Managing an employee with mental health issues – what you need to know

Employees do not always disclose a mental illness voluntarily, and nor are they legally obliged to do so

Managing an employee with mental health issues – what you need to know

by Amber Chandler, Partner, Barker Henley

Sadly, mental illness affects a high proportion of the Australian population, with BeyondBlue reporting that 45% of the Australian population will experience a mental health condition in their lifetime. As employers, how do we deal with mental illness in our workforce? Furthermore, is it any of our business?

Employees do not always disclose a mental illness voluntarily, and nor are they legally obliged to do so. Pre-employment medical assessments will not always disclose them unless the medical condition affects the inherent requirements of the relevant role.

Privacy and anti-discrimination legislation may also prevent employers asking about possible medical conditions. Despite these restrictions, an employee’s mental health condition will be relevant to an employer if it affects safety in the workplace, or the employee’s ability to perform the inherent requirements of their role.

When managers notice employees exhibiting behaviour that would fit the description of misconduct --- whether that be uncharacteristic lateness, a general lack of focus resulting in poor work quality or disrespect, the “knee-jerk” reaction can often be to performance manage or discipline the employee. However, the Australian Human Rights Commission, in their helpful guide Workers With Mental Illness: a Practical Guide for Managers, urges employers when noticing changes in behaviour, to show support for employees early on.

While an employer is certainly entitled to apply their standard performance management system to all employees where they have a legitimate concern about their performance, it is important to take into account personal circumstances and whether a mental illness may be contributing to poor performance. Therefore, if an employee does disclose a mental health issue, it is advisable to only move to performance management as a last resort as it is possible performance management may only exacerbate the employee’s stress and anxiety levels.

The key question employers must ask before performance management is whether the underperformance or misconduct is caused by a mental health condition, or is it simply underperformance or misconduct? It is important to identify the reason for performance issues before taking any performance management or disciplinary action.

Various decisions in unfair dismissal matters and adverse action cases highlight the need for an employer to open a dialogue with an employee when mental illness is impacting an employee’s performance.

In Vernham v Jayco Corporation Pty Limited [2015] FWC 8185, Mr Verham had made a workers compensation claim for psychological injury due to work stress, which was declined by the insurer. He sent two emails to the workers compensation insurer in which he threatened harm against his employer and its employees. The insurer notified the employer about the contents of these emails and eventually he was summarily dismissed for serious misconduct. He then filed an unfair dismissal application, and, although the Fair Work Commission (FWC) found the employer had a valid reason to summarily dismiss Mr Verham, it held the dismissal was harsh.

The FWC found that, on the evidence given at hearing, Mr Vernham was suffering from a mental illness at the time he sent the emails and that there was a direct causal link between his mental state and his decision to send the emails. However, when dismissing him for sending the emails, the employer failed to afford him procedural fairness by giving him an opportunity to explain to them what his mental state was.

Additionally, there had been a three month period between the employee sending the emails and the decision to dismiss Mr Vernham. The FWC said the employer should have used that time to make enquiries about Mr Vernham’s actions. The FWC also identified several occasions in their interactions with Mr Vernham where the employer should have been prompted by various signals to ask him about his mental state.

This case confirms that discussion with the employee about their actions is always advisable before making a decision to dismiss.

In State of Victoria (Office of Public Prosecutions) v Grant [2014] FCAFC 184, an employee who worked as a solicitor took time off work for a broken leg injury. However, after returning to work, he kept taking days off work ostensibly to attend medical appointments.

Eventually, due to some operational issues with his cases and the functioning of the department due to his unannounced absences, his supervisor held a meeting with him to discuss his performance. He asked Mr Grant to advise him of the nature of his health problems. Following the meeting, Mr Grant provided a medical certificate certifying that he was unable to work for the next week.

Shortly after the meeting, Mr Grant advised his employer he was suffering from depression but did not provide any medical report confirming this. His employer issued a letter which outlined attendance and performance issues, directed him to take leave with pay and to provide a medical report regarding his fitness for duty.

Mr Grant then provided a report from his doctor which confirmed he suffered from a long-term anxiety condition and a recent lapse into depression but gave him an excellent prognosis as Mr Grant had reduced his alcohol consumption.

The employer notified Mr Grant in writing that an investigation would take place into several allegations of misconduct made against him and Mr Grant was given the opportunity to respond in writing. Eventually, the employer found all allegations were substantiated and notified Mr Grant of intention to terminate his employment.

Mr Grant filed an adverse action application and at first instance, he was successful as the trial judge found Mr Grant’s conduct arose wholly out of his medical condition and therefore for the employer to dismiss him for that conduct was discriminatory (adverse action).

However, the employer appealed that decision and was successful in overturning it. The Full Federal Court found: “[the employer] was aware he made his decision that Mr Grant had been suffering from depression and other ailments at the time at which the misconduct occurred. The medical evidence did not expressly or impliedly link the misconduct and the illness…There was no evidentiary foundation for the conclusion (by the primary judge) that ‘[i]t was [Mr Grant’s] illness on any view that led him to do the things that he did that caused his dismissal…’”.

In the above, it was two key elements that protected the employer:

  1. The fact that the employer had bothered to make the enquiries with the employee about the nature of his illness;
  2. None of the medical evidence provided gave any indication that the medical condition caused the performance issues.

This put the employer in an excellent position to defend the adverse action claim as the dismissal was not carried out because of the illness, but because of the misconduct. Therefore, no adverse action had taken place.

Important points to note when managing employees with mental health conditions:

  1. If the employee discloses a medical condition, ask them about it and seek a medical opinion.
  2. Have strong policies and procedures and follow those procedures fairly and transparently. Ask yourself: would I be treating someone the same way if they did not have this condition but in the same circumstances?
  3. Do not delay in carrying out action. Delay can exacerbate existing mental illnesses.
  4. Ensure the employee always has a support person present. This could be a personal friend, family member or even their own GP or psychologist.
  5. Have a clear paper trail of the action you have taken, that is consistent particularly in terms of the reason you have carried out performance management or disciplinary action.


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