Recent WA WorkCover arbitration decision rejects a stress claim following a disciplinary process

In August 2021, the WorkCover WA Conciliation and Arbitration Service (the Arbitrator) handed down a decision dismissing an application for compensation by a worker who claimed he suffered psychological injury following unreasonable treatment by his supervisor before his employment was terminated.

The worker sought a determination of liability with respect to an alleged “adjustment disorder” that he claims was the result of being verbally abused, intimidated and threatened by a supervisor in the course of his employment.  The worker sought weekly payments for the nine months in 2019 he claims he was incapacitated due to this “adjustment disorder” as well as other statutory entitlements under the Workers’ Compensation and Injury Management Act 1981 (Act).

The Arbitrator was not satisfied in all the circumstances and on the balance of probabilities that a disease was suffered in accordance with the Act. The Arbitrator was not persuaded as to the veracity of the worker’s claims or his credibility as a witness.

Client objectives

Our client’s objective was to demonstrate that the employer’s actions in dismissing the worker without notice on the basis of their gross misconduct was reasonable given the circumstances, and for this reason the worker should not be entitled to compensation.

Facts of the case

The worker claimed that, for being “a bit late” to work one day, his supervisor yelled and swore at him, leaving the worker in shock. Then he went to complain to his line manager, who scoffed at him, then fired him.

The employer submitted that the worker was over an hour late to work, without any reasonable explanation, and that the worker had a history of poor performance and insubordinate behaviour. When questioned as to why he was late for work, the worker became enraged and swore at his supervisor. The worker then approached his line manager, shouted racist obscenities at him, and generally behaved in an aggressive manner. This was overheard by multiple other employees and customers. The worker was asked to leave the premises.

Following consultation with Fair Work Australia, the employer terminated the worker’s employment for gross misconduct. The employer called several witnesses, all who corroborated this version of events in a consistent and forthright manner in oral evidence.

It was clear on cross-examination of the worker that he did not agree that his supervisor was, in fact, his supervisor, on the basis of prejudicial views as to the supervisor’s ethnicity. The worker did not believe he was required to respect his supervisor’s authority because he was, “un-Australian” and spoke “broken English”. The worker attempted to claim on cross-examination that he was “multicultural sensitive”, however his actions demonstrated otherwise. At the hearing, the employer established a pattern of prejudicial and discriminatory behaviour by the worker against his supervisor for qualities such as physical appearance and race. It was evident that, rather than having been abused and threatened himself, it was the worker who was the aggressor.

The law on compensation and injury management in WA

Section 5(1) of the Act provides that workers who have suffered an “injury” may be entitled to compensation. However, an injury does not include a disease caused by stress, if the stress arises from one of the disciplinary or performance management processes mentioned in s 5(4), unless the employer conducted the process unreasonably or harshly.

Basis for the decision

Representing our client at arbitration, we successfully demonstrated that the employer had acted reasonably when it dismissed the worker. It was found that the worker was over an hour late for work and became aggressive and abusive when questioned about his lateness. The worker became angry and verbally abusive toward his line manager when he was unempathetic to the worker’s complaint.

The Arbitrator found the worker to be an unreliable witness who lacked credibility and preferred the employer’s version of events in every respect. On this basis, it was entirely reasonable for the employer to dismiss the worker on the spot following his swearing and racist obscenities.

The Arbitrator also found that there was insufficient evidence that the worker had suffered an “injury” for the purposes of the Act. According to the law, evidence based on incorrect facts, or an incomplete history, should carry little or no weight (Pollock v Wellington (1996) 15 WAR 1 applied in Atanasoska v Inghams Enterprises Pty Ltd [2009] WASCA 17). As the independent medical expert relied on the worker’s version of events, which was incorrect or incomplete, the Arbitrator rejected the expert’s conclusion that the worker had an injury.

Outcome favours insurers and employers

This decision is beneficial for insurers and employers who face stress claims from disgruntled employees. Given the variety of different factors involved in stress claims, these can be challenging to manage while simultaneously minimising the impact of the claim on businesses and their workers.

What constitutes reasonable disciplinary action will vary depending on the circumstances. However, this decision reiterates that a worker’s serious misconduct is a valid reason for an employer to terminate their employment without notice.