Australia: Workers comp lessons - ironing out the creases in performance management

There has been controversy in Western Australia around the implementation of performance management plans (PMP) in the context of determining whether the defence under s 5(4) of the Workers' Compensation and Injury Management Act 1981 (WA) (the Act) can protect an employer from a workers' compensation claim for a worker's psychiatric injury. So the question is, are PMPs a form of discipline or part of a pre-disciplinary process?

Last week's decision of Pilbara Iron Company (Services) Pty Ltd v Suleski [2017] WADC 114 has confirmed that a PMP is in fact disciplinary. The case also provides important commentary around the other elements of the s 5(4) defence, including whether employer actions are unreasonable and harsh.

Elements of the case

The case related to a claim for workers' compensation in WA following a meeting on 22 August 2013 between the employee, Mr Suleski, and his employer, Pilbara Iron Company (Services) Pty Ltd (Pilbara Iron). Mr Suleski attended the meeting with his superintendent, Ms Bufton, during which he was formally advised (with prior warning) that he would be placed on a PMP due to a number of performance issues identified in the preceding six months. The PMP was implemented from the meeting on 22 August and in part stated that it "...may result in disciplinary action up to and including termination of employment".

It was accepted by the Court that Mr Suleski suffered from a psychiatric disease that rendered him incapacitated for work from 22 August 2013 and that his employment was a significant contributing factor to the disease.

At first instance, the issue for determination was whether the employer had a defence under s 5(4) of the Act, which was dependent on whether:

  • the meeting was disciplinary
  • if so, whether the meeting was the whole or predominant cause of his incapacity, and
  • if so, whether Pilbara Iron's actions on 22 August were unreasonable and harsh.

The employer argued that:

  • Mr Suleski's psychiatric disease arose wholly or predominantly from his expectation of discipline and that the Arbitrator was therefore not in a position to consider whether Pilbara Iron's conduct was unreasonable and harsh (McPherson v State Print [Unreported, WASC, Library No 960697, 15 December 1996]) or,
  • Mr Suleski's psychiatric disease arose wholly or predominantly from actual discipline which was not unreasonable and harsh.

Referring to FAI General Insurance Co Limited v Goulding [2004] WASCA 167, Arbitrator Nugawela found that the meeting was disciplinary and that Mr Suleski's psychiatric condition wholly or predominantly arose from the PMP's implementation at the meeting. The Arbitrator also found that the reasons given by Pilbara Iron for implementing the PMP were unreasoned and unjustified, and therefore unreasonable and amounting to harsh conduct. In so finding, the Arbitrator determined that:

  • it was unreasonable for Pilbara Iron not to accept (or to disregard) Mr Suleski's explanations concerning the issuing of warnings to subordinates
  • there was no reasonable opportunity for Mr Suleski to complete the transport operator role description and it was unreasonable for Pilbara Iron not to accept (or to disregard) his explanations concerning the provision of the role description, and
  • it was unreasonable to implement a PMP where:
    • Mr Suleski had not been provided with any or adequate leadership training
    • his mid-year performance review was selectively downgraded on his superintendent's email instruction, and
    • Pilbara Iron deviated from its own procedures by placing him on a PMP instead of a development plan.

Pilbara Iron's appeal

The Judge reviewed the Arbitrator's reliance on Department of Education v Azmitia [2014] WADC 85 in coming to a decision and found it had no application in this case. Azmitia was concerned with a causation test where the issue is whether the employment was a significant contributing factor to the contraction of a disease. This was not the issue under consideration in the present case.

The Judge also noted the worker's perception of whether he had been treated unfairly versus whether he had in fact been treated unfairly, was not relevant to the issue to be determined—whether the PMP's implementation constituted discipline (and if it did), whether any disease suffered by Mr Suleski was caused by stress (and if it was), whether the stress wholly or predominantly arose from the discipline under consideration.

Although the Arbitrator had erred in his application of Azmitia, the Judge stated that this did not lead to an error in the ultimate finding that the PMP's implementation was disciplinary and the predominant cause of the stress-related disease.

The Judge also noted—notwithstanding the apparent failure to adduce evidence of any relevant policies, codes of conduct, practice or guidelines relevant to Mr Suleski's employment and work performance—that placing Mr Suleski on the PMP fell within the natural and ordinary meaning of the word "discipline" under s 5(4)(a), as it involves instruction to train to proper conduct, to subject a person to rules of conduct, to maintain a state of order by training and control, or to bring to a state of order and obedience by training and control.

The Arbitrator erred in law by the way he approached the determination of whether the PMP's implementation was unreasonable and harsh. The correct approach was to objectively determine whether, in all of the circumstances, the employer's action of placing Mr Suleski on the PMP was unreasonable and that the consequences were harsh. The relevant circumstances included those leading up to the decision to implement the PMP, such as how:

  • Mr Suleski was informed of the decision in the context of all the policies, guidelines and codes of conduct that regulate his conditions of employment and work performance
  • he was informed of the decision to implement the PMP, and
  • the PMP impacted upon Mr Suleski after it was imposed, to his work performance and any personal issues.

The Judge commented that an opportunity to address poor work performance would not normally be unreasonable or harsh, although this depends on the procedure being followed, what internal guidelines or codes of conduct require, and on consequences to the worker. Further, the worker's belief that he was being unfairly targeted was not relevant to whether the actions of the employer were unreasonable and harsh. Consequently, the issue of whether the implementation of the PMP was unreasonable and harsh was remitted to the Workers' Compensation Arbitration Service to a different arbitrator for further determination.

How does this decision affect you?

While the Judge confirmed that a PMP is discipline, the success of the appeal could be short-lived as the matter of whether the employer's behaviour was harsh and unreasonable has been remitted for rehearing. In this decision, it is important for employers to ensure they are following policies, codes of conduct and guidelines in their workplace and that if performance management is required through the implementation of a PMP, that it is reasonable to do so.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.