Key Takeaways

S11A(1) provides that no compensation is payable in respect of a psychological injury if the injury was wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal, or provision of employment benefits to workers.

While performance appraisal and discipline are most often raised in s11A defences, the category of ‘provision of employment benefits’ is not as frequently applied.

The term ‘provision of employment benefits to workers’ is not defined by the legislation. In a recent decision in the WCC, Arbitrator McDonald accepted that provisions contained in an employment contract constituted employment benefits under s11A.

Brief Facts

The employer introduced new contracts which amongst other matters contained changes to redundancy and sick leave entitlements and also included new provisions with respect to company cars. Under the new contracts, staff were given the option of handing back their company car when new employment letters were signed or at the end of the car lease in exchange for pay increases in 2015 and 2016.

The worker was the only staff member who declined to sign the letter or return the car. The lease on the worker’s car had two years to run and the worker was told that if he kept the car there would be no salary increases.

In 2017 the employer advised the worker that the lease was close to expiring and would not be supplied for private use when the lease ran out. The worker was told that once the vehicle was returned he would be entitled to salary increases to place him on equal footing with his colleagues.

In addition to alleging a number of work-related issues as being the cause of his psychological injury, the worker alleged that the ‘forcible’ removal of the car by his employer and the failure of his employer to increase his pay in 2015 and 2016 was unreasonable and inconsistent with the employment contract he had signed in 2002.

Judgment

In dealing with s11A, the worker accepted that the relevant action on behalf of the employer was the provision of employment benefits and included the matters contained in the new contracts such as the company car and changes to salary, redundancy and sick leave. The Arbitrator found that what led to the worker’s injury and the cessation of work were issues related to the contract. The Arbitrator held that the predominant cause of the injury was the conduct of the employer with respect to employment benefits.

Implications

The decision in Ceccato adds to a body of case law that attempts to define what is or is not an employment benefit.

Interestingly, in Hosoglu, the Arbitrator commented that in his view an employment benefit would involve additional matters which are not part of the contract of employment and are not routinely available to all employees. He gave the example of the use of an employer’s corporate box at the football as falling within the category whereas the provision of a company car as a term of the contract of employment would not. This view is distinct from the view of the Arbitrator in Ceccato who found that matters dealt with in employment contracts such as company cars can constitute employment benefits.

Overall, the case law demonstrates a varied interpretation as to what constitutes an employment benefit. Ultimately, it is an issue that is likely to depend on the facts of the individual case. The decision in Ceccato provides a timely reminder to consider the under-utilised category of ‘provision of employment benefits’ when considering claims for psychological injury.