By Jack de Flamingh and Keti Bull -
Snapshot
- The High Court has ruled damages are now potentially available for psychiatric injury in common law wrongful dismissal claims connected with defective disciplinary processes.
- The decision marks a shift in the law concerning remedies for breach of an employment contract and enhances the risks for employers in managing disciplinary procedures.
- Depending on the language of an employment contract, policies or procedures may be considered to be incorporated into the terms of employment.
Against the backdrop of growing community, political and regulatory recognition of the importance of mental health and wellbeing, the High Court has now confirmed common law damages may be awarded to employees who suffer psychiatric illness or injury due to the adoption of a termination process that breaches the employment contract. Following this ruling in Elisha v Vision Australia Limited [2024] HCA 50 (‘Elisha’), the overall risk profile associated with termination of employment processes has increased further.
Factual background
Mr Elisha was engaged as an adaptive technology consultant at Vision Australia Ltd (‘Vision’) under an employment contract dated 2006. In March 2015, while travelling for work purposes, he was involved in an incident where he was alleged to have behaved aggressively towards a hotel staff member. Despite Mr Elisha’s denial of the allegations, his manager ultimately accepted the hotel proprietor’s account of the incident, leading to his summary dismissal. Crucially, his manager’s preference for the hotel proprietor’s account, and his decision to dismiss were informed by previous reports of other allegations of aggressive behaviour by Mr Elisha. Those other allegations were not put to Mr Elisha during the disciplinary process – he was only given the opportunity to respond to the allegations relating to the hotel incident.
