Mental Health Claims – What is ‘Reasonable Management Action’?

In the past few years, mental health injuries have become more and more prevalent in the workplace, and defending them tends to be costly and time consuming, often draining the limited resources of an organisation.

Defending psychiatric injury claims often comes down to what is and is not ‘Reasonable Management Action’. We generally encounter seven categories of ‘Management Action’ which are recognised, at face value, as being reasonable, including:

  1. Transfer;
  2. Demotion;
  3. Promotion;
  4. Performance appraisal;
  5. Discipline;
  6. Retrenchment or dismissal; and
  7. Provision of employment benefits.

If an employee suffers a psychiatric injury as a result of one of the above ‘Management Actions’ being taken, so long as the action was taken for the benefit of the organisation, it will most likely be reasonable if the action is undertaken in a reasonable way.

‘Reasonable Management Action’ is not undertaken in a reasonable way if it involves:

  1. Berating an employee or making threats to dismiss them in front of their work colleagues;
  2. Intentionally embarrassing or belittling an employee;
  3. Conducting a spontaneous disciplinary meeting with no prior warning or consultation;
  4. Standing over an employee for regular extended periods of time to observe their work;
  5. Using disciplinary procedures disproportionally;
  6. Conducting an unfair workplace investigation:
    1. Without adequate notice;
    2. Without procedural fairness;
    3. In a rushed manner;
    4. With obvious bias or a pre-determined outcome.

When considering if your organisation’s actions are reasonable, ask yourself:

  1. Do you have policies and procedures? If so, are they reasonable and have you complied with them?
  2. If an investigation involving the actions of an employee is warranted:
    1. Is it fair?
    2. Is it timely so that all parties are provided with an outcome without undue delay?
    3. Was procedural fairness provided?
  3. Take a step back and assess your actions objectively:
    1. Are you too biased? If so, have someone else assess your actions;
    2. Have you gathered actual facts or are you relying on opinion, inuendo or rumour?

If you have a worker lodge a mental health claim, don’t instinctively become defensive and take the claim as a personal insult. Start by speaking to and engaging with the worker. Ask them if they require or want support such as through your Employee Assistance Program. Most of all, try not to let your employee feel isolated while away from work which can lead to longer duration claims. It is also important to keep a record of the interactions you have with your injured employee.

It is important to develop an understanding that mental injuries can be just as debilitating as physical injuries. Regardless of the type of injury suffered, your goal should be to return your employee to work if at all possible.

“The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.”
For the latest publications and updates, click on the link below.
Scroll to Top

Book a consultation