Elisha v Vision Australia Limited [2024] HCA 50
In a landmark decision, the High Court of Australia (HCA) has allowed an appeal, resulting in a dismissed employee being awarded $1.44 million in damages for lost earnings and pain and suffering after being diagnosed with a psychiatric injury resulting from his employer breaching his employment contract.
Facts
Mr Elisha commenced employment with Vision Australia in 2006.
Mr Elisha’s employment was governed by a written employment contract signed on 27 September 2006.
Between December 2014 and July 2015, Mr Elisha was treated for anxiety and depression, although Vision Australia was not aware of this.
On 23 and 24 March 2015, Mr Elisha was involved in an incident while he was staying at a hotel on a work trip. It was alleged that he had been aggressive and intimidating to one of the hotel proprietors, Ms Trch (Incident).
Subsequent to the Incident, two other Vision Australia employees stayed at the hotel and were advised by Ms Trch of the Incident. The two employees reported the Incident to their manager who escalated it to Mr Elisha's manager, Ms Hauser.
Since 2011 or 2012, Mr Elisha and Ms Hauser had a poor working relationship; however, Mr Elisha had not been subject to disciplinary action prior to the Incident.
After becoming aware of the Incident, Ms Hauser:
on 8 May 2015, informed Mr Van Dyk (Human Resources Manager) and Ms Eagle (a member of the People and Culture team) that she had previous verbal reports of Mr Elisha's ‘aggressive behaviour’; and
on 10 May 2015, informed Mr Garwood (General Manager of Vision Australia) that she has been aware that Mr Elisha’s ‘behaviour has deteriorated’ and ‘[she] felt that [the Incident] is gross misconduct and should be addressed accordingly’.
On 29 May 2015, Mr Elisha’s employment was terminated because of the Incident. While not known or put to Mr Elisha at the time of termination, Ms Hauser’s claims that Mr Elisha had been aggressive prior to the Incident formed part of the reason for termination.
Following Mr Elisha’s dismissal, he was diagnosed with a major depressive disorder and adjustment disorder with depressed mood and was found to have no capacity for work for the foreseeable future.
Mr Elisha also commenced unfair dismissal proceedings, which settled on 9 July 2015 for $27,248.68, being the maximum amount to which he was entitled in respect of those proceedings.
On 27 August 2020, Mr Elisha commenced the proceedings, the subject of this decision, in the Supreme Court of Victoria.
Issues
The HCA considered the following questions:
Was Vision Australia’s disciplinary procedure (Disciplinary Procedure) incorporated into Mr Elisha’s employment contract and if so, did Vision Australia breach Mr Elisha’s employment contract for failing to follow the Disciplinary Procedure?
The HCA majority answered Yes to this question.
Can damages for a breach of contract extend to a psychiatric injury?
The HCA majority answered Yes to this question.
Is liability for a psychiatric injury too remote?
The HCA majority answered No to this question.
Key Takeaways
Employers should review (and amend where appropriate) existing employment contracts, particularly legacy or outdated contracts, to ensure that any reference to a policy or procedure is not incorporated as a contractual term.
Policies and procedures should be carefully drafted to ensure that they are flexible and do not contain overly prescriptive processes, while also providing employees with clarity as to their effect.
Nevertheless, ensure training and support is in place to ensure compliance with processes under employment related policies and procedures.
Z5 Legal can assist you if you require assistance with preparing and/or updating employment contracts and preparing workplace policies and procedures.