Employers should not shy away from making decisions
affecting an employee's employment where they have a sound
basis for doing so and can clearly articulate the reasons for the
Commonwealth departments and agencies can be more confident in
taking reasonable administrative action including performance
management of their employees, following the High Court's
decision in Comcare v Martin  HCA 43.
It has underscored that disease or injury caused by, or worsened
by, reasonable administrative action will not be compensable under
the Safety, Rehabilitation and Compensation Act 1988 (Cth) - a
position which had been thrown into some doubt by the view of the
Full Federal Court when it considered this case on appeal.
The reasonable administrative action and the disease
Ms Martin did not have a good working relationship with her
manager (her formal complaint of bullying has been found to be
unsubstantiated). She took a temporary acting position, reporting
to another manager, and applied to be made permanent in that role.
She was unsuccessful; hearing that news, and thinking she would
return to her previous role and manager, she "broke down
uncontrollably" and immediately went home. Ms Martin sought
medical treatment the following day and was diagnosed as suffering
from an adjustment disorder which made her unfit for work.
The High Court considered there was no question that she
suffered from a compensable disease which had been aggravated
following Ms Martin's unsuccessful application for a promotion.
The key issue is the causal connection between the decision not to
award her the promotion and the prospect of returning to her
substantive position, and whether that entitles Ms Martin to
Carve-outs to compensation under Commonwealth Act
Under the Safety, Rehabilitation and Compensation Act 1988
(Cth), there is no compensation for a disease "suffered as a
result of reasonable administrative action taken in a reasonable
manner in respect of the employee's employment."
Comcare contended that the decision not to promote Ms Martin was
reasonable administrative action, and the deterioration of her
disease was caused by it, so she therefore was not entitled to
compensation. This was rejected by the Administrative Appeals
Tribunal (AAT) and Comcare appealed to the Federal
Court, which found the view of the AAT that the decision not to
award Ms Martin the promotion was not taken in a reasonable manner,
amounted to an error of law. Ms Martin appealed that decision to
the Full Bench of the Federal Court.
On appeal, the Full Federal Court found in favour of Ms Martin.
It said that the Act required a common sense approach to causation;
the news about her failed application preceded her
breakdown but that does not mean it caused it.
"As a result" means reasonable administrative action
was a cause
The High Court unanimously overturned the Full Federal
Court's decision, saying that:
"an employee has suffered a
disease 'as a result of' administrative action if the
administrative action is a cause in fact of the disease which the
employee has suffered."
The administrative action need not be the sole cause, as long as
the employee's ailment or aggravation would not have been a
disease without the administrative action.
In this case, Ms Martin's disease was worsened by the
administrative action and what she perceived to be
its consequences. That means it falls within the exclusionary
provision of the Commonwealth's statutory compensation
Lessons for employers
This decision reaffirms that where employers take action in
relation to a person's employment, including making decisions
about whether an employee should be awarded a promotion, the
employee's perceived consequence of that action is irrelevant,
provided that the action is undertaken
The test for determining whether the employee's injury is
caused "as a result of" the action taken by the employer
is to be assessed objectively. It assumes a plain meaning and is
not influenced by an employee's subjective reaction to the
action being taken.
Employers should not shy away from making decisions affecting an
employee's employment where they have a sound basis for doing
so and can clearly articulate the reasons for the decision. Where
there is an unresolved personal workplace grievance or complaint,
employers need to be mindful of ensuring they uphold their work
health and safety obligations, to both employees and managers, by
making reasonable adjustments where needed. This is particularly so
in the context of potential reprisal action under the Public
Interest Disclosure Scheme.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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