Ensuring Management Action is Reasonable during COVID-19

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By Rachael Sutton, Partner

Since the beginning of the COVID-19 pandemic there have been hundreds of coronavirus-related workers’ compensation claims and notifications across Australia.

Apart from those claims and notifications directly related to exposure or potential exposure to the virus, there is the obvious potential for psychological claims to be made by employees in managerial and supervisory positions as well as employees who are the subject of various impacts on business resulting in significant changes to their conditions of employment as well as, in certain circumstances, the termination of their employment.

During this pandemic, employee who are in managerial and supervisory positions are being tasked to have “difficult conversations” on an ongoing basis; at a frequency and on subject matter which is outside what would be considered “normal”,  such as:

  • negotiating downward changes to salaries and wages, hours of work, changes in work duties, leave arrangements;
  • managing working from home arrangements and managing performance of work under these arrangements,
  • communicating tough business decisions such as stand downs;
  • ending employment through redundancies;

These conversations are different because they involve:

  • topics that are uncomfortable and most of us don’t want to talk about;
  • situations or circumstances where the next stage or outcome may be uncertain.

For many of these managers and supervisors it may be the first time that they have been confronted with these business conditions, let alone having these conversations with employees in circumstances where there are heightened levels of concern and anxiety about job security on both sides of the discussion.

Many people avoid difficult conversations in the workplace because it makes them feel uncomfortable.  Even experienced managers can find these conversations daunting, despite being an important part of their role.

Ensuring any action taken is reasonable and “getting it right” is essential to avoiding disputes and claims that may be brought by employees for breaches of:

  • Employment Contracts;
  • Awards or Enterprise Agreements;
  • Leave provisions in the National Employment Standards and Long Service Leave laws;
  • Job Keeper laws, rules and directions
  • General protections laws
  • Anti-bullying laws
  • Discrimination laws

It is therefore essential that managers have the skills, knowledge and confidence to identify and manage these issues, and that they are well prepared and feel supported during this time to have those conversations. Arranging for manager briefings, preparing Q & As for managers and allowing them to prepare themselves by asking questions about how to deal with situations will assist them to be prepared and more confident for interactions with employees.  It is likely to reduce feelings of being overwhelmed by the task and the risk of claims for workers compensation for psychological injury.

Whilst there is a range of industrial options for employees who may feel aggrieved by the actions of their employer or manager to pursue, employees may also chose to take “stress leave” for the psychological impact and to make a claim workers compensation.

In most jurisdictions, workers compensation laws allow an employer to rely upon “reasonable action” as a defence to a claim for psychological injury, but there are three common elements that must be present in defending such a claim. The action must:

  • fall within the circumstances set out in the legislation;
  • have caused the injury; and
  • be reasonable.

Section 11A(1) of the Workers Compensation Act 1987 in New South Wales provides that:

No compensation is payable under this Act in respect of an injury that is a psychological injury if the injury was wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers.

The following matters will be usually considered by the Workers Compensation Commission when considering whether action was reasonable:

  • All the circumstances surrounding the action both before and after;
  • Weighing the rights of the employee against the goals of the employer (fairness);
  • Even if the employer has complied with its own protocols, the Commission can consider whether the protocols are objectively reasonable;
  • Even where the action was justified, the Commission will have regard to the relationship prior, eg length of service, work arrangements (flexible, working from home, reasons for work arrangements or hours of work).

The reasonable action defence will be available to claims arising during the pandemic if employers are able to communicate effectively with their managers and supervisors and prepare them sufficiently to implement sound procedures for taking action particularly when it impacts employment benefits (eg changes to employment conditions, stand downs, taking of leave, change of duties) or results in the termination of employment in the workplace.

Procedural steps that are consistent with legislative rules, industrial rights, obligations and expectations during this period and ensuring that both employee and employer understand the expectations, and adhering to them in appropriate circumstances, will generally be found to constitute reasonable action.  If action does not comply the employer will be left vulnerable to not only industrial disputation and claims but also workers’ compensation claims.

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