Have any questions? Call us: 
When can the circumstances of performance counselling lead to a successful injury compensation claim if the worker sues?
Consider the case of Robert Gairns – a long serving salesman at a national musical instrument distribution business– whose performance had been long considered by the company’s managing director to have been “below standard”.
The company had no systems to track the sales performance; allocated no sales targets or budgets to be met; did not conduct performance reviews; and had no procedures to document employee performance concerns.Only the “odd word” had been spoken to Gairns over the years in mild reprimand of the frequency of his smoking breaks and talking too much on the job about his personal life and matters unrelated to work.
In February 2019 – at 4.45pm on a Friday – MD Ian Corazzol called Gairns over to his desk in their open plan office at Carole Park in Brisbane to say that because his internal sales team had performed poorly, his role was abolished as from Monday as part of a re-structure and his salary was to be reduced by $5,000.
The emotionally fragile Gairns was “utterly stunned” by his demotion – stating he thought it was unlawful – and by the news his performance had been thought to be poor.
Minutes later the MD notified staff by email that Ian Evans had been moved from the position of service manager – taken up when he started with the company six months earlier – to the new position of national sales manager.
The 50-yr-old returned to his own desk and packed his bag. Evans – who had overheard part of the conversation and knew of the restructure plan and his pending promotion – approached to ask if he was all right and to say he “didn’t know that was going to happen”.
The demoted employee did not present on Monday but a week later agreed to a café rendezvous with Evans where he was encouraged to return in a similar role but reporting to him, rather than to Corazzol.
After some weeks he decided he would leave. His employment came to an end in April 2019.
He filed proceedings in Brisbane’s District Court for the psychiatric injury sustained by reason of the circumstances in which the demotion and salary reduction were notified to him.
When the dispute came before her, Judge Jennifer Rosengren re-visited the scope of an employer’s duty noting there is no obligation to “provide a happy workplace” or “to ensure that there is no conflict between employees” or even that employees “are always spoken to in a temperate way”.
The obligation is to take reasonable measures to provide a safe workplace and to avoid workers being exposed to an unnecessary risk of injury in the performance of their role.
Managerial conduct that adversely affects an employee is – she explained – to be expected in the workplace as is any resulting psychological stress and tension. Workers cannot complain about “distress, alarm, injustice, anxiety, unhappiness or despondency” arising from such conduct or being told how to go about their work.
Hurt felt from performance counselling is likewise beyond complaint because employers are contractually entitled to investigate staff performance thereby putting any resulting decisions outside the scope of an employer’s duty to provide a safe system of work.
Gairns contended though, that his meeting with the MD did not fall into that category as performance issues had never before been raised with him and the meeting and demotion were rather, related to the re-structure.
Judge Rosengren agreed and ruled the conduct of the meeting fell within the scope of the employer’s duty to provide a safe system of work.
She also accepted that the company had been aware of the worker’s emotional vulnerabilities given his frequent presentations to the office in a state of distress due to personal issues or work problems. He had taken several absences in prior years – of which the company knew – to attend psychiatrist appointments.
The employee further argued that such knowledge required the company to take measures to avoid the foreseeable risk of psychiatric injury to him.
In particular, Gairns contended the company should have mitigated the risk of injury to him by providing written advance notice of its specific concerns; notifying him in advance of the potential consequences; providing him the opportunity of a meeting to respond; conducting an investigation; allowing a support person in attendance; and conducting the meeting behind closed doors.
The judge agreed.
“Demotion of a long-term employee is a serious matter and does not commonly occur,” she observed.
Given the real chance of psychiatric injury to an employee being notified of a demotion, a reasonable employer would have done more – so as to avoid such risk – than what had been done by in this case.
The meeting Corazzol arranged had been an “inadequate and misguided approach to any sort of perceived performance issues”.
Her honour also accepted Gairns’ assertions that his ongoing mental condition had been enlarged and aggravated by the manner of his demotion as a result of which he was likely to be limited in the future to part-time work in a low-stress environment.
His use of excessive alcohol and cannabis was not a separate contributor to his adverse mental state but rather – so ruled her honour – “a mal-adaptive coping strategy for the plaintiff’s anxiety, in circumstances where he has been reluctant to use pharmacological alternatives”.
Gairns was awarded general damages of just $4,350. Loss of income was assessed at $190,000 for the past and $130,000 for the future after a 35% discount was applied to take into account the chance his pre-existing psychological condition would otherwise have affected his work capacity. Total damages came in at $396,000.
Gairns v Pro Music Pty Ltd [2024] QDC 118 Rosengren DCJ, 2 August 2024
Categories: psychological injury , Reasonable management action , office worker injury