Minimising the stress of stress claims

We'd all like to believe the cliché that when the going gets tough, the tough get going. But in tough economic times, all employees, even those who seem able to tough it out, are vulnerable to workplace stress.

This stress might be caused by real or rumoured redundancies, reductions in hours of work and redeployments or it might arise out of the tough human resource decisions employers sometimes have to make.

There are obvious benefits in adopting a pro-active approach to minimising work place stress, including:

• Reduced absenteeism.
• Reduced "presenteeism", where employees are at work but not performing at the required level.
• A happier, more focused and productive work force.
• Less time wasted in dealing with a compensation claim.

What the law says

Employers in WA may know of their responsibility to ensure their workplace is free from hazards under the Occupational Safety and Health Act 1984 ("OS&H Act"). However, employers may not know that a "hazard" is defined as anything that may result in harm to the health of a person. While most employers are conscious of the need to protect their workers from physical harm, they may not be aware of the responsibility they have for the mental well-being of their employees.

Obviously, employers aren't responsible for every bad feeling an employee might have and sometimes employers have to make tough decisions that inevitably impact on the mental well-being of their employees.

The question for employers is: how do I run my business effectively and still look after my employee's mental well-being?

Work place injuries are covered by the Workers' Compensation and Injury Management Act 1981 ("Compensation Act"). The Compensation Act defines what an injury is and isn't, specifically excluding a disease caused by stress if that stress arises from the worker's actual or expectation in relation to dismissal, retrenchment, demotion, discipline, transfer or redeployment.

But, there's a catch... employers can still be responsible for a stress injury arising in these circumstances if the inactions are unreasonable or harsh.

Does this mean I can't sack someone?

Employers can still make the tough decision to dismiss, retrench, demote or discipline their workers, they just have to follow the right process.

Case study 1:

Jack's Supplies Pty Ltd employs 16 workers. One of them, Jason, had been employed for three years. Jason wrote to his boss, Carmen, stating that for many months, three other employees had been bullying him. She'd also received some complaints about Jason. Carmen was really busy and she put the complaints in a file, thinking she'd deal with it when things settled down.

Three weeks later, Carmen found the file and decided to take some action. She investigated and decided that Jason should be disciplined so he was transferred to an administrative position which meant his career progression was inhibited.

Several months later, Jason put in a claim for compensation arising out of the psychological injury he'd suffered while employed at Jack's Supplies which was caused by Carmen's handling of the complaints. The investigation of Jason's compensation claim could not find evidence to show that he had been bullied but did find that Carmen's actions before transferring him were unreasonable. Although stress caused by the transfer was an excluded category, Carmen's process of dealing with the complaints both caused an illness and a successful claim.

Case study 2:

Belinda employed Jill at one of her hairdressing salons. She knew that Jill was upset about things happening in her life. She also knew that Jill had seen a doctor about this and had taken some time off work to deal with her emotions.

One day, Nathan, a stylist at the salon where Jill worked, rang Belinda and reported that Jill had thrown a hair dryer at Chloe, another stylist. The hair dryer had not struck Chloe but the incident had frightened her. Belinda went straight to the salon and transferred Jill to another salon 25 kilometres away.

Jill put in a claim for compensation arising out of the psychological injury she'd suffered by being transferred. The investigation found that Belinda knew of Jill's emotional state and also knew that the transfer would have an adverse effect on Jill's health. It also found that Belinda had very limited evidence that she transferred Jill as a disciplinary action.

It's easy to see why these employers ended up in trouble! They didn't act reasonably to ensure that their employees were protected from stress or that they were not exposed to claims.

Clearly, prevention is better, and much cheaper, than a cure. When employers are presented with claims for stress, they incur a lot of expense in defending themselves. Just having an employee off work for a long period of time can be costly. When many businesses are facing considerable economic pressure, it makes good sense to avoid these unnecessary expenses.

Acting reasonably

An employer who wants to be seen to have acted reasonably when dealing with an employee should:

• Investigate claims swiftly, fairly, transparently and in an unbiased manner.
• Document all findings.
• Communicate regularly with the employee during the investigation.
• Not dismiss a complaint because it lacks detail without trying to obtain that detail.
• Consider carefully a transfer or demotion of the employee to a role which may inhibit their career.
• Look for indications of the employee's emotional health and act carefully.
• When employers do have to make some tough human resource decisions, they should:
• Have an employee assistance program in place so employees can get advice and counselling.
• Deal openly, honestly and fairly with all employees.
• Comply with all laws including the OS&H Act, Compensation Act, Equal Opportunity Act and the Fair Work Act .
• Get expert advice if they are unsure about how to proceed.

Your business depends on you making the right decisions, no matter how tough those decisions may seem. Employees know this - they just want to be treated fairly. If you keep their well-being in mind, you'll go a long way to minimising their stress and, ultimately, your own.

For further information or advice on this topic, please contact Mark Hemery, Principal, on mhemery@talbotolivier.com.au or Joanne Deligeorges, Lawyer, on jdeligeorges@talbotolivier.com.au.

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