Is there an alternative to workers compensation claims for illness from bullying at work?

Is there an alternative to workers compensation claims for illness from bullying at work?

Preventing bullying in the workplace

Protracted acts of bullying expose employees to the risk of psychiatric illnesses such as anxiety and depression. Where these injuries can be attributed to workplace conditions, the employee may choose to lodge a claim for workers compensation. Each claim is determined in the jurisdiction of the employer, using the relevant statutory authority.

In Victoria, an employee may lodge a WorkCover claim through WorkSafe via the Workplace Injury, Rehabilitation and Compensation Act 2013 (Vic). Under the Act, an employee who has sustained a work-related mental injury may be entitled to compensation for treatments such as consultations with general practitioners, psychologists and psychiatrists. Similarly, an employee may also seek to be reimbursed for medical expenses. If a claimant is successful, they are entitled to receive weekly payments based on their pre-injury weekly earnings.  

However, a workers compensation claim is not the only avenue of redress. Specific focus should be had to the General Protections provisions of the Fair Work Act 2009 (Cth). If bullying behaviour commences because the employee exercised a workplace right, such as the right to make a complaint or inquiry in relation to their employment,[1] the behaviour may constitute adverse action in contravention of section 340 of the Fair Work Act 2009 (Cth).

Importantly, in the recent decision of Leggett v Hawkesbury Race Club Limited (No 3)[2], Justice Rares noted that in calculating compensatory damages, as a result of a breach of the Fair Work Act 2009 (Cth), the Court ‘is not constrained in respect of compensation that can be awarded by the separate operation, in a different sphere, of the State Workers Compensation Act.[3]

To observe this in effect, it is necessary to refer to the facts of the case. The scathing decision of Justice Rares in Leggett v Hawkesbury Race Club Limited (No 3) is significant not only for the blatant disregard Hawkesbury Race Club (the Club) had for the welfare of their former employee, [4] Vivienne Leggett (Ms Leggett), but also the quantum of damages awarded for her subsequent pain, suffering, past and future economic loss.[5] 

Justice Rares’ ordered that the Club pay Ms Leggett $1,770,510 in compensation, in addition to penalties and costs. This decision is likely to be one of the largest compensatory awards in history, for a General Protections claim ordered by the Federal Court.

The facts of Leggett v Hawkesbury Race Club Limited (No 3)

Ms Leggett began working for the Club in January 1991 as an independent contractor with responsibilities including sponsorship and promotion.

In June 2005, Ms Leggett was appointed as the Club’s sponsorship and marketing manager in her capacity as an independent contractor. The Club quickly realised that Ms Leggett’s position was ostensibly that of an employee. As such, the Club regularised its employment relationship with Ms Leggett in July 2013, retrospectively paying her any entitlements under superannuation or under the Fair Work Act 2009 (Cth). From this point, Ms Leggett was formally recognised as engaged in an employment relationship with the Club. Notably, there was no written contract of employment between the Club and Ms Leggett.

In May 2016, Greg Rudolph (Mr Rudolph) commenced employment with the Club in the role of Chief Executive Officer. Arguably, the commencement of his employment sparked the beginning of Ms Leggett’s mistreatment.

After only two days in his new position, Mr Rudolph confronted Ms Leggett and accused her of earning ‘too much money’.[6] In addition, Mr Rudolph sent numerous emails to Ms Leggett, querying the legitimacy of her commission-based remuneration package often providing her with less than 8 hours to respond. As a result of refusing to sign off on numerous requests and withholding payment of Ms Leggett’s end-of-financial year bonus, Ms Leggett noted Mr Rudolph’s distrust in the execution of duties she had performed for over 25 years.[7]

Ms Leggett also made it clear that she was ‘loosing sleep and constantly thinking about [Mr Rudolph’s] emails’,[8] and subsequently informed the Club’s Directors on numerous occasions that Mr Rudolph’s behaviour had caused her constant anxiety, poor sleep, and a tendency to cry all the time.[9]

On 9 October 2016, Ms Leggett sent an email to Mr Rudolph, complaining about his ongoing behaviour and the effect that it was having on her mental wellbeing, and requested that her complaint be referred to the board (the Employment Complaint). Mr Rudolph emailed her a perfunctory response which did not address her complaint. Instead, he requested that Ms Leggett attend a meeting to discuss her performance at work. Ms Leggett was also informed that she could bring a support person if she wished.

Ms Leggett subsequently received a medical certificate and commenced paid personal leave from 10 October 2016 until accepting the repudiation of her contract of employment on 15 March 2017.

At trial, the parties’ respective expert psychiatrists agreed that Mr Rudolph’s conduct towards Ms Leggett caused the onset of a significant depressive disorder and anxiety that has rendered her unemployable from 10 October 2016 to date.[10]

The decision in Leggett v Hawkesbury Race Club Limited (No 3)

In his 2021 ruling, Justice Rares determined that the club had contravened section 340 of the Fair Work Act 2009 (Cth) on two occasions (in addition to further breaches under the Act for failing to pay annual leave and long service leave upon termination, and commissions when they became payable).[11]

The Judge was ‘positively satisfied’ that as a result of Ms Leggett exercising her workplace rights,[12]  including the right make a complaint in relation to her employment and the right to take paid personal leave,[13] Mr Rudolph had withheld her commission and demanded she attend a performance meeting. This constituted adverse action, as it injured Ms Leggett in her employment and altered her position to her prejudice pursuant to section 342 of the Fair Work Act 2009 (Cth).

As a result, the Court ordered $1,770,510 in compensation under s 545 of the Fair Work Act 2009 (Cth). Of this amount, $214,250 was apportioned for pain and suffering, $1,169,048 for past economic loss, $869,745 for future economic lost and $78,980 for interest. Pertinently, in calculating compensation, Judge Rares noted the FWA ‘is not constrained in respect of the compensation that can be awarded by the separate operation, in a different sphere, of the State Workers Compensation Act’.[14]

The implications of Leggett v Hawkesbury Race Club Limited (No 3)

It has possibly been thought that employees suffering illness through stress and anxiety from bullies in a workplace should result in a WorkCover type claim. However, stress and anxiety WorkCover claims appear to have been restricted over recent decades. Thus the finding of Justice Rares, that an employee who has been seriously bullied received $1.7 million worth of compensation, is increasingly significant. 

It should not be surprising that Justice Rares makes such comments in a decision. The Fair Work Act 2009 (Cth) has strong protection for employees. The fact that it has taken over a decade for such a significant decision to be made, reflects the slow uptake of employee rights through Courts and tribunals of laws which can readily be laboured as ‘powerfully left-winged’. Were a conservative government still in power, the legislation might have been wound back – but that is unlikely under the new Labor Government.

If you are an employee and believe your employer has failed to act in accordance with the Fair Work Act 2009 (Cth), the specialist lawyers at McDonald Murholme are available to provide you with tailored advice on (03) 9650 4555.

[1] Fair Work Act 2009 (Cth) s 341

[2] [2021] FCA 1658 (Rares J)

[3] Ibid [218].

[4] [2021] FCA 1658 (Rares J) (Leggett).

[5] Order of Rares Jin Leggett v Hawkesbury Race Club Limited (Federal Court of Australia), NSD1554/2019, 7 June 2022.

[6] Leggett (n 4) [19].

[7] Ibid [38].

[8] Leggett (n 1) [38].

[9] Ibid [43].

[10] Ibid [1].

[11] Fair Work Act 2009 (Cth) ss 90(2), 323.

[12] Leggett (n 4) [150].

[13] Fair Work Act 2009 (Cth) ss 97(a), 341(1).

[14] Leggett (n 4) [218].

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