Employment and Safety: High Court confirms employer's duty to protect employees from psychiatric injury and other developments

The latest issues, decisions and proposed changes impacting business and workplace risk 15 min read

High Court confirms employer's duty to protect employees from psychiatric injury

By Alana Perna and Andrew Wydmanski

High Court of Australia

Kozarov v Victoria [2022] HCA 12

In a highly anticipated decision, the High Court has found that the Victorian Office of Public Prosecutions (OPP) failed to take reasonable measures in response to evident signs of psychiatric injury in relation to an employee, and that this failure caused an exacerbation of the employee's psychiatric injury.

How does this affect you?

• The High Court decision provides significant guidance regarding employers' duty to protect the mental health of their employees, and confirms that employers must take a proactive approach to control known risks to the psychological health and safety of employees, including those arising from the specific nature of their work.
• Employers must follow their policies designed to eliminate or reduce risks to health and safety, as they will be relevant in assessing whether the employer was on notice of those risks and took appropriate steps in response.

Background

Ms Kozarov was a solicitor in the Specialised Sexual Offences Unit (SSOU) of the OPP, which included work on sexual abuse claims from both children and adults. Ms Kozarov developed chronic post-traumatic stress disorder (PTSD) and a major depressive disorder as a result of cumulative exposure to vicarious trauma in her files.

Litigation history

In the Victorian Supreme Court, Justice Dixon held the OPP had breached its duty of care by failing to take reasonable steps to prevent Ms Kozarov's psychological injuries, making two main findings:

• the Notice Finding: the OPP had been placed on notice of risk to Ms Kozarov's mental health on at least nine occasions, requiring it to offer her a rotation out of the SSOU to minimise the risk; and
• the Rotation Finding: Ms Kozarov would have accepted an offer to rotate into another OPP department to avoid exacerbating her PTSD. This was supported by Ms Kozarov's recognition of her need for psychological intervention, as well as her cooperation with exploring alternate roles at the OPP.

The OPP appealed and the Court of Appeal upheld the Notice Finding, but rejected the Rotation Finding on the basis that Ms Kozarov did not provide sufficient evidence to substantiate that she would have accepted a rotation into another team.

High Court decision

Ms Kozarov appealed to the High Court to reinstate the Rotation Finding made at first instance. In four separate judgments the High Court unanimously allowed Ms Kozarov’s appeal, finding that the OPP failed to provide Ms Kozarov with a safe system of work, and this failure exacerbated her psychiatric injuries.

Justices Gageler and Gleeson found that, on the Notice Finding, a reasonable employer would have observed indicative signs that Ms Kozarov was not coping with her workload and the effects of vicarious trauma, and that her mental health was at risk. They considered that the signs went beyond the inevitable experience of vicarious trauma that occurs in people who work with victims. On the Rotation Finding, it was held more likely that Ms Kozarov would have accepted medical advice to rotate out of the SSOU, and this position was not challenged by her application for a promotion in the SSOU during her employment.

Chief Justice Kiefel and Justice Keane emphasised that the formulation and presentation of Ms Kozarov's case is not a model to be emulated by future plaintiffs. It neglected the principles in Koehler¹, a 2005 High Court decision concerning the extent to which reasonable care must be taken for the mental health of an employee where the employer must be alert for signs that, because of the employee's demands, puts them at risk of developing a mental illness. It should have been undisputed that the OPP was duty-bound.

Further, the OPP's Vicarious Trauma Policy, which was established before Ms Kozarov commenced her employment with the OPP, identified the significant risks of vicarious trauma and the preventative measures the OPP should implement to reduce the risk. If the case had been run in this way, there would have been no need to consider whether one event should have reasonably conveyed to the OPP that Ms Kozarov's mental health was adversely affected by her SSOU work demands, or whether she would have accepted an opportunity to rotate out of the SSOU. There was a duty, breach, clear causation and reasonable foreseeability.

Justices Gordon and Steward considered that the OPP failed to take the following reasonable steps to provide Ms Kozarov with a safe system of work:

• providing an active and enforced occupational health and safety framework;
• providing training for management to identify red flags and respond to staff showing heightened risk;
• conducting welfare checks; and
• maintaining a flexible approach to work allocation and rotations to different departments.

Justice Edelman concluded that a reasonable employer would have been aware of the risks that existed to employees in the SSOU. As more evident signs of Ms Kozarov's psychiatric injury emerged, a reasonable employer would have appreciated that there was a considerable increase in the likelihood and seriousness of a psychiatric injury to her or, if psychiatric injury already existed, a considerable increase in the likelihood of it becoming worse.

DoorDash and Transport Workers Union sign historic agreement

By Chloe Wilton and Eden Sweeney

In an industry first, food delivery platform DoorDash and the Transport Workers' Union (TWU) have signed a Statement of Principles to Ensure Safety and Fairness for Workers in the On-Demand Economy. These principles are aimed at providing a roadmap for national legal reform of the on-demand transport industry.

Key takeaways

• The Statement of Principles is not legally binding and so does not impose any obligations on businesses in the on-demand transport industry. However, DoorDash and the TWU intend to eventually lobby the Government to implement industry-wide standards that will be based on the Statement of Principles.
• Businesses in the on-demand transport industry should carefully monitor developments in this space.

What are the principles?

The Statement of Principles includes six principles:

• Workers in the on-demand economy should not be prohibited from accessing appropriate work rights and entitlements.
• Transport workers must have transparency.
• Transport workers must have the opportunity to contribute to a collective voice.
• Transport workers must have access to dispute resolution processes.
• Appropriate resources should be allocated to ensuring industry standards are established and maintained, and to driver education and training.
• Adoption of a three-stage approach towards achieving regulation of the on-demand transport industry.

The TWU has said its agreement with DoorDash and its push for regulation in this area is aimed at providing delivery workers with the flexibility and independence they desire, whilst also providing them with a set of minimum standards and entitlements.

Watch this space

Agreeing to the Statement of Principles is just the first out of three steps that DoorDash and the TWU intend to take to secure greater regulation of the on-demand transport industry. Next, they intend to formalise a more detailed Memorandum of Understanding with each other, which will set out industry-wide standards for the on-demand transport industry. Finally, they intend to lobby the Government to implement those industry-wide standards.

Oops they did it again: the CFMMEU gets maximum penalty for contravention

By Rachel Skevington and Chloe Wilton

Australian Building and Construction Commissioner v Pattinson & Anor [2022] HCA 13

The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) has been ordered by the High Court to pay the maximum civil penalty available, for a relatively minor contravention, due to its history of prior contraventions.

Key takeaways

• The court can take into account prior contraventions when assessing penalties for breaches of industrial law, clearing the way for regulators (potentially including regulators outside of industrial law) to seek maximum penalties for relatively minor contraventions where there is a history of contraventions.
• Any contravention of industrial, employment or safety laws should be remedied as soon practicable. Employers should take positive steps to ensure ongoing compliance with relevant laws, particularly if they have a history of past contraventions.

Background

An officer of the CFMMEU made misrepresentations to two non-union employees of a subcontractor, by falsely stating that to be permitted to work at the relevant site they would need to join the CFMMEU. This conduct contravenes section 349 of the Fair Work Act 2009 (Cth) (the Act), which prohibits a person from knowingly or recklessly making a false or misleading representation about another person's obligation to engage in industrial activity. The CFMMEU had contravened s349 and other provisions of the Act on more than 150 previous occasions.

Decisions

The Federal Court of Australia accepted that the CFMMEU officer knowingly or recklessly made a false or misleading representation and imposed the maximum penalties, having regard to the CFMMEU's history of contraventions.

The CFMMEU successfully appealed the decision, and the Full Court of the Federal Court reduced the penalties. The Full Court determined that the maximum penalty could only be applied for the most serious types of contraventions and cannot be imposed merely because the contravener had a history of contraventions.

On appeal, the High Court of Australia unanimously decided that maximum penalties are not reserved for only the ‘worst’ category of contravening conduct and that the court could consider the CFMMEU's history of contraventions when assessing penalties. A maximum penalty may be justified where the contravention is part of a pattern or the contravener is well-resourced, meaning a lesser penalty may not be sufficient deterrence. A maximum penalty is unlikely where the contravention is a 'one-off', was not deliberate or was deliberate but the relevant officer has been disciplined.

The High Court emphasised that an 'appropriate' penalty will be one that deters the contravener but is not overly oppressive. In this case, the maximum penalty was considered justified due to the CFMMEU's 'demonstrated attitude of non-compliance'.

New OHS psychological health regulations in Victoria

By Tarsha Gavin, Kathleen Weston and Katherine Polazzon

Victoria's workplace health and safety regulator, WorkSafe, has prepared the Occupational Health and Safety Amendment (Psychological Health) Regulations (Proposed Regulations) after the Victorian Government flagged its commitment to introducing regulations to address psychological health in the workplace. WorkSafe is currently reviewing public comment submissions before finalising the regulations, which are currently expected to be introduced by 1 July 2022.

Key takeaways

• The Proposed Regulations will clarify employer obligations around psychological health.
• WorkSafe is also developing a new psychological health compliance code to support employer compliance with the OHS Act and proposed regulations.
• Employers should review their existing measures, policies and systems to assess their compliance with the incoming regulations and compliance code.

Overview of the proposed regulations

The Proposed Regulations have been announced following several high-profile reviews recommending changes around protecting psychological health, including the Review of Model Work Health and Safety Laws (the Boland Review), the Respect@Work Report and the Productivity Commission's Mental Health Inquiry. It also follows the recent High Court decision of Kozarov v State of Victoria regarding an employer's duty of psychosocial care in the workplace. You can read our Insight on the Kozarov decision here. 

The Proposed Regulations require employers to identify and control risks associated with 'psychosocial hazards' in the workplace. Psychosocial hazards are defined in the Proposed Regulations as any factor(s) in the design, systems, management or carrying out of work, or personal and work-related interactions which may cause an employee to experience a negative psychological response that creates a risk to health and safety.

Examples of psychosocial hazards identified include bullying, sexual harassment, aggression or violence, exposure to traumatic events or content and poor workplace relationships.

Some of the key features of the Proposed Regulations include:

• a requirement to review and revise measures to control risk associated with psychological hazards;
• a requirement to implement a written prevention plan for certain psychosocial hazards; and
• for employers with 50 or more employees, a duty to report to WorkSafe about reportable psychosocial complaints (meaning a complaint of bullying, sexual harassment, aggression or violence). Employers will be required to keep a copy of any report for five years.

While duties and requirements under the Proposed Regulations are expected to apply from 1 July 2022, enforcement of penalties for failure to comply with certain duties under the Proposed Regulations will not commence until 1 September 2023.

Federal Court cuts back on tolerance for 'reasonable' overtime

By Andrew Wydmanski and Hannah Jorgensen

Australasian Meat Industry Employees Union v Dick Stone Pty Ltd [2022] FCA 512

An employer has been found to have breached various provisions in the Fair Work Act (FWA) by requiring a migrant worker to work a standard 50-hour week.

How does this affect you? 

• Requiring employees to consistently work additional hours over a standard 38-hour week may be considered 'unreasonable', even if the working arrangement aligns with business needs.
• Individual circumstances need to be considered, including industry work patterns, how much the employee is paid and the nature of their role.
• Employment contracts should specify whether remuneration includes payment for 'reasonable additional hours' where workers are required to work more than 38 hours per week.

Background

Dick Stone Pty Ltd (Dick Stone), a large meat wholesaler, employed Samuel Boateng, a Ghanaian immigrant, as a knife hand within three weeks of his arrival in Australia.

The employment documents provided to Mr Boateng required him to work 50 'ordinary work hours' a week, from 2am to 11:30am on weekdays and from 2am to 7am on Saturdays, plus reasonable additional hours as required. The documents did not state how much he would be paid, whether his pay included overtime, and did not refer to the modern award governing his employment. Mr Boateng routinely worked a 50-hour week on a standard rate of pay and occasionally worked additional hours for which he was paid overtime rates derived from his standard pay.

The Australasian Meat Industry Employees Union (the Union) commenced an adverse action claim on behalf of Mr Boateng after his position was made redundant. The Union contended that Dick Stone's requirement to work 50 hours per week was unreasonable and that Mr Boateng had not been paid correct overtime or penalty entitlements.

Mr Boateng provided evidence that working the hours required of him was 'very difficult', 'tiring', and that 'if he were given a choice, he would not have chosen to work that way'. Dick Stone argued that Mr Boateng had freely entered into his employment contract, had not complained about his hours until the Union became involved, and argued that the majority of workers preferred the additional remuneration associated with working a 50-hour week.

Decision

The Federal Court found it was unreasonable of Dick Stone to require Mr Boateng to consistently work a 50-hour week because:

• The provision for a 38-hour week under the NES could not be contracted out of;
• There were 'obvious risks' associated with working long shifts in a job requiring the use of knives;
• The usual pattern of work in the industry was to commence work from 4am, not 2am;
• The nature of Mr Boateng's role did not require him to work a 50-hour week;
• Although the 50-hour week aligned with the company's business needs, it did not mean it was reasonable to require Mr Boateng to work the additional hours (which is required by the NES for those working more than 38 hours per week). Whether the majority of Dick Stone's workers worked and preferred a 50-hour week was also irrelevant to whether the requirement to work 50 hours was reasonable in Mr Boateng's individual circumstances; and
• Mr Boateng had not questioned Dick Stone's employment offer or attempted to negotiate its terms because he had only recently arrived in Australia and was unfamiliar with Australian employment laws. Further, Mr Boateng had not complained about his hours as he was not aware of his award entitlements and had not been provided a Fair Work Information Statement prior to commencing his employment with Dick Stone (in breach of the law).

Greenfields agreements: When is a business a genuine new enterprise?

By Tegan Ayling and Hayden O'Halloran

Australian Rail, Tram and Bus Industry Union v Busways Northern Beaches Pty Ltd (No 2) [2022] FCAFC 55

The Full Court of the Federal Court has clarified the circumstances in which a greenfields enterprise agreement may apply by considering the meaning of 'genuine new enterprise'.

How does this affect you?

• For employers branching out into new business, a greenfields enterprise agreement may not apply if the new undertaking is similar to an existing undertaking.
• To determine this, employers should compare the essential characteristics of the existing undertaking and those of the new undertaking. If the existing and new undertakings have substantially the same character, the new undertaking may not be a 'genuine new enterprise' and a greenfields agreement is less likely to apply.

Decision

The NSW Government sought tenders from private contractors for the provision of public bus services in Sydney. The successful tenderer, Busways, applied to the Fair Work Commission for approval of a greenfields agreement to cover the employees that would be involved in the services.

A greenfields agreement is an enterprise agreement that relates to a 'genuine new enterprise' and is made before the employer has employed any of the employees who will be covered by the agreement. The Commission initially approved the Busways agreement and the Full Bench agreed on appeal. However, the Full Court of the Federal Court overturned those decisions because the bus service was not a 'genuine new enterprise'.

The Full Court's view differed from the Commission's by considering that the words 'genuine new' referred to the nature of the enterprise and not its relationship to the employer. A 'genuine new enterprise' must be new to a substantial degree, and not only to the person establishing it. Further, the employer cannot be commencing an undertaking as a successor to an existing operator.

In the court's view, substantially the same bus services had been provided by a public entity previously and so the same services, albeit under Busways' control, were not a 'genuine new enterprise'. The court focussed on Busways' obligations to provide for the management and delivery of the same transport services, in the same regions, using largely the same plant and equipment. The proposed workforce was also the same, including that Busways was required to guarantee existing roles for two years. Some degree of evolution or improvement was involved as government encouraged higher levels of sustainability and efficiency from its tenderers and services would be run 'for profit'. However, those factors were not 'essential' and did not substantially change the character of the bus services to be provided by Busways.