonable care it could lead to a mental health injury.

Worker wins $1.44 million

The Supreme Court agreed with Mr Elisha’s argument that Vision Australia had breached his contract. Leading to him acquiring a “very severe psychiatric illness.” The court labelled the organisation’s disciplinary process as a “sham and a disgrace.” It said that if he wasn’t dismissed, he would not have developed injuries to his mental health. Mr Elisha’s former employer was ordered to pay him $1.44 million in damages.

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Often court is not necessary to pursue your employment matters. It may be easier than you think to seek justice.

Decision overturned on appeal

However, the Victorian Court of Appeal later overturned this ruling. It found that the damages awarded were inconsistent with existing legal principles derived from precedent. Specifically, it was not consistent with the 1909 House of Lords decision in Addis v Gramophone Co Ltd.

This case took place in the United Kingdom. In his ruling, the judge had said: “an employee cannot recover damages for injured feelings, mental distress or damage to his reputation, arising out of the manner of dismissal.”

The Court of Appeal concluded a breach of an employment contract did not hold an employer liable for damages related to a mental health injury. It stated that damages could only be awarded if a breach of contract caused a mental health injury that resulted from a physical injury. The court ruled that Mr Elisha’s mental health injury was too remote from Vision Australia’s contract violation.

High Court restores original Supreme Court decision

Mr Elisha then appealed the overturned decision by taking his case to the High Court of Australia. Six of the court’s justices ruled in favour of him, with one justice dissenting. They determined that Vision Australia’s disciplinary policies were incorporated into Mr Elisha’s employment contract. Therefore, the organisation’s breach of these policies directly caused his mental health injury.

The court disagreed with the Court of Appeals finding that Mr Elisha’s mental health injury was too remote from Vision Australia’s contractual breach. It ruled that an employer can be held liable for a mental health injury caused by a violation of the employment contract and the way the employee was dismissed.

Dissenting judge pleads case for employer

The one dissenting justice, however, disagreed on the question of remoteness. He stated that Vision Australia could not reasonably have anticipated Mr Elisha’s serious mental health injury at the time the employment contract was signed. He argued that such injuries would require “special circumstances” to be known to the employer at the time of contract formation.

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Worker’s $1.44M in damages restored, Australian workers win new rights

Given these findings, the High Court restored the decision of the Supreme Court of Victoria. Vision Australia was therefore ordered to pay him $1.44 million in damages that were previously awarded to him for his pain and suffering.

The court’s decision overturned a precedent that stood since 1909 – and one that many believed was no longer applicable to the modern Australian workplace. This belief was echoed by the High Court, which said:

“…the case was decided more than a century ago in a different social context and has been overtaken substantially by more recent decisions in the United Kingdom and Australia.”

The ruling therefore will have a huge impact on the rights of Australian workers. Providing them greater protections during disciplinary processes and terminations. It has created a legal precedent that can make employers accountable for the psychological impact of their actions.

Employers are now legally obligated to adhere to their own policies and procedures. If their failure to do that results in a psychiatric injury, the affected employee can now make a solid case to sue for damages.

Have you experienced a mental health injury at work?

Whether you have been bullied or subject to any other form of mistreatment, you have options to seek justice for any mental health injury caused. If this has been your experience, give us at A Whole New Approach a call today.

We’re Australia’s leading workplace mediators who can help you make a claim with the Fair Work Commission.  We understand the ins and outs of the commission and what you need to do to get compensation. AWNA do whatever it takes to get you justice, we are committ to your cause.

We offer a no win, no fee service and your first conversation with us is free and completely confidential. Call us today on 1800 333 666 to take the first step to getting compensation.

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