Walk the razor’s edge - performance management and workplace bullying

23 Apr 2012

In the context of the new harmonised work health and safety laws and accompanying Codes of Practice, there are a myriad of avenues by which employers could face bullying-related claims from employees. While the Code on Preventing and Responding to Workplace Bullying is still under review by Safe Work Australia, there are several ways in which employees may lodge a claim against their employer alleging workplace bullying. As we approach the performance review period, it is important for employers to be stringent in their conduct of performance reviews and keep in mind the various risks that may arise from management conduct that may be considered standard administrative action.

The Harmonised WHS Laws

Safe Work Australia is still in the process of developing and approving a series of model Codes of Practice to accompany the harmonised WHS regime that came into effect on 1 January 2012 in half the jurisdictions in Australia. The Code on Preventing and Responding to Workplace Bullying (Bullying Code) is yet to be finalised. In the context of performance management, however, the draft Bullying Code contains specific provisions dealing with workplace bullying.

The Bullying Code

The draft Bullying Code defines workplace bullying as:

“repeated, unreasonable behaviour directed towards a worker or a group of workers, that creates a risk to health and safety.”

It covers direct and indirect bullying as well as “unintentional bullying,” where the behaviours "should reasonably have been expected to cause" humiliation, offence, intimidation or distress. Unions have criticised the definition because single instances of inappropriate behaviour are not included.  However, inclusion of single incidents may bring more instances of performance management bullying within the ambit of WHS laws.

Regardless, the draft Bullying Code provides that “reasonable” management action, carried out in a fair way, is not bullying. Managers have a right to direct the way work is carried out and to monitor and give feedback on performance.  However, how this is done (or even omitted to be done) can make the difference between reasonable and unreasonable, which is an extremely fine line.

Examples of reasonable management action provided in the draft Bullying Code include:

  • setting reasonable performance goals, standards and deadlines in consultation with workers and after considering their respective skills and experience;
  • informing a worker about unsatisfactory work performance in a constructive way and in accordance with any workplace policies or agreements;
  • implementing organisational changes or restructuring; and
  • performance management processes.

Workers Compensation

In NSW, if an employee believes that they have been bullied at work as a result of a performance review (unfortunately, stress and other psychological injury claims stemming from allegations of bullying and harassment are quite common in the lead up to 30 June), they may make a claim for compensation under the Workers Compensation Act 1987 (NSW) (WCA).

Importantly, section 11A (1) of the WCA provides that no compensation is payable under the WCA in respect of a psychological injury if the injury was wholly or predominantly caused by “reasonable action” taken by the employer with respect to a variety of factors, including performance appraisal. Thus, an employer can reduce the risk of an employee’s claim being successful if it can be shown that the action taken in relation to performance management was reasonable.

With this in mind, the Federal Court recently ruled in favour of a Commonwealth Bank employee, who suffered psychiatric injury as a result of “performance management” actions. The employee’s claim centred on management reporting requirements (that is, ongoing performance management as opposed to annual performance review) that made him feel "embarrassed and humiliated" and led to him to attempt suicide. The court found that the injury was caused by “management” rather than “administrative” action and was therefore not excluded from compensation.

Use of the Bullying Code

Under WHS laws, Codes of Practice are intended to provide practical guidance for duty holders to achieve standards of health, safety and welfare. Although failure to follow a Code of Practice is not of itself a breach of WHS laws, application of an approved Code of Practice on a subject matter is admissible as evidence of whether an obligation under the Act has been complied with.

It is likely that changes will be made to the draft Bullying Code, and that a second draft will be released for public comment. However, once in operation, a recent Queensland case highlights the need to at least adhere to the minimum standards set out in a Code. The Warwick Industrial Magistrate’s Court fined a Queensland employer $110,000, plus more than $4,000 in costs for neglecting to follow the Queensland Mobile Crane Code of Practice 2006 after an unlicensed crane operator was killed. The Code required crane owners to ensure that operators were licensed.

Adverse action claims

Employers are also at risk of employees bringing adverse action claims if they conduct performance management in a way that constitutes workplace bullying. In Stevenson v Airservices Australia [2012] FMCA 55 (1 February 2012), Mr Stevenson brought an adverse action claim against his employer, alleging that his employment was terminated because he exercised a workplace right by complaining about bullying and harassment. The employee claimed that one manager had sent him insulting emails in an effort to “harass, intimidate and put pressure on him to leave his employment.” The Federal Magistrates Court did not make a finding of adverse action, after accepting that the worker was sacked for performance reasons, however the case illustrates the ease with which an allegation of workplace bullying can arise in response to management action.

What you can do

The draft Bullying Code states that the best way to control bullying risks is to eliminate the risk. However, if that is not reasonably practicable, it suggests implementing measures to minimise risk as much as possible. In the context of performance management and reviews, the following employer practices should be observed (in addition to developing and implementing a workplace bullying policy):

  • Always have another person present when discussing performance with an employee or delivering the results of a performance review.
  • Take notes during the meeting, providing a copy to the employee.
  • Seek external advice early if it seems likely that the employee will commence legal action.  Once a workers compensation claim is made, dealing with employee performances becomes much more difficult.
  • Do not attribute poor employee performance to personal issues (eg trouble at home).
  • Be careful not to make off hand remarks that may be construed as bullying, what you think is a joke isn’t always to everyone’s liking.
  • Encourage reporting of workplace bullying instances.

For further information on workplace bullying or WHS laws generally please contact bertonl [at] kempstrang [dot] com [dot] au (Lisa Berton), partner or urryb [at] kempstrang [dot] com [dot] au (Ben Urry), senior associate.

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