Since 2005, when the HCA handed down its findings in Koehler v Cerebos (Australia) Ltd, that case has stood for the principle that employers can be held liable for mental injury sustained by an employee in the workplace where such injury is ‘reasonably foreseeable’. As a result, employers need to be alert for signs that employees are at risk of mental illness due to the demands of their work, and to proactively seek ways to prevent such injury and/or address that risk.

With psychological injuries becoming increasingly prevalent in Australian workplaces over the past decade, the HCA’s decision in the case of Kozarov v Victoria was eagerly anticipated, to see whether it would provide any revision to the Koehler principle, or at least some further guidance as to employers’ duties in safeguarding their employees’ mental health at work. The result is a decision that doesn’t alter the key principles adopted by Koehler, but rather, stands next to that decision.

Background

In 2009, Ms Kozarov joined the Victorian Office of Public Prosecutions’ (OPP) Specialised Sexual Offences Unit (SSOU). Her work involved regular exposure to traumatic material. Appreciating the potentially traumatic nature of the work that its employees undertook, the OPP had adopted a Vicarious Trauma Policy for the protection of the psychiatric health of employees within the SSOU. The Policy was in place at the time Ms Kozarov commenced in the SSOU. Unsurprisingly, Ms Kozarov expressed concerns early in her employment about the effects of the repeated exposure to traumatic material on her daily life.

In May 2011 Ms Kozarov was promoted, but at the same time her health was worsening. In various forums she raised significant concerns about the impact of her duties and her workload on her mental health. In August 2011 Ms Kozarov suffered a significant deterioration in both her mental and physical health, culminating in more than two weeks off work on sick leave, and a referral to a psychologist. Upon her return to work on 29 August she perceived verbal comments by her manager as asserting that she was not coping with her work, and responded with several highly emotive and verbose emails, that were by all accounts a disproportionate response. Ms Kozarov was then unable to work for the rest of that day.  

After 29 August Ms Kozarov continued to perform her normal duties in the SSOU up until the end of December 2011, and even accepted a promotion in November 2011. She took pre-arranged annual leave and long service leave for the whole of January 2012. However prior to her scheduled return on 7 February she sought an extension of her leave. She subsequently requested to be moved out of the SSOU on 9 February. Around the same time Ms Kozarov was formally diagnosed with post-traumatic stress disorder (PTSD) resulting from vicarious trauma suffered in the course of her employment, as well as a consequential major depressive disorder. Thereafter, the OPP sought to return her to work in an alternative area, but after some months without being able to successfully place her, Ms Kozarov’s employment was terminated.

The Supreme Court & Court of Apppeal

Ms Kozarov brought an application for damages in respect of psychiatric injuries allegedly suffered while she was employed as a solicitor in the SSOU, as a result of her repeated exposure to vicarious trauma.

Initially, the VSC decided in Ms Kozarov’s favour, finding that:

1. the OPP had a duty to take reasonable steps to avoid or minimise risk to her mental health because it had been placed on notice of such risk (the Notice Finding); and
2. had Ms Kozarov been psychologically assessed at the end of August 2011 and been provided with advice to rotate into a different area she likely would have accepted such offer, which would have avoided exacerbating her PTSD (the Rotation Finding).

On appeal the VSCA upheld the Notice Finding but rejected the Rotation Finding. The Court found that even if Ms Kozarov underwent psychological screening post-August 2011, on the balance of probabilities it could not be proven that she would have accepted a rotation out of the SSOU. This was based on various representations by Ms Kozarov while employed as to her commitment to her role and the importance of her work, as well as her various applications for promotion within the SSOU.

Decision

In three separate judgments, the HCA upheld Ms Kozarov’s claim and found that her employer’s failure to provide a safe place and system of work exacerbated and prolonged her psychological injury.

The leading judgment (Justices Gageler and Gleeson) viewed the dispute as revolving around whether the OPP failed to take reasonable measures in response to evident signs of psychiatric injury, and whether this failure caused an exacerbation of such injury. The Court believed there were numerous signs that Ms Kozarov was at risk of psychological harm, and that these should have been evident to her employer by the end of August 2011. They also considered that her willingness to explore alternative roles with the OPP in February 2012 was supportive evidence that, had she been psychologically assessed for her fitness for work from August 2011 and as a result been advised to rotate duties, then she was likely to have accepted such rotation, regardless of any applications for promotion. Accordingly, the Court upheld the Rotation Finding, effectively finding that if the OPP had Ms Kozarov assessed for her fitness for SSOU duties when the risks of psychological injury became clear, they could have rotated her in the workplace and thereby prevented her condition from significantly worsening.

Further Observations

In addition to the Court’s primary ruling, the various judgments made a number of observations regarding employers’ duties that are worth keeping in mind. These include the following:

• The duty of care owed by employers to employees includes a need to take ‘active steps for the care of the psychiatric health’ of employees.
• The obligation of an employer to take reasonable care for the safety of employees should also take into account the obligations which the parties owe each other under the contract of employment.
• Where the duties of a particular job are inherently dangerous to employees’ psychiatric health, employers have a greater duty to be proactive and provide measures to enable the work to be performed safely by employees. Such measures could include:
  • an active OH&S framework;
  • appropriate and regular training regarding the risk of psychological injury;
  • welfare checks and the offer of referral for a fitness-for-work screening, in response to staff showing a risk of psychological injury; and
  • a flexible approach to work allocation, including the option of temporary or permanent rotation.
• Where an employer’s internal policies show a clear appreciation that the work poses a risk to employees’ mental health, the employer needs no further warning signs to take reasonable steps to safeguard their staff's mental health.

Implications

While most workplaces lack the unique risks of the SSOU, the following general learnings can be taken from this case in terms of employers’ duties regarding psychosocial hazards at work:

• Be aware of warning signs like changes in behaviour, absences, underperformance, and overwork.
• Any genuine concerns raised by employees regarding difficulty coping with the demands of their role should be taken seriously, and attempts should be made to address these.
• Provide training to assist leaders to identify risks of psychological injury, and how they should respond to any potential signs of concern.
• Promote an environment where leaders take a proactive approach to safe-guarding staff mental health.
• Empower staff to raise any concerns about their duties or workplace, and seek to address any genuine concerns where it is reasonable to do so.
• Where a psychosocial risk is identified, there should be a framework in place for addressing that risk, including the provision of counselling, occupational screening, and responding to the outcome of that screening.

If you would like more information regarding the above case and how it applies to you, or require specific advice tailored to your workplace, then please contact a member of our Employers’ Liability team.