Take it or Leave it: Forced Annual Leave Found to Cause Psychological Injury

Panchal v Woolworths Group Limited [2021] NSWPIC 389

The Applicant, Tarunkumar Panchal, claimed that he sustained a psychological injury in the course of employment with the Respondent, Woolworths Group Limited.

He alleged that there were several incidents at work between November 2019 and 20 August 2020 which involved interpersonal conflicts with his manager which resulted in his psychological injury.

He claimed weekly compensation payments from 21 August 2020 to 18 October 2020, alleging he was totally incapacitated for work; and then ongoing weekly compensation payments thereafter, alleging a partial incapacity for work.  He also made a claim for medical or related treatment expenses.

The Respondent denied liability for the Applicant’s psychological injury on the grounds that he did not sustain an injury during the course of his employment with the Insured or in the alternative, if he did sustain a psychological injury then no compensation was payable as it had occurred as a result of the reasonable actions taken by the Respondent with respect to the provision of employment benefits and discipline.

Issues for Determination

• Whether the Applicant sustained an injury in the course of his employment with the Respondent pursuant to Section 4 of the Worker Compensation Act 1987 (“the Act”);
• Whether any psychological injury sustained by the Applicant was wholly or predominantly caused by the reasonable action taken by the Respondent with respect to the provision of employment benefits under Section 11A of the Act;
• The extent of the Applicant’s incapacity for work as a result of his injury; and
• Whether treatment for the Applicant’s psychological injury was reasonably necessary in accordance with Section 60 of the Act.

Decision

The Applicant alleged that three separate incidents (or series of incidents) occurred in the workplace which caused his psychological injury. He firstly alleged there was a conflict between himself and his manager in November 2019 in which he was allegedly directed to continue working despite complaining of severe back pain. He secondly alleged that on 19 November 2020, he was demoted without notice.  He thirdly alleged that unreasonable demands were placed upon him by his manager from April 2020 to August 2020 to take his accrued annual leave which had built up to an excessive level.

The Respondent submitted that the first two alleged incident did not occur in the manner described by the Applicant and that the third alleged incident did not amount to bullying or harassment, and that in any event the third alleged incident involved reasonable actions taken with respect to “the provision of employment benefits”.

Member John Isaksen referred to the decision in Attorney General’s Department v K [2010] NSWWCCPD 76 in which Deputy President Roche found that [at 54]:

“The critical question is whether the event or events complained of occurred in the workplace. If they did occur in the workplace and the worker perceived them as creating an ‘offensive or hostile working environment’, and a psychological injury has resulted, it is open to find that causation is established. A worker’s reaction to the events will always be subjective and will depend upon his or her personality and circumstances. It is not necessary to establish that the worker’s response was ‘rational, reasonable and proportional.”

Member Isaksen noted that it did not automatically follow that if there were real events in the workplace and those events were perceived by a worker to be hostile that a psychological injury is established. Rather, it was simply “open” to the Commission to make a finding of employment being the cause of psychological injury once a consideration is given to all of the evidence.

Member Isaksen was not convinced that the first two incidents occurred in an offensive or hostile work environment. However, he found it reasonable to conclude that the Applicant perceived that he was working in a hostile work environment when he was frequently approached by management to take annual leave and not offered assistance when he tried to change the dates of the leave that he had applied for. Member Isaken was therefore satisfied that the Applicant sustained a psychological injury in the course of his employment.

In relation to the Section 11A defence, Member Isaksen found that annual leave for a permanent employee was an entitlement as distinct from a benefit. He noted that annual leave is one of the minimum entitlements listed in the National Employment Standards. The Respondent submitted that “benefits” and “entitlements” were interchangeable. Member Isaken was of the view that there is a distinction noting that “a permanent employee has an expectation that he or she will be entitled to annual leave so long as they otherwise meet the requirements of the Fair Work Act, whereas a benefit is an act of kindness or generosity that may be provided by an employer to an employee.”

An Award was made for the Applicant in regards to the claim for weekly compensation payments and medical or treatment expenses in respect of his psychological injury were reasonably necessary.

Implications

This decision considered the distinction between employee “benefits” and “entitlements” within Section 11A of the Act. Member Isaksen found that annual leave was an entitlement and not a benefit and therefore, an employer’s action with respect to requiring an employee to take accrued annual leave was not considered to be reasonable action taken with respect to the provision of employment “benefits” pursuant to Section 11A of the Act.  Employers should be mindful of this decision when approaching the topic of forced annual leave for employees who have accrued an excessive amount.

The decision also clarified that whilst a psychological injury is not automatically established if real workplace events are perceived by a worker to be hostile, once consideration is given to all of the evidence, it is open to the Commission to find a psychological injury has occurred based upon a worker’s perception of events.

Should you have any queries concerning a workers compensation matter, please contact our team on either (02) 4929 9333 or (02) 8297 5900.