What you need to know
- The High Court in Comcare v Martin has clarified the causal connection required to establish that an injury was suffered "as a result of" reasonable administrative action (RAA) and so excluded from coverage under the Safety Rehabilitation and Compensation Act 1988. What is necessary is a determination that the employee's employment would not have significantly contributed to the employee's injury, had the RAA not been taken.
- This approach was followed in Lim v Comcare, a case involving multiple work-related causes for the injury, only one of which was RAA. The Full Federal Court confirmed that Comcare must ask: "Would the employee have suffered the injury if the RAA had not occurred?" The claim will only be excluded if the answer to that question is "no".
- Prior to Martin v Comcare, liability was excluded where an employee's injury had been caused by multiple work-related causes, but only one of those causes was RAA. This is not the approach anymore.
- A media release from Comcare on 28 April 2017 stated that Comcare does not consider that the Lim v Comcare decision will "open the compensation floodgates" in relation to acceptance of workers’ compensation claims.
- We consider that where an employee has suffered a psychological injury caused by multiple work-related causes, these decisions are likely to result in less claims being rejected on the grounds of RAA.
What you need to do
- Remember that the SRC Act is a no-fault scheme and RAA was only ever intended to provide a limited exclusion to liability.
- Be aware that these decisions may result in an increase in accepted claims and, consequently, an increase to insurance premiums. They should not, however, lead to an increase to the number of claims.
- Take positive steps aimed at reducing the overall number of psychological injury claims within your business; ensuring that all performance management and counselling is reasonable and conducted in a reasonable manner; and equipping your HR staff and line managers to understand and identify legal issues and effectively manage solutions.
What is "reasonable administrative action"?
The SRC Act defines a compensable injury as including a disease that was contributed to, to a significant degree, by the employee's employment. However, the definition excludes an injury resulting from RAA taken in a reasonable manner in respect of the employee's employment. RAA includes reasonable performance appraisals, disciplinary action and anything reasonable done in connection with an employee’s failure to obtain a promotion.
Comcare v Martin
In Comcare v Martin, an employee suffered an adjustment disorder after she was informed that she was unsuccessful in achieving a promotion. Her failure to obtain the promotion meant that she would be required to return to her substantive position where she would be supervised by a person she alleged had bullied her in the past.
While Comcare accepted that the employee's disease was contributed to, to a significant degree, by her employment, it considered that Ms Martin was not entitled to compensation as the injury had been caused by RAA, namely, the promotion decision. Ms Martin argued that her adjustment disorder was not caused by the RAA, per se, but because the consequence of the promotion decision was that she would be sent back to be supervised by the alleged bully.
On appeal, the High Court found in favour of Comcare. The High Court identified as “critical” the Tribunal’s finding that returning Ms Martin to her substantive position was a direct and foreseeable consequence of the promotion decision in Ms Martin's mind, and that this "triggered" the deterioration of her mental condition.
The High Court's decision clarified the causal connection required to establish that a disease was suffered "as a result of" RAA, and so excluded from coverage under the SRC Act. What is necessary is that the employee's employment would not have significantly contributed to the employee's disease, had the RAA not been taken.
Lim v Comcare
In this case, the employee had an adjustment reaction with depressive anxiety. Comcare accepted that the employee's disease was contributed to by a number of employment related factors, including discussions about her voluntary redundancy, a performance appraisal and dealings with her supervisor.
The Tribunal and the Federal Court at first instance found that the performance appraisal was RAA taken in a reasonable manner and so the claim was excluded. The employee appealed to the Full Federal Court, by which time the High Court had handed down its decision in Comcare v Martin.
The Full Federal Court followed Comcare v Martin and found that the Tribunal's decision involved an error of law in finding that the employee's claim was excluded without having answered the necessary statutory question: whether or not the employee would have suffered the adjustment disorder if the performance appraisal had not been made.
The Court noted that in Comcare v Martin the Tribunal had critically found that the promotion decision had triggered the deterioration of the employee's mental condition. By contrast, in Lim v Comcare, the Tribunal found that the performance appraisal only contributed to the development of the employee's condition.
The Court expressed the view that the High Court in Comcare v Martin had not sought to formulate a new test for the application of the exclusionary provision in a case involving a disease, but that it has simply "spelt out more fully than earlier authorities" the elements of the statutory question which must be determined.
Authors: Jon Lovell, Partner; Monica Campbell, Senior Associate; Jarrod Cusack, Lawyer; and Raina Singh, Graduate
