Victorian Court of Appeal confirms employer not liable for psychiatric injury: employee not up to the job – Shearer v iSelect Services Pty Ltd [2021] VSCA 328

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By Stuart Eustice, Partner and Holly White, Lawyer

Mr Shearer worked as a sales consultant for iSelect Services Pty Ltd (employer) between May 2010 and June 2013. In June 2013, he ceased work on income protection (paid by his employer’s insurance), and his contract of employment was formally terminated in 2017.

In June 2012, Mr Shearer began suffering from anxiety due to his working hours and the requirement to achieve sales targets. Between June 2012 and June 2013, Mr Shearer took three periods of extended leave. During that time, his employer offered him a new role (with a pay reduction), sought psychiatric assessment, and facilitated a staggered return to four days of work per week as recommended by his treating health practitioners.

In September 2018, Mr Shearer commenced proceedings against his employer in negligence claiming damages for personal injury. He claimed his employer had failed to take reasonable steps to protect him from the risk of psychiatric injury arising from the pressure of his work. A trial judge found that while Mr Shearer’s employer did owe him a duty of care, that duty was not breached and even if it had been, the evidence did not support a finding that the hypothetical breach was causative of Mr Shearer’s alleged injuries.

Mr Shearer sought leave to appeal the decision to the Victorian Court of Appeal. The Court of Appeal refused Mr Shearer’s application for leave to appeal, finding there were no real prospects of success.

The Court of Appeal agreed with the trial judge’s findings[1] that:

  1. A duty of care was owed: by November 2012, when Mr Shearer’s doctor advised that his sales role was too stressful and he should seek alternative employment, it was reasonably foreseeable that Mr Shearer was at risk of suffering a psychological illness. Therefore, a duty of care had arisen.
  2. No breach had occurred: the steps taken by Mr Shearer’s employer were reasonable, moving Mr Shearer to a different team, seeking medical opinions, approving leave and facilitating a staggered return to work. Importantly, the medical advice received in April 2013, prior to Mr Shearer’s staggered return to work, identified reduced hours but did not recommend any modification of duties. Mr Shearer’s employer followed this advice, allowing Mr Shearer a staggered return to 4 days per week.
  3. Even if there was a breach, it would not have been causative of the alleged injury. The medical evidence did not demonstrate that removal of the targets would have lessened Mr Shearer’s symptoms generally associated with his sales role.

The Court of Appeal emphasised that  risk of psychiatric injury as a result of performing work duties is not reasonably  foreseeable by any employer in the absence of some reason for an employer to ‘suspect that the appellant was at risk of psychiatric injury’.[2] It went on to opine that when examining the content of a duty, regard must be had to the limitations imposed by contractual or other obligations. The duty of the employer was to take reasonable care to avoid the risk of psychiatric injury, within the parameters of the employment relationship as a sales consultant. It would have been unreasonable to expect the employer to excuse Mr Shearer from performance targets as they are common across the sales workforce.

[1] Shearer v iSelect Services Pty Ltd [2021] VCC 458 (Judge O’Neill).

[2] Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44, [27]; [2005] HCA 15.

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