What can we learn from Elisha vs Vision Australia - with Catherine Dunlop

In this episode, Australian hosts Jason and Joelle chat with Catherine Dunlop, Partner and Board Member at Maddocks. Catherine explains the recent Australian High Court case involving Vision Australia. The Court awarded the plaintiff $1.5 million in damages following a "sham" disciplinary process resulting in psychological injury. Join us as Catherine breaks down the facts of the case and shares her views on what employers should learn from this case.

A supplementary note from Catherine:

In the interests of brevity and getting to the learnings, my explanation of the case wasn’t a fulsome account of all aspects of the findings. So, to address some questions and to assist those who want those details (without getting into the nitty gritty of whether the headnote to the decision in Addis v Gramophone Co Ltd is correct), the following may assist:

The High Court decision and the new precedent

The High Court affirmed the findings of the Victorian Supreme Court and the Court of Appeal in holding that the law permits an employee to recover damages in breach of contract for psychological harm resulting from a termination of employment. This overturned precedent that exempted damages arising from termination. The employee was awarded $1.4m in damages.

The finding of the Court on the breach of contract issue is likely to have limited application to employers given:

the breach arose from incorporation of policies in the employment contract in this instance, not a common practice; and the workers compensation legislation in some jurisdictions may act as a bar for recovery of damages arising from breach of contract. The majority of the High Court held that it was unnecessary to consider whether an employer could be liable in negligence in such circumstances. A decision to that effect would have represented a significant change in law.

The decisions

Justice O’Meara in the Victorian Supreme Court made findings of fact and accepted the employee’s version about the interaction with the hotel manager. He held that the employer did not comply with its Disciplinary Policy, and that an earlier deed of release in related unfair dismissal proceedings was not a bar to recovery, given the specific wording of that deed.

The Supreme Court held that:

The policy was incorporated into the employee’s contract of employment That contract was breached The damage was not too remote and therefore the employee was able to recover The Victorian Court of Appeal upheld the employer’s appeal finding that:

There was no error in the Supreme Court’s (relevant) findings of fact The policy was incorporated into the employee’s contract of employment That contract was breached it was not a recoverable breach as the damage was too remote (applying past precedent that such damages are only recoverable when they are consequent on a physical injury) The High Court held that:

The policy was incorporated into the employee’s contract of employment Liability for psychiatric injury arising from termination of employment is not beyond the scope of a contractual duty (and will depend on the wording and context of the contract) (with one dissent) The damage was not too remote.