Aiming at an Employee and Shooting Yourself in the Foot – Workplace Investigation Leads to Compensation Claim


The recent decision of Woodside Energy Ltd v Kieronski [2019] WADC 64 delivered on 9 May 2019 upheld the award of compensation to a worker who claimed psychiatric injury as a result of a workplace investigation by her employer.

Facts

In October 2011, the worker claimed she had developed work related stress after being accused of breaching a workplace Code of Conduct. She was ultimately cleared of any wrongdoing and given an apology.

She returned to work from December 2012 to August 2013, when the employer told her that she was being investigated for another Code of Conduct breach and would be stood down until the matter was resolved.

She suffered an anxiety disorder after that meeting and she was terminated in November 2013.

WorkCover arbitration decisions

 On 25 October 2015, she was awarded compensation under the Workers’ Compensation and Injury Management Act 1981 (WA) (Act) on the basis that the employer’s actions amounted to discipline and that the discipline was unreasonable and harsh. The employer successfully appealed that decision and the matter was remitted back to WorkCover.

On 10 January 2018, she was again awarded compensation but on different grounds. This time it was found that the employer’s actions were not disciplinary and that the worker’s stress predominantly arose from her perceived loss of reputation, injustice and need to ‘clear her name’.

District Court appeal

The employer appealed that decision to the District Court. The employer accepted the worker’s stress was an ‘injury’ for the purposes of the Act, but argued it was not compensable because:

  1. Her stress arose predominantly from an expectation of discipline under Section 5(4) of the Act.
  2. The employer’s investigation of the second Code of Conduct breach was ‘discipline’ under Section 5(4)(a) and its actions in this regard were not harsh and unreasonable.

The Arbitrator had accepted the worker’s expectation of discipline or dismissal was a factor contributing to her stress after the second Code of Conduct investigation but it was not the whole or predominant cause. Rather, as noted above, the predominant causes of her stress were her perceived loss of reputation, sense of injustice and the need to clear her name.

On appeal the Court agreed with the Arbitrator’s view that the employer’s actions did not constitute discipline. Applying the principles in Pilbara Iron Company (Services) Pty Ltd v Suleski, it was held the meaning of ‘discipline’ depended on the terms and conditions of the employment relationship. Not only did the Code of Conduct distinguish between ‘investigation’ and ‘discipline’, it also stated that disciplinary action followed an investigation, so the Code of Conduct investigation could not have constituted ‘discipline’. As the Court held that the employer’s actions were not discipline, there was no need to consider if they were harsh and unreasonable.

Conclusion

This case is an important reminder that the terms and conditions of an employment relationship are a key determinant for the meaning of ‘discipline’ so employers should perhaps consider a review of their relevant policies and contract of employment terms and conditions.

The information published in this paper is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.