Restructures and potential impact on mental health .... This recent ACC case may provide further redress for employees:
While restructures in our workplaces are often categorised by our courts as being part of management’s prerogative, employers should be mindful that it does have an impact on their employees.
Losing your job may be one of the most stressful things a person may experience. It may lower self esteem and worthiness. It may cause financial turmoil. It may effect family and loved ones. And it may effect a workers health, sometimes significantly.
Ironically, the effect on the health of an ex-Accident Compensation Corporation employee was so significant that she appealed ACC’s decision not to accept her work-related mental injury in the Wellington District Court.
Ms Phillips was employed by ACC for about six years. Originally based in Whangarei, when her dream job came up in Christchurch, she successfully applied for it. Ms Phillips, her husband and two teenage daughters sold up and moved to Christchurch in 2017.
In 2019 ACC underwent a significant restructure. Ms Phillips’ position was disestablished and she was required to apply for alternative roles or face redundancy.
The medical evidence concluded that during the redeployment phase that Ms Phillips’ mental health was severely effected. The first instance arose when Ms Phillips raised her concerns about ACC failing to fulfil its obligations to her while she was in the “redeployment pool”. Her manager requested a meeting with her and a HR Representative. The meeting was said to be confrontational and aggressive. Ms Phillips says that she was not shown any support by her manager, instead the manager made it clear she was to stop pursuing her grievance. She left the meeting in tears and was extremely distressed. She consulted her doctor and was placed on stress leave.
Later, Ms Phillips accepted a lesser role that was two bands below her disestablished position. She was placed at 110% of the remuneration banding and was told that it was the maximum allowable in accordance with ACC policy. Ms Phillips shortly after found out that a colleague had been moved to a lower band but was offered 119% of salary to align her old and new pay. Ms Phillips asked to be treated similarly, but her request was declined. She consulted her doctor and was again advised to take stress leave.
There followed a further incident where Ms Phillips tried to return to the workplace to email an updated medical certificate to her manager from her work laptop. There she was confronted by her new team leader and the assistant Branch Manager and humiliated and demeaned in front of about 20 other staff.
Ms Phillips was diagnosed with acute stress reaction, depression and post traumatic symptoms. This was confirmed in a later report by another psychiatrist.
In coming to his decision, the District Court Judge accepted that Ms Phillips had an identifiable mental injury, and that the injury was caused by a series of events, the most notable being the meeting when she sought to understand the redeployment process with her manager. The Judge said that the test is whether or not people generally in Ms Phillips’s position would suffer mental injury in the way she did. He concluded that the answer was yes: people generally who had uprooted family from Whangarei to pursue a dream job in Christchurch would suffer mental injury from the events Ms Phillips went through.
The decision means that Ms Phillips can get financial support through ACC and the therapy she needs to help recover.
Successful claims for work-related mental injuries are not common. ACC says that it accepted 81 claims for work-related mental injuries last year, but it could not easily identify how many of those related to workplace bullying.
Claims for compensation for “humiliation, loss of dignity and injury to feelings” are a common form of remedy sought in personal grievance claims in the Employment Relations Authority. In redundancy situations, compensation awards tend to be at the lower end of the scale for the manner of the dismissal, rather than compensation for the shock and injury to feelings for losing the job. Egregious behaviour on behalf of the employer will usually significantly increase this.
Whatever jurisdiction a worker seeks redress in, they will need to establish solid evidence of their injury and its impact on them. Given that it should be clear that the loss of a job will be a significant and a potentially damaging event in a workers life, it is important that they are treated respectfully and fairly.
Ms Phillips’ case may make it easier for workers to pursue a further avenue of redress if their mental health is significantly damaged in the workplace.
David Burton is an employment law barrister and can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it..