What Australian employers can learn from the recent withdrawal of a psychosocial risk prosecution in NSW

Scarlet:

Hello and welcome to Ashurst Legal Outlook and the first episode in our new mini-series on Employment and Safety law, where we share insights into workplace developments in Australia from our leading Employment and Safety team at Ashurst. My name is Scarlet Reid, and I'm a partner in the Employment and Safety team in the Sydney office at Ashurst, Australia. I'm joined today by Bruce Hodgkinson, who is a leading Senior Counsel in the area of Work Health and Safety law in Australia, and who recently worked with Ashurst on a landmark prosecution in the area of psychosocial risk. Hi Bruce, thanks for joining us today.

Bruce:

Thank you very much. Scarlet, it's a pleasure to be here.

Scarlet:

Thanks, Bruce. Now Bruce and I today will be talking about matters involving psychosocial health and duties under the Work Health and Safety laws.

Ashurst is certainly acting in a number of cases in this area, and Bruce is also acting in a number of prosecutions involving the management of psychosocial risks and WHS duties. Most recently, Bruce has been working with the Ashurst team on a prosecution that was brought in 2022 against Western Sydney Local Health District, which is a landmark prosecution in the psychosocial risk space.

Now Bruce, this particular matter has raised a number of key legal issues for the development of the psychosocial risk space. It's one of the first, if not the first, contested matter where a court has been tasked with determining the threshold for psychological harm, and what steps are reasonably practicable for an employer to take to minimise risks to psychosocial safety. As the matter has actually now been withdrawn, we don't have clear answers from the Court on these topics. But Bruce, in your experience, what are your views on this threshold question?

Bruce:

Scarlet, I think the case threw up a number of very important questions and also a number of very important difficulties. The first of those is that there's actually no definition of what a “psychosocial injury” is, and there's no clear indication as to whether or not that is a different form of injury from a “psychological injury”. That will be a matter the courts will have to grapple with in the future.

Also, the Court was very keen to see what policies and procedures were in place at the time that the allegations were made in relation to the psychosocial injury, and looked in detail at those policies and whether or not they covered all of the relevant areas, being: Were they looking after people? Did they provide a proper level of opportunity for people to answer allegations, to be provided allegations clearly, to have sufficient support when they were dealing with allegations.

And the case that we've just had arose from some allegations made arising out of a fairly normal procedure; that is an investigation to determine whether some form of disciplinary process should be considered. And even at that stage, the regulator alleged that persons were put at risk of their psychosocial health and of psychosocial injury.

What we also know from some of the material, and none of it is conclusive, but some of the material is that mere “stress” is not a psychosocial injury. It is an indicator, and it is something to which every PCBU would have to have regard. But in itself, unless it's prolonged or sustained or in some form of major exaggerated circumstance, stress is not a psychosocial injury.

Scarlet:

Thanks so much for those insights, Bruce. Guidance material is going to be very important for the future in this area. And I think one of the points that wasn't determined in this recent case that we've both acted in – because the case was withdrawn – was this concept of “reasonable management action”. Now this is dealt with specifically in the New South Wales SafeWork Code of Practice on “managing psychosocial hazards at work”. And what that Code of Practice tells us is that reasonable management action, when carried out lawfully and in a reasonable manner, is a legitimate way to manage workplace behaviour. The types of behaviour that you mentioned came up in our case. So do you think that in the future, courts will grapple with this issue of “reasonable management action” in the context of WHS prosecutions in a similar manner as they grapple with it now in, say, the workers compensation jurisdiction?

Bruce:

I think it's almost certain that they will grapple with that concept of "reasonable management action". The difficulty in dealing with the concept of "reasonable management action" is what is “reasonable” in the particular circumstance that you're dealing with. Unfortunately, what might appear to be reasonable, given past practice or experience, might – when the microscope approach of a court case is applied to it – appear to be unreasonable. And we saw allegations that an informal discussion at a very early time in the investigation held in a particular room was unreasonable, and there was an allegation that that was a cause of psychosocial injury. Now no manager is going to jump straight into some form of process if there's no basis to do it.

So, a preliminary investigation sounds to be one: reasonable, and two: sensible. But the regulator made allegations that that wasn't reasonable and that that wasn't sensible, and that indeed that could cause a psychosocial injury. So, yes, reasonable management action will be a very deeply contested issue, I think, in future cases and there will be a lot of consideration going into what is “reasonable”.

I think, for the present time, what employers and PCBUs have to be looking at is: is the action objectively reasonable? And has your manager who's engaged in the action been consistent with your policies and procedures? Have they taken steps that are, firstly, explainable? Why did they take the step? And secondly, that step, looked at from the outside, would appear to a person to be “a reasonable action” that may not ultimately be enough, but that will be where people have to start.

Scarlet:

I agree entirely. And I think the points you raise also give rise to this issue about managers, because, as we know in workplaces, it is often managers – as in line managers of businesses – who are charged with having discussions about disciplinary issues, having discussions about performance management issues. So I think the other issue for consideration for employers is, what type of training and instruction do they need to give to their managers, to be able to have these discussions in a way that notes all of those issues that you've raised, Bruce. Such as, making sure that they can explain why they've had the discussion, and making sure that objectively, their discussions would be seen as reasonable. Now we weren't dealing with the issue of training in our matter, but what's your view on that, Bruce?

Bruce:

You're right. Training wasn't raised, but I think it's a very important issue. Managers will need to be trained in how to operate pursuant to the policies in a way that can be seen as objectively appropriate. I think the other problem that employers and PCBUs are going to face is that, as with our case, it wasn't just the persons about whom complaints were made, but the complainants and other persons who were potentially subjected to psychosocial hazards and potentially suffered psychosocial injuries. So the process becomes incredibly complex when one starts to think that we're not just dealing with how did we deliver bad news to one person, but how do we deliver bad news? Is the person delivering it suffering from some form of pressure or stress? Are the other persons in the area suffering from some form of pressure or stress? And have we properly – within our systems – catered for those potentials in a way that provides a reasonable, practicable answer in relation to psychosocial injury?

Scarlet:

There's so much learning to come in this area. I think you and I have both seen the evolution of Work Health and Safety law in Australia over the past decade – or perhaps more than a decade – and this is really a whole new emerging area. I think that guidance from the courts will be very important as this area of the law continues to develop. But in the meantime, those guidance materials that you've referred to, Bruce, will be critical to pay attention to for all workplaces.

Bruce:

I agree with that. I think the other thing about people's processes and policies and procedures in this area is that they have to be a continuing area of development. If they're not, then they'll lag behind very quickly, because this area is changing, literally month by month.

We know that, not only in in New South Wales, but right around the country. All of the regulators are very, very keen on bringing prosecutions in relation to psychosocial injury, if they can. And the field seems to be wide open. So we can expect a lot more activity in this area, which will create its own levels of stress and its own levels of concern, but it won't go away.

Scarlet:

No, I absolutely agree with you. We're certainly seeing that in practice, this is an area that has the attention of regulators from coast-to-coast in Australia, that is for sure.

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