Employer Obligations: Mental Illness

In this circular, we give a brief overview of employers’ legal obligations with respect to the mental health of their employees. In particular, we look at your liability for employees’ mental health; how to best manage them; and a decision on point. We also provide an update on recent changes to our contracts to further protect employers from liability.
Given the prevalence of mental health issues it is highly likely that some of your employees either are currently, or will be afflicted by mental illness at some point during their employment. As such, it has never been a more important time for employers to inform themselves of their rights and responsibilities and follow best practice.
Employers’ legal obligations
Duty to ‘take reasonable steps’
Put simply, employers are obligated to take all reasonable steps to ensure the health and safety of their employees.  This obligation – which is a general principle of workplace health and safety (WHS) laws – has two elements. Firstly, employers must take reasonable steps to minimise harm from existing or arising. Secondly, employers must take reasonable steps to prevent harm from affecting employees.  Each state has its own Worksafe regulatory body, which is empowered to investigate and respond to potential breaches of WHS laws. This operates independently of Fair Work, meaning that health and safety matters can potentially involve separate action from either or both Worksafe and Fair Work.  Needless to say, the most sensible path is to avoid a complaint arising in the first place, because even if it proves unsuccessful, the time and resources required to respond can be quite debilitating, especially for small businesses without dedicated HR or legal advisors. 
Employers’ liability for psychiatric injury
A failure to uphold this obligation – that is, to take reasonable steps to ensure the health and safety of employees – may result in an employer being held liable for psychiatric injury arising from the performance of work. The central inquiry in determining whether an employer will be found liable for breaching their duty of care to an employee is whether the psychiatric injury suffered is ‘reasonably foreseeable’ in the circumstances. This was established in the High Court case of Koehler v Cerebos (Australia) Ltd [2005] HCA 15.
Whether the psychiatric injury suffered by an employee is ‘reasonably foreseeable’ depends on a number of factors. In particular, the court will consider the nature and extent of the work being done by the particular employee and signs given by the employee concerned as to their vulnerability to psychiatric injury. For example, if an employee informs their employer that they are experiencing stress, and the employee subsequently suffers psychological injury, it will be difficult for the employer to deny that the risk was reasonably foreseeable and thus avoid liability.
That said, the courts have consistently emphasised that it is the responsibility of the employee to inform the employer of any susceptibility or vulnerability to psychological injury. Without such notice or any signs of warning as to the possibility of psychological injury, an employer is entitled to assume that the employee considers that he or she is able to do the job for which they have been employed.
The terms of an employment contract are also crucial in determining whether the risk of psychological injury is reasonably foreseeable. In Brisbane Youth Service Inc v Beven [2017] QCA 211 the Queensland Court of Appeal held that Koehler ‘requires an examination to be made of the whole content of the contractual relationship between the appellant and the respondent’. For example, in the Koehler case itself, the court found that the psychological injury that occurred due to stress from work was not reasonably foreseeable, and thus the employer was not liable, because the employee agreed by contract to perform the relevant duties. The reason for this ties in with the aforementioned obligation on the part of employees to notify the employer of any vulnerabilities which might increase the risk of psychological injury. Without such notice, the employer can assume that the employee is capable of performing the duties stipulated in their contract of employment. However, if the employee is expected to perform duties which go beyond the duties described in the employment contract, it is more likely that there is a foreseeable risk of injury. This highlights the need for employers to clearly set out the duties expected of employees in their employment contracts and position discriptions.
Best Practice
The existence of these obligations, coupled with the seriousness of mental health and the intrinsic difficulty of identifying mental health issues, necessitates that employers are informed and proactive in how they approach mental health matters at work (including the prevention, management and resolution of issues involving them).
To mitigate against risk, employers should have clear policies on issues which relate to employees’ mental health. For example: WHS (including a duty to inform the employer of risks); bullying and harassment; code of conduct; resolution of grievances; personal leave;  and disciplinary action policies. Employers should have employment contracts and position descriptions for each employee which clearly outline their duties. They should also encourage a culture of mental health awareness and consider providing employees with training on how to recognize and manage stress, work-related or otherwise. Others forms of support include access to independent counselling by way of an Employee Assistance Program (or similar); and the appointment of a mentor to assist in transitioning to change.
That said, it is also sensible to accept that given the wide range of mental health disorders, it may not be possible eliminate risk, which then comes back to the question of “reasonableness” based on the legal principle articulated above. One thing, however, is clear: taking no action at all would unlikely meet the reasonableness test and would likely constitute a breach of the employer’s duty of care, hence opening them up to liability.
Update to ClinLegal documents
We have recently updated our contracts to further protect employers from potential liability. There are three major changes to be made aware of. Firstly, we have incorporated of a fitness to work clause, whereby new employees must promise that there is no medical reason (physical or mental health) impacting their ability to work, and that they will advise the Manager if/when that changes. This protects employers by allowing them to assert non-disclosure in the event that an employee subsequently claims they have suffered a psychological injury due to their work.
The second clause we have added stipulates that the employee has received the Fair Work Information Statement, thereby preventing an employee from claiming that they did not receive it. 
The third and final clause we have inserted obliges employees to state that they have no criminal record, and notify their employer without delay if that changes.
We invite all members to log into the member portal to access the updated contracts.  As a reminder, members have access to our contracts and position description App which includes a description of tasks expected for each role.  It is important that members ensure they use the most up to date contracts available through the portal, since older versions may become obsolete due to changes in the law and thus may not offer the strongest protection against liability.
Final word on Fair Work Changes
As previously announced, there are legislative changes currently before parliament which if passed, would amend various sections of the Fair Work Act.  We have decided to wait until the changes are confirmed before elaborating on them as the proposed amendments are subject to further change.

As with all things legal, we maintain that Prevention is Key.  For further information on how we can assist you, please contact us for a confidential discussion: [email protected]

The above information is current as at the date of publication and is based on information made publicly available. It is important to stay appraised of any developments or changes. This Circular is produced for guidance purposes only and is not a substitute for legal advice. Legal advice should be sought for individual circumstances. For tailored advice for your Practice, please contact us.