The Federal Court of Australia has recently ordered an account of damages to be paid to a senior-employee of Hawkesbury Race Club, Mrs Leggett, due to the bullying and harassment resulting from her employment. This case highlights consequences that result from overbearing and harassing management of staff and how injured workers may bring substantial damages claims pursuant to the general protections provisions of the Fair Work Act.
Background
Mrs Leggett started working at Hawkesbury Race Club on January 1991. Her "tenacious nature" as her colleagues described had garnered her full employment at the Club as well as a generous means of remuneration where she was entitled to an annual rate of $25,000 as well as a 10% commission. By the time that a new CEO, Mr Rudolph commenced in that role on the 6th May 2016, Mrs Leggett was a well-respected and senior employee.
Following the commencement of Mr Rudolph's employment, Mrs Leggett's psychological health was found to have been substantially affected as a result of Mr Rudolph's overbearing micromanagement style. On the 9th October 2016, following an incident, Mrs Leggett emailed Mr Rudolph stating that she was "very upset" and felt that Mr Rudolph was "rude" in his demand through the tone elicited to her. When outlining that she wanted him to inform the Board of their strained relationship, Mr Rudolph asked in an email to meet him in the office the following day to "discuss your work performance" and that she could "bring a support person" if she so wished.
When Mrs Leggett had received the email on the 10th October 2016, she claimed that she felt even more "distressed, emotionally drained and began vomiting". When informed of this, Mr Rudolph was recorded to gloatingly remark that his employees were "dropping like flies" and that Mrs Leggett was pulling the "stress leave" to avoid working. The Club withheld payments which she was entitled and used this as "bargaining chips" to negotiate with the Complainant.
The Club's response to these claims was found by the Court to be lacking. They had delegated authority to Mr Rudolph, the source of Mrs Leggett's stress, to handle her complaint to resign and the Board had explicitly confirmed that they would not "get involved in those negotiations, delegating" that authority to Mr Rudolph. The Club had shown a transparently apathetic approach to the plight of Mrs Leggett, who had expressed her frustration and stress to many of the directors.
Repudiation
The Court found that there was a repudiation of the employment contract. The Club had withheld her commissions between the 10 October 2016 to 7 February 2017 and the 25 January 2017 to 21 February 2017 commissions with the latter being paid on the 8th November 2019. In addition with the fact that Mr Rudolph told the applicant that the commission would not be paid when due but would be sorted out in due course indicated that the Club had repudiated the contract. They had evinced an intention to not be bound by the terms of the employment and therefore, Mrs Leggett was entitled to substantial damages for the Club's breach of contract.
Fair Work Act Claims
Mrs Leggett had made two claims in relation to the general protection provisions of the Fair Work Act.
Firstly, she had argued that the Club had taken adverse action against her when they had replied to her 9th October email convening a meeting to discuss her work performance. Counsel for Mrs Leggett claimed that this was used to injure or threaten her in her employment in contravention of the general protection provisions because she had exercised her workplace right to make a complaint in regard to Mr Rudolph's conduct.
The Fair Work Act created a presumption that Mr Rudolph had taken adverse action by emailing the complainant to have a meeting to have a discussion about her performance. The critical issue here would be Mr Rudolph's conscious mental process for taking this action. The Court rejected the argument that Mr Rudolph was concerned as to how the complainant was feeling. This is because of the comments that he made in regard to her email stating that she was pulling the "stress leave" card. A reasonable person the Court said would infer that Mr Rudolph's actions are indicative of bullying, rudeness as well as harshness. The Club could not displace the presumption established under the Fair Work Act that adverse action was taken against Mrs Leggett through seeking to convene a meeting to discuss her work performance following her complaint.
The second claim was that Mr Rudolph deliberately withheld payment to Mrs Leggett of her commissions because she had taken sick leave and made a complaint on the 9th October email. She said that her payment was being withheld because of the complaint that she made on the 9th October and that this commission would be used as a bargaining chip for the discussion of her performance. This "drove the nail home" in addition to the Club's response to Mrs Leggett's claim as it showed that the Club showed a total disregard to her exercising her rights as an employee through the 9th October email.
Additionally, many of the payments that Mrs Leggett was entitled to were withheld for many months and up to years. This had clearly breached the Fair Work Act which requires payments of amounts payable to an employee in relation to the performance of work in full at least monthly. Here, the employer had withheld her entitlements for years in some cases and breached this provision of the Fair Work Act.
Consequences
The Court took into account that the conduct by Mr Rudolph had "caused a very serious psychiatric illness that may never be cured, ameliorated to any significant" in assessing the damages. As a result, the Club was ordered to pay $200,000 in compensation under the Fair Work Act for the Club's contravention.
Takeaway for Employers
There are two main takeaways from this case. Employers should ensure that they respect the rights of their employees to make claims and to be cordial when responding to these claims. A failure to do so could be taken as an adverse action which would contravene the general protection provisions of the Fair Work Act and the employer may be liable to pay compensation.
Employers should also take note the precedent set by this case in regard to damages awarded for psychological damage pursuant to the general protection provisions. When assessing damages claims in the general protection context, traditionally the Court has tended to award general damages of $5,000 to $10,000 for harm or suffering caused to employees. As a result of this decision, we anticipate seeing more significant damages being sought by employees in some general protection matters and an increased focus on psychological damage suffered by employees for psychological distress. This may change the dynamics in the conciliation process and with the compensation being sought by the employee or their representative being materially higher than may have been in the case in the past, making it potentially more difficult for employers to settle claims for an amount they consider reasonable. Hence there is a greater need or incentive for employers to avoid these claims in the first instance.
If you have any queries regarding the above please feel free to contact Michael Bishop, Amelita Hensman or Ben Drysdale of our Employment Law team.
Sources
Leggett v Hawkesbury Race Club Limited (no 3) [2021] FCA 1658
Fair Work Act 2009 (Cth)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
