Industry Knowledge.

Case Note – Harris v Northern Territory of Australia, Northern Territory Work Health Court, February 2019

(NT) Return to Work Act
Management Action – reasonable grounds, reasonable manner
Incapacity – nature of incapacity, most profitable employment
Normal Weekly Earnings – allowances, leave loading

What did this case decide?

The Harris case was decided by the NT Work Health Court (WHC) on 15 Feb 19.   This case dealt mainly with the issue of management action in the defence of a claim for psychological injury.  The Employer was successful in its defence of the claim.

The Court decision also resolved other issues – whether a ‘sittings allowance’ and ‘leave loading’ are included in wages (normal weekly earnings (NWE)) (yes and yes), whether (and when) you take into account earnings in a second job (yes, taken into account in certain circumstances) and, in the situation you are fit to work with the qualification you could not work with a particular person, whether this constitutes incapacity (depending on the facts, no, this does not incapacitate).

We understand this to be the first NT Court decision relating to the defence of ‘management action taken on reasonable grounds and in a reasonable manner by or on behalf of the workers employer’ (see s3A (NT) Return to Work Act (RTWA)).

The facts?

In Jun 13, Mr Harris joined the Department of the Legislative Assembly (DLA) as Senior Administrative Officer level 2 in the position of Director Procedural Support and Education Service.  Mr Harris reported to the Clerk / Chief Executive of the DLA (CE).  Previously, Mr Harris served in the Australian Defence Force for a number of years.   Mr Harris had pre-existing PTSD arising out of his military service.

There was a performance review process in 2015 that ended successfully.   In early Jan 16, after coming back to work from the December break, certain events happened at work between the CE and Mr Harris.

Between Jan and Apr 16, there were interactions between Mr Harris, the CE and other DLA staff.  Among other things, Mr Harris was provided correspondence about his performance and work duties.   Mr Harris contended these actions were unreasonable and should have been taken differently.

In early Apr 16, arising out of certain events at work and in ‘response to Mr Harris’s outburst and mental health disclosures’, the Employer suspended Mr Harris from duties on full pay and arranged for him to be medically reviewed.

Mr Harris claimed compensation about a year later, in Mar 17.  In the claim, Mr Harris alleged his mental injury was caused by bullying and harassment. The claim was disputed by the Employer.  The case was heard by the WHC in Sep 18.

The Employer did not dispute Mr Harris suffered a mental injury on 4 Apr 16 (an adjustment disorder or depression and anxiety arising out of the events at the workplace) and did not dispute the mental injury arose out of employment or that Mr Harris gave proper notice of the injury.

The issue revolved around whether the action taken was management action and whether the management action was taken on reasonable grounds and in a reasonable manner.

Mr Harris considered that the performance management process was inappropriate, intimidating and lacked procedural fairness.

The WHC decided the case in Feb 19.  The WHC assessed the evidence provided by witnesses and information in documents.  The Court made findings that the steps were management actions and the overall approach was proportionate, moderate and reasonable.

Management action

The ‘management action’ defence was introduced in the RTWA in 2015 to replace the ‘reasonable administrative action’ defence.  The NT Supreme Court interpreted the previous ‘reasonable administrative action’ provision as requiring the employer to ‘prove that the relevant reasonable administrative action was the sole cause of the worker’s injury.’

Section 3A creates a defence to a claim for mental injuries caused wholly or primarily by reasonable management action.  Management action does not have to be the sole cause.

Management action is defined in s3 to include a number of things including appraisal of the worker’s performance, counselling of the worker, suspension of the worker’s employment and redeployment of the worker.

In relation to s3A, the Employer needs to prove:

  1. the conduct or actions complained of by the worker constitute management action as defined; and
  2. the management action was taken on reasonable grounds; and
  3. the management action was taken in a reasonable manner; and
  4. the reasonable management action wholly or primarily caused the mental injury.

The WHC discussed how the Court assesses what is ‘reasonable’ and it reviewed a number of previous Court decisions in other jurisdictions.  Some of the guidelines include:

  • what is reasonable is assessed objectively and relates to the specific conduct involved in light of the process overall.
  • reasonableness must be assessed against what is known at the time without the benefit of hindsight, taking into account the attributes and circumstances, including the emotional state of the employee concerned.
  • the administrative action must not be ‘the irrational, absurd or ridiculous.’
  • whether an action is reasonable should be attended, in all the circumstances, by a question of fairness.
  • a thing is done ‘reasonably’ if it bears a rational relationship to that activity and is not disproportionate to what is necessary to carry it out.
  • there may be more than one way of doing things ‘reasonably’.
  • the judgement required is whether the thing done was done ‘reasonably’ not whether it could have been done more reasonably or in a different way more acceptable to the court.
  • a course of conduct may still be ‘reasonable action’, even if particular steps are not.

In Harris, the WHC stated in ‘order to properly factor in the grounds on which the management action was taken the Court must also be satisfied:

  1. That there were objectively reasonable grounds for the management action to be commenced, and
  2. There was reasonable proportionality between the grounds for commencing management action and the level and manner of action taken.’

In terms of what ‘wholly’ or ‘primarily’ mean the Court considered:

  • management action can only be ‘wholly’ the cause where it is the only cause of the injury.
  • where there is more than one causative factor for a mental injury, management action is ‘primarily’ the cause if the Court determines ‘the management action was the chief, principal, or primary cause of the injury.’

In Harris, the WHC determined in ‘all the circumstances, having considered each of the workplace actions in tum, [the Court] was satisfied that the performance management process and medical suspension were taken on reasonable grounds and in a reasonable manner.’

Accordingly, the Court found, as Mr Harris did not suffered an ‘injury’ as defined by the RTWA, the Employer had no liability to Mr Harris.

Having decided the ‘management action’ issue in favour of the Employer, the Court was entitled to go no further.  However, the Court helpfully continued on to decide the other issues in the case which related to incapacity, earning capacity and normal weekly earnings (NWE).

Incapacity – does inability to work with a particular individual incapacitate?

Mr Harris’ treating psychologist thought Mr Harris ‘could return to work in his substantive position provided he was not supervised by’ by the CE, as the relationship between them had broken down.’

An independent psychiatrist examined Mr Harris in early 2018 and the psychiatrist considered Mr Harris was fit to return to work in his substantive position. ‘The only limitation arose from Mr Harris’s obsessive animosity towards’ the CE.  As ‘the relationship between the two had irreconcilably broken down, Mr Harris’s mental health might deteriorate were he to work with’ the CE again.

The Court considered whether this qualification, namely, that he could not work with the CE, caused a continuing partial incapacity?

Mr Harris ‘submitted that because [he] could not return to his old job under [the CE] the open market available to him was reduced and his opportunities restricted.’

The Court determined that having ‘recovered from his work-related mental illness, there was no restriction on his capacity to undertake paid work in all fields of employment in which he was or might reasonably be expected to work. Neither his opportunities for work nor his earning capacity were restricted or reduced by any continuing disability. He could do everything that he could do before the injury. That he could not work at one locus or site of employment (his old job while [the CE] was still there) did not … amount to any meaningful restriction to his ability to undertake paid work in the fields of employment open to him or to his ability to sell his labour in the open market.’

The Court accepted the Employer’s submission that ‘interpersonal difficulties of this sort have not been recognised as limiting the ability of the worker to work.’

Incapacity – return to work and earnings

In Nov 17, Mr Harris found fulltime work in a senior administrative position with the Northern Territory Police, Fire and Emergency Services (NTPFES).  There was no issue these earnings should be taken into account.

During 2017 and 2018, Mr Harris also worked at The Precinct tavern.  The Court had to decide whether Mr Harris’ earnings at The Precinct should also be taken into account.

Mr Harris argued that any ‘additional earnings over and above those obtained from his most profitable fulltime employment (ie fulltime with NTPFES) should be excluded from the relevant calculations.’

The Court said ‘the issue turns on what is ‘reasonable’’.  The Court considered ‘it might be reasonable for a worker to work more than one job provided the jobs are, in isolation, and in combination with each other, within the reasonable capacity of the worker.’

The Court also considered that ‘whilst a worker might be physically or mentally able to work more than normal fulltime hours, it might not be reasonable to expect them to do so. It will all depend on the circumstances of the worker and the nature of the work being undertaken.’

In Mr Harris’ situation, during the suspension period ‘Mr Harris was reasonably capable of working at the Precinct Tavern and the work was reasonably available to him.’  However, when he was working with NTPFES, and while Mr Harris was capable working additional hours at The Precinct, ‘the additional hours were not ‘reasonably available’ to him.’

Sittings allowance

Section 49A(3)(c) sets out a list of allowances to be taken into account in determining NWE and s49A(4)(c) directs those allowances are exhaustive.   The ‘sittings allowance’ is not one of the listed allowances.

The Court reviewed the nature of the ‘sittings allowance’ and determined that, whilst it was referred to as an ‘allowance’, that is a misnomer. The Court applied the reasoning in the WHC’s decision of Saitz to find the ‘sittings allowance’ was really remuneration simplicter and should be added to NWE.  This is because the ‘sittings allowance’ was ‘directly referable to the performance of work duties during parliamentary sittings and is a reward for work done during the course of employment.’

Leave loading

The Court determined ‘the recreation leave loading is an entitlement which is paid to an employee whether leave is accrued, taken, or cashed out and a pro rata payment of the leave loading is paid on cessation of employment. In those circumstances … it is an entitlement that falls within the concept of remuneration and it is not an excluded allowance.’

For further information please get in touch with our lawyers at RLA.