How should employers respond to psychological risk?

Consider the scope of an employer's duty of care 5 min read

A recent decision of the County Court of Victoria highlights the complexities around management of psychological health and the scope of an employer's duty of care.

In this case, the court dismissed a worker's negligence claim for a psychological injury which he claimed was sustained as a result of stress related to 'unrealistic' sales targets enforced by his employer.¹ The court determined that, in the context of the employer's commercial operations, the employer took adequate steps to alleviate the worker's stress and, as such, did not breach its duty of care.

Key takeaways

Psychological injuries can be complex, and employers can face challenges in understanding when and how to intervene. However, in line with an employer's duty to provide a safe workplace, employers should put in place measures to assist workers who may be at risk. These measures may include:

• monitoring employee behaviour to identify signs of stress or an inability to carry out required duties;
• supporting a flexible workplace;
• investigating and responding to complaints made by employees regarding their duties and stress levels;
• monitoring interactions between employees and customers or clients, and investigating complaints regarding employee behaviour;
• enforcing strict start and finish times for employees and encouraging regular breaks;
• monitoring overtime and reallocating the workload; and
• clearly communicating how performance-based bonuses are calculated.

Background

Mr Shearer was employed as a call centre salesperson for iSelect Services (iSelect) where he earnt a base salary and was eligible for performance bonuses upon satisfaction of sales targets. Mr Shearer claimed he developed a stress-related psychological condition as a result of long hours, lack of downtime, deadlines and pressure to meet sales targets. Mr Shearer was eventually required to leave work suffering from a Major Depressive Disorder.

Mr Shearer commenced proceedings against iSelect for a worker's negligence claim. Mr Shearer alleged that the risk he would suffer a psychological injury was reasonably foreseeable and that the steps iSelect took to reduce his stress were inadequate and therefore amounted to a breach of its duty of care. Mr Shearer claimed that iSelect should have allowed him to remain on inbound calls only without daily sales targets, facilitated a transfer to a non-sales division or reduced his work hours.

Decision

The court determined that iSelect was put on notice of Mr Shearer's stress and related stress symptoms. iSelect was well informed of the pressure Mr Shearer felt from attempting to achieve his sales targets, that he was suffering burnout and that his doctor had considered him 'borderline depressive'. The possibility of Mr Shearer's work duties leading to a diagnosable psychological injury was deemed reasonably foreseeable.

However, the court concluded 'reasonable foreseeability of psychological injury to [a] particular employee alone is not sufficient to enliven the duty of care'. An employer's duty of care 'cannot be considered without taking account of the obligations which the parties owe one another under the contract of employment'. In this case, this included:

• Mr Shearer was employed as a sales person to sell iSelect's products in a manner that it prescribed. Mr Shearer was aware of his sales targets and that it was part of his job to meet those targets. These duties and obligations were provided for in Mr Shearer's contract of employment.
• iSelect was under an obligation to modify Mr Shearer's work, where reasonable and within the context of their commercial operations.

In determining the reasonable steps expected to be taken by iSelect, the court considered the following:

• iSelect had granted Mr Shearer considerable time away from work;
• when iSelect became aware that there were difficulties with Mr Shearer being able to meet his targets, it referred him to a psychiatrist;
• iSelect saw an increase in business which meant increased inbound and outbound calls;
• iSelect was a commercial operation which employed salespersons to sell its products in the manner it determined;
• despite Mr Shearer's stress symptoms, he had decided to recommit to iSelect on two separate occasions and wished to stay with iSelect long term;
• iSelect had moved Mr Shearer to a different division within the company; and
• iSelect had followed medical advice and had reduced Mr Shearer's hours.

Mr Shearer claimed iSelect should have taken additional steps to manage his stress. These included reducing / removing his sales targets, moving him to a different area of the company (preferably a non-sales area) or changing the type of calls to which he responded. The court concluded that it was not reasonable for iSelect to take these steps. By taking these steps iSelect would have been placing Mr Shearer in a special position. This may have affected his ability to earn, and affected the regard in which he was held by managers or other employees. Additionally, there was insufficient medical evidence to suggest that had iSelect taken these steps that they would have prevented or significantly reduced the risk of Mr Shearer suffering a psychological injury.