Under new management: Reasonable management action and psychological injuries

Workers compensation legislation in each jurisdiction provides a “reasonable management action” defence or exception to claims of alleged psychological injury. The defence states that where an employee suffers a psychological injury as the result of management action, the employer will not be liable for that injury if the management action was reasonable and carried out in a reasonable manner.

In B v Workers Compensation Regulator [2017] QIRC 049, the Queensland Industrial Relations Commission (the Commission) recently examined the reasonable management action defence when it dismissed a worker’s claim for workers compensation for a psychological injury, finding that the employer’s action was not unreasonable management action.

Mr B (the Worker) was employed by BWS (the Employer) as a full-time liquor assistant / relief manager. He had transferred to a new store at his request following a disciplinary process in which he was issued with a first and final warning.

The Worker had worked at the new store for only five days when he alleged that he was subject to unreasonable management action from the Store Manager and Area Manager, including that he was:

  • Relocated to the store to be micromanaged in order to bring about the termination of his employment;
  • Verbally abused in front of a customer;
  • Directed to perform a task in an unreasonable time period; and
  • Treated in a hostile manner because he arrived late to work.

The Worker lodged a claim for workers compensation alleging that he sustained a psychological injury as a result of the “intentional hardship” from the Store Manager and Area Manager. The Worker’s claim was initially rejected by the Workers Compensation Regulator (the Respondent), a decision he then appealed to the Commission. 

While the Worker’s injury was not in dispute, the Employer argued that the injury arose out of or in the course of reasonable management action taken in a reasonable way. Accordingly, the Commission had to determine whether the Employer’s management action was reasonable management action taken in a reasonable way.

The Worker submitted that the Employer had an obligation to relocate him to a nearby store because he would be relying on public transport and that the Area Manager was unreasonable for failing to do so. The Worker also submitted that the Area Manager made unnecessary visits to the store and was closely monitoring him. It was the Worker’s belief that the Area Manager transferred him to the particular store in order to closely supervise him and to find opportunities to terminate his employment.

The Commission heard that the Worker initially sought to transfer to another store following a disciplinary process and then sought to be relocated to a store close to his home because his driver’s licence was suspended. The Commission noted that the Area Manager reasonably sought to accommodate the Worker’s request and made rostering arrangements which factored in the Worker’s travel arrangements. The Commission held that the Area Manager’s management action was not unreasonable and found that there was no evidence that there was a premeditated plan to terminate the Worker’s employment or that he was the subject of excessive monitoring.

The Commission also rejected the Worker’s claims of unreasonable management action by the Store Manager. It was held that the Store Manager:

  • Was entitled to counsel the Worker about his customer service and that it was not done in front of a customer; and

  • Reasonably enquired with the Worker about his progress on a task.

Further, despite the Worker’s claim that the Store Manager attended work on his day off just to reprimand him about his repeated late arrival to his rostered shift, the Commission held it was the Store Manager’s choice to do so and it was reasonable for him to address the Worker’s repeated lateness.

The Commission held that the Worker’s allegations of unreasonable management action had not been made out and dismissed the Worker’s appeal. The Commission expressed the view that other underlying considerations, including the Worker’s belief that he would be unfairly managed and fear of termination of his employment were factors, rather than the conduct of the Store Manager and Area Manager which caused the development of the Worker’s psychological disorder.

Generally, the approach to what will be considered to be “reasonable” is objectively determined having regard to all of the circumstances and does not mean the action must be “perfect” or “ideal”. The decision highlights to employers the type of conduct by management which will be considered to be reasonable management action taken in a reasonable way. 

Shane Koelmeyer is a leading workplace relations lawyer and Director at Workplace Law. Workplace Law is a specialist law firm providing employers with legal advice, training and representation in all aspects of workplace relations, employment-related matters and WH&S.

02 9256 7500 | sydney@workplacelaw.com.au

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