Managing a mentally healthy workplace is becoming an increasingly important, and an increasingly topical, aspect of workplace relations. As the prevalence of mental health conditions in the workplace continues to increase, together with the costs to employers and productivity, the management of mental health conditions often falls into the too hard basket. This article will discuss mental health conditions and how they affect the workplace and will also look at the legal considerations relevant to the management of mental health conditions in the context of two recent unfair dismissal cases.

What is mental illness and how does it affect the workplace

The Australian Government Department of Health defines mental health conditions as a general term that refers to a group of illnesses that “affect how a person feels, thinks, behaves and interacts with other people.” Mental health conditions include mood disorders, such as depression and bipolar disorder, anxiety disorders, such as social anxiety disorders, obsessive-compulsive disorders or phobias, and psychotic disorders, such as schizophrenia. Latest statistics indicate that one in five Australians will suffer from a mental illness at some point in their lives and according to the World Health Organization, depression will be one of the biggest health problems worldwide by the year 2020.

In terms of how mental health conditions impact on business, a recent report prepared by PwC reveals significant costs to Australian businesses as a result of untreated mental health conditions and, in particular:

• over six million working days lost each year due to depression;
• over 12 million days each year of reduced productivity;
• 3-4 days off work per month for each person experiencing depression; and
• $10.9 billion dollars lost each year due to absenteeism, lost productivity and compensation claims.

The report also revealed that it is generally employees experiencing mild depression who represent the greater volume of financial burden to employers, with 61% of the costs attributable to those suffering from mild depression as opposed to clinical depression. In conjunction with the launch of the first national campaign to target mental health in the workplace, beyondblue, a leading mental health organisation has advised businesses “if you’re not investing in mental health you’re losing money.”

At a practical level mental health conditions affect employees’ ability to concentrate, relate and interact with others, impair judgment, cloud decision-making, can result in reduced motivation, difficulties with logical thought, lowered productivity, deterioration of work performance, social withdrawal and erratic behavior. Understanding and responding to early warning signs can have a very beneficial impact on the management of mental health conditions and it is widely accepted that the earlier the response and, if necessary, the sooner treatment starts, the better the outcome, including by reducing absenteeism and productivity costs to businesses.

Failing to manage mental illness and the risks

Prolonged disharmony in the workplace arising from workplace bullying, interpersonal conflict, excessive or unreasonable work demands or workplace change, for example, the uncertainty created by restructure, are all factors commonly cited as the cause of an employee’s onset or exacerbation of mental health conditions. In addition to the business risks that arise from mental health conditions in the workplace as discussed above, mental health conditions in the workplace can also expose employers to risk with respect to workplace bullying, adverse action, discrimination, workers compensation and unfair dismissal claims. Two recent cases that have already received a good deal of media attention highlight the consequence for employers when mental health conditions are not managed in the workplace.

Brett McAuliffe v Australian Taxation Office [2014] FWC 1413 (6 June 2014)

In this decision the Fair Work Commission (the “Commission”) handed down a scathing decision criticising the Australian Taxation Office (the “ATO”) and its treatment of an employee who had been suffering from a mental health condition. Commissioner Riordan described the ATO’s actions as “unconscionable” at a time when “Australian society is focusing on the issues of mental health in the workplace” and remarking that he hoped the ATO would not treat an employee diagnosed with depression and anxiety in the future “in the same shabby manner”. The decision highlights the fallout that results from the mismanagement of mental health conditions in the workplace and the potential legal and reputational exposure.

Mr McAuliffe had been employed by the ATO for a period of 10 years. In the period between August 2012 and April 2013, Mr McAuliffe had been absent from the workplace for approximately two months due to “psychological issues” resulting from his perception of bullying and harassment by his managers. As a result of Mr McAuliffe’s absences, Mr McAuliffe was referred by the ATO to an independent psychologist, Dr Synnott, who diagnosed Mr McAuliffe with “an adjustment disorder with anxiety and depressed mood”. Dr Synnott certified Mr McAuliffe as being fit to work but noted that if Mr McAuliffe was required to work with the people he identified as having caused his problems, any return to work would be unlikely to be “successful or enduring”.

Mr McAuliffe subsequently returned to work in June 2013. On Mr McAuliffe’s return to work he was not transferred to another role or team, nor was his return to work plan followed by the ATO. Shortly after Mr McAuliffe’s return to work, and despite there being no complaints or issues about Mr McAuliffe’s performance or ability, the ATO directed Mr McAuliffe to attend a series of further consultations with Dr Synnott. These consultations resulted in a recommendation that Mr McAuliff cease work and obtain further treatment. Mr McAuliffe was directed by the ATO to “cease work immediately and go home”. Mr McAuliffe complied with this direction and the ATO then went on to deactivate his security pass and provide Mr McAuliffe’s photo to its security desk as someone to be denied access to the building.

Mr McAuliffe challenged this direction by providing two medical certificates from his GP which certified him as fit to work. Despite Mr McAuliffe producing medical evidence certifying him fit to work the ATO refused to allow Mr McAuliffe to return. Mr McAuliffe then lodged an unfair dismissal claim with the Commission claiming that he had been constructively dismissed.

Although Mr McAuliffe’s unfair dismissal claim was ultimately unsuccessful, Commissioner Riordan was very critical in his judgment of how the ATO “deliberately and mischievously delayed Mr McAuliffe’s return” to work. Commissioner Riordan also criticised the ATO for trying “to manipulate an outcome to suit its purposes” and found the “ATO’s behaviour in seeking multiple clarifications from Dr Synnott as appalling.” It was also noteworthy that Commissioner Riordan found that it was “a breach of Mr McAuliffe’s contract of employment and the [Fair Work] Act to refuse him entry to his workplace to undertake the functions that he was contractually obligated and entitled to perform” particularly in circumstances where the ATO knew of Mr McAuliffe’s fitness to work and his dire financial situation.

Ronaldo Salazar v John Holland Pty Ltd T/A John Holland Aviation Services Pty Ltd [2014] FWC 4030 (26 June 2014)

In another particularly scathing decision, the Commission has condemned John Holland Pty Ltd T/A John Holland Aviation Services Pty Ltd (“John Holland”) for its treatment of an employee when it sacked the employee for “serious misconduct” without having proper regard to the fact that the employee was suffering from a mental health condition and in full knowledge of the employee’s mental health condition and his need for ongoing treatment.

Mr Ronaldo Salazar was employed as a Licensed Aircraft Mechanical Engineer (“LAME”) in the maintenance of commercial jet aircraft at Tullamarine Airport. Mr Salazar was notified that he was to change work groups from Crew A to Crew B as Crew B was in need of skilled engineers. However, Mr Salazar refused to change work groups stating that he had not been appropriately trained to complete work on a Rolls Royce Trent 700 engine which predominately formed part of the work in the Crew B work group.

On 18 July 2013, Mr Salazar sent an email to Glenn Palin, the Managing Director of the John Holland Group alleging that John Holland was incompetent, was trying to “kill” him and his family, that he was being denied his legal rights as a LAME and suggesting that there may be a repeat of an air crash that occurred in San Francisco. Mr Salazar also threatened to take complaints to Today Tonight, 60 Minutes or the Prime Minister.

On 5 August 2013, Mr Salazar received a letter from John Holland alleging that he had engaged in serious misconduct as a result of his refusal to change work groups as directed and as a result of his email to Mr Palin and was subsequently dismissed from his employment.

Commissioner Ryan found that the dismissal was “invalid and unfair” as it appeared that the managers of John Holland had not given sufficient, if any, weight to the obvious mental health problems that Mr Salazar was experiencing at the time the company directed him to change work crews and in the period that followed. Commissioner Ryan found John Holland’s actions to be “towards the major end” of the “scale of unfairness” particularly as Mr Salazar had been suffering from mental health conditions since January 2013 and had provided medical certificates showing he was being treated by a psychiatrist and psychologist. As a result, Commissioner Ryan found that it was “neither sound nor defensible” to rely upon the conduct of an employee with an obvious mental health problem in drawing a conclusion that the conduct of the employee amounted to serious misconduct. Commissioner Ryan further found that it was totally unreasonable for the company to come to the conclusion that Mr Salazar engaged in serious misconduct and that the evidence of Mr Salazar’s mental health condition provided a “strong reason for excusing the conduct” when Mr Salazar sent the email to Glenn Palin.

Commissioner Ryan was unable to order Mr Salazar’s reinstatement because John Holland’s Tullamarine operations had since closed, but ordered compensation based on lost wages and redundancy payments made to other engineers when the operations closed.

These decisions illustrate the importance that the Commission places on the appropriate treatment of mental health conditions in the workplace both throughout the employment relationship and at the time of dismissal. These decisions also highlight the increasing importance of managing mental health conditions at a time when mental health is at the forefront of drives to improve Australian workplaces and productivity.