When does “reasonable performance management” stop being… reasonable?

Employees are prevented from making mental injury claims (such as stress claims) “caused wholly or predominately by … management action taken on reasonable grounds and in a reasonable manner by or on behalf of the worker’s employer” pursuant to the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic). “Management action” encompasses a wide range of events including counselling, disciplinary action, investigations, demotions and dismissal. Similar legislation exists in each state.

However, where the management action is based on unreasonable grounds and carried out in an unreasonable manner, employees may be able to claim workers’ compensation. But just what constitutes “reasonable” will always be dependent on the circumstances.

The Supreme Court of ACT recently upheld a decision which characterised a HR manager’s action as unreasonable – upholding an employee’s workers’ compensation claim for a resultant psychological injury.

Case study: Compass Group Healthcare Hospitality Service Pty Limited v Beaton

Ms Beaton was employed by Compass Group since 2008. On 13 March 2012, she received an email from the Compass Group HR Manager (Manager) asking her to book a room, but was not advised of the purpose of the booking. The following day, the Manager came to Ms Beaton’s office and said “Cate, can you come with me, I’d like to have a chat”.

Ms Beaton asked the Manager if she should bring a pen and paper, to which she was told that she did not. However, during the meeting, the Manager was taking notes. At the meeting (at which no one else was present), the Manager told Ms Beaton that numerous complaints had been made against her from a number of staff and those complaints included bullying and harassment. One such complaint had only been made that morning. The meeting went for approximately 2 hours with no break.

Ms Beaton subsequently made a worker’s compensation claim. She submitted that following that meeting, her mental health deteriorated significantly and she sustained a generalised anxiety disorder and major depressive disorder. Compass Group contested this claim.

At the hearing, Ms Beaton alleged that she had not received any warning or was made aware of any of the allegations that were to be the subject of the meeting. Accordingly, as the meeting progressed, Ms Beaton was shocked by the allegations and felt “degraded, intimidated, harassed, hurt and disbelieved”. She also alleged that she was spoken over the top of and not provided with an opportunity to fully explain her position. She stated that the “chat turned into an attack”.

In response, the HR Manager on behalf of Compass Group put forward that the meeting was “like a fact finding and investigation meeting” and that Ms Beaton was ‘aware’ of the allegations – but was unable to provide concrete evidence of making Ms Beaton in fact ‘aware’.

The Magistrates’ Court had to determine whether the meeting “was conducted in a reasonable fashion”.

The Court held that that “it was inevitable that what may have started in the mind of [the Manager] as a fact finding mission would have been perceived by any person the subject of [the Manager’s] interrogation as being an attack on their integrity”.

Further the Court held that:

“In those circumstances … it was incumbent on [the Manager] to gauge the [Ms Beaton’s] reaction and be prepared to modulate her presentation to [Ms Beaton] according to her perceptions of [Ms Beaton’s] reaction. It was not open to her simply to assume that [Ms Beaton] would have no emotional reaction to the meeting being put to her, and that expressions of shock or disbelief were not indicators of adverse emotional or psychological reaction”

In summary, “Shortly put I find that the lack of warning, the continuous allegation of wrong doing for an excessive period of time and without paying heed to the applicant’s expressions of denial, upset and discontent was an unreasonable means of conducting the meeting and that that unreasonable conduct was the cause of the applicant’s injury”.

The Supreme Court agreed, stating that “The failure of [Compass Group, through the HR Manager] to give [Ms Beaton] advance warning of the issues to be raised, being complaints highly critical of [Ms Beaton’s] work performance, was calculated to cause shock. This was compounded by the length of the meeting and the number of allegations presented to [her] without notice”.

Lessons for employers

When faced with poor performance or serious allegations, HR Managers and employers must ensure that information is provided to the employee in a fair and reasonable manner. Failing to do so may result in an unwanted stress claim or bullying claim in the Fair Work Commission.

We recommend ensuring the following:

• Undertake due diligence before providing the employee with an allegation
• Provide the employee with a letter outlining concerns, prior to a meeting
• Allow the employee to bring a support person if requested
• Keep the meeting brief and to the point, and
• If anybody at the meeting is getting too heated or upset, have a break or resume the meeting at a later stage

HR Legal can assist you with managing underperforming employees.

We can also provide onsite training on “Managing Performance v Performance Management” which can assist you and your team understand your obligations.

Click here for more information.

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This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.