Precedent

What went wrong?

  1. The employer had incorporated its disciplinary procedure into the employee’s contract, setting the stage for a breach of contract claim;
  2. The employer failed to follow its own policies when conducting the disciplinary process; and
  3. The employee sustained a psychiatric injury that resulted in him having no capacity for work in the foreseeable future as a consequence of the botched process.

“The process adopted by [Vision Australia] was nothing short of a sham and a disgrace”

– Justice O’Meara
 

Why was the claim successful?

  1. The employee could demonstrate that the disciplinary process formed part of his employment contract, and that his employer had not followed that process; and
  2. The High Court held that it should have been reasonably foreseeable that serious breaches of disciplinary procedures may cause an employee to sustain a serious psychiatric illness.

“It is apparent that a serious breach of disciplinary procedures involving serious unfairness to an employee of a kind that occurred in this case involved a serious possibility of causing the development of a serious psychiatric illness, which should reasonably have been contemplated by the parties at the time they entered the contract”

– Justice Jagot
 

What can employers do to avoid the same fate?

  • Review and update your employment contracts regularly;
  • Ensure that policies and procedures are not incorporated as terms of the contract;
  • If your company has an established disciplinary policy in place:
  • Ensure that it is strictly followed before dismissing an employee.
  • Ensure that all allegations that form part of a disciplinary process are included in the investigation letter.
  • Include particulars provide the employee with a reasonable opportunity to respond to the concerns.
  • Do not make any decisions in relation to the future of an employee’s response prior to considering their response to the allegations.

 

This case offers a salutary reminder to employers of the importance of getting your company’s employment contracts regularly updated, and to seek legal advice before taking steps to dismiss an employee.

[1] Addis v Gramophone Co Ltd [1909] AC 488
 

Disclaimer

The above does not constitute legal advice, but is information which may be of general interest. Tisher Liner FC Law will not be held liable or responsible for any claim, which is made as a result of any person relying upon the information contained in this publication.