Ignorance of pre-existing condition costs employer $600,000

The Victorian Supreme Court has awarded more than $600,000 in damages to an employee whose pre-existing mental health issues caused her to have a breakdown, after her managers failed to properly consider her condition when handling a conflict between the employee and her supervisor.


In this case, the employee (a youth justice worker) claimed that she was bullied and harassed by a supervisor and that she was unnecessarily exposed to psychiatric harm in her workplace.  Her allegations included that she was subjected to negligent supervision during the relevant period by her managers, who were aware of her pre-existing mental health conditions and of her predisposition to suffering mental health conditions.

At the beginning of 2007, the employee began to have difficulties in her relationship with her team leader, where essentially she believed that she was being unfairly treated and micromanaged. By May 2007, she requested a transfer to a different team leader, complaining of a deterioration in her mental condition as a result of what she alleged was bullying, humiliation, harassment and micro-management.  She alleged that other employees were not subjected to such treatment.

The Court noted that the significance of this information was not the content of the complaint about the team leader’s behaviour, but that the plaintiff was suffering ongoing stress and anxiety. The Court acknowledged that the employee’s manager was aware of her ongoing mental health problems, and said that this should have sounded ‘a clear warning bell’ for the manager.

It wasn’t until early 2008 that the manager accepted that the employee’s request for a transfer to a new team leader needed to be addressed. Despite this, the employee remained under the direction of the team leader until November 2008, at which point it was accepted by the employer that a mental breakdown was imminent.  Only then was the employee transferred to a different team leader. The same day, the employee was sent home due to her condition and she never returned to work.


The employee alleged that prior to exposure to the workplace environment, which caused the deterioration of her mental state, she was an outgoing, socially active person with close relationships with her children and grandchildren. She said that she had been a happy and confident person who loved her role as a youth justice worker.

Following her breakdown, the employee alleged that she no longer enjoyed socialising and found it difficult to be amongst crowds of people. She said that she struggled to get up every day and found herself increasingly isolated. She claimed that she struggled with routine domestic duties and often became anxious and upset.

The Court recognised that the employee had a pre-existing psychological injury, and accepted that she suffered from an exacerbation of that injury in her workplace (caused by the mismanagement of her dealings with the team leader). The Court held that she was entitled to damages for the exacerbation of her condition, rather than her condition in full.  Accordingly, the Court reduced the employee’s compensation by one third. The damages were assessed in total as $625,345 made up by the following sums:

(a) Damages for pain and suffering and loss of enjoyment of life – $210,000.

(b) Damages for pecuniary loss – $415,345.

The significant award of pecuniary damages, was largely derived from a finding that the employee has been unable to work since November 2008, and that she will remain wholly incapacitated.

Lessons for employers

This case shows that employers don’t just need to be aware of issues in the workplace which have the potential to cause psychological injuries to employees, but they also need to be wary of aggravating known pre-existing mental health conditions.  When assessing and managing risk in this regard, employers need to be aware of the risk of an aggravation to a pre-existing condition.

Employers must also be constantly vigilant and ensure that they do not become complacent during the recovery of an employee. In this case, the Court held that the employee showing signs of recovery from her condition did not convey to the employer that the level of risk associated with that employee had improved. Rather, the Court said that the improvements in her condition conveyed the need for continued vigilance to ensure a proper approach to management of the employee’s workplace environment.

Judge Dixon also criticised the Employer for focusing on avoiding a WorkCover claim, rather than managing the employee’s condition and workplace environment effectively, which would in turn have avoided a WorkCover claim.  Judge Dixon commented that as the employer lost focus, the employee continued to suffer significant levels of work-induced stress and anxiety.

In the decision, the Judge implied that the employer’s focus should been on “creating a workplace environment that was safe for the [employee’s] mental state and minimised the risk of psychiatric injury and a consequent work care claim”.  This was despite the fact that the employer frequently told the employee that they were concerned for her mental state and would act to minimise the risk of further injury.  The Court found that irrespective of this, the employer’s actions in not taking steps to act on the employees request to transfer to another team leader, objectively showed a disregard for the risk to the employee’s mental state.

What can employers do?

Employer’s should heed the lessons from this case.  Risk to the workplace comes from job management, employee interactions, workplace management, workers’ compensation claims and damages claims.  To assist in reducing their risk in similar situations, employers can:

  • Develop and implement appropriate policies for receiving and appropriately handling complaints of bullying and serious interpersonal conflict;
  • Where practical and reasonable to do so, change the employee’s working conditions, or find suitable alternative positions for the employee to avoid stressors;
  • Educate supervisors and managers and provide them with the necessary skills to appropriately manage affected employees; and
  • Where practical and reasonable to do so, provide counselling, training and professional development to assist affected employees with workplace change, acceptance of feedback and managing work related stress.

Disclaimer: The information contained this article is general and intended as a guide only. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this update, Aitken Legal does not accept liability for any errors it may contain. Liability limited by a scheme approved under professional standards legislation.