Revisiting psychological injury involving perception - Lindsay v IMB Ltd

There is a line of authority that permits workers to argue they have suffered a work-related psychological injury based on their perception of work events.  Deputy President Roche in Attorney General’s Department v K [2010] NSWWCPD 76 succinctly summarised the relevant principles when dealing with cases involving psychological injury based on the worker’s perception of events as follows:

  • Employers take their employees as they find them. There is an “eggshell psyche” principle which is the equivalent of the “eggshell skull” principle.

  • A perception of real events, which are not external [or imagined] events, can satisfy the test of injury arising out of or in the course of employment.

  • If events which actually occurred in the workplace were perceived as creating an offensive or hostile working environment, and a psychological injury followed, it is open to the Commission to conclude that causation is established.

  • If the events within the workplace were real, rather than imaginary, it does not matter that they affected the worker’s psyche because of a flawed perception of those events because of a disordered mind.

  • There is no requirement at law that the worker’s perception of events must have been one that passed some qualitative test based on an “objective measure of reasonableness.”

  • It is not necessary that the worker’s reaction to the events must have been “rational, reasonable and proportionate” before compensation can be recovered.

The recent decision of Lindsay v IMB Ltd [2019] NSWWCCPD 7 (“Lindsay”) brought to light these established principles and analysed what exactly is required to establish a work-related psychological injury caused by perception of events or conduct. 

In Lindsay, the worker was a loans assessor who received a promotion and was asked to perform a number of additional duties, including managing the loan queue and supervising a new employee.  She was also told her lending authority would be upgraded to class A.  Following her promotion, the worker alleged the relationship with her team and specifically her team leader, changed.  She was not congratulated on her promotion and was taken off management of the loan queue, which she saw as a demotion.  The worker says this led to her feeling anxious and betrayed, which caused her psychological injury.

The claim was disputed and the worker commenced proceedings in the Workers Compensation Commission.  The arbitrator found in favour of the respondent, concluding the factual evidence did not corroborate the worker’s allegations against her team leader.  The arbitrator believed the events relied on by the worker as having caused her psychological injury, were not real events and, therefore, the worker did not receive a psychological injury as a result of her employment.

The worker appealed the decision and argued the arbitrator failed to appreciate the difference between the perception and actuality of events.  For example, the worker argued she saw her withdrawal from the management of the loan queue as a demotion.  This was a real event. 

On appeal, the Deputy President reiterated the critical question is whether the event or events complained of and relied upon actually occurred in the workplace.  If they did occur and the worker perceived them as creating a hostile work environment, and a psychological injury resulted, causation is established.  The Deputy President considered the principles summarised by President Roche in Attorney General v K and the earlier Court of Appeal decision in Chemler

The Deputy President also made clear that a worker’s reaction to certain events is always subjective and depends on their personality and circumstances.  There is no need to establish the worker’s response was rational or reasonable. 

In this worker’s case, the events she relied on were real events.  The factual evidence confirmed this.  The claim therefore relied on events that had actually occurred, which the worker perceived as creating a hostile work environment, causing her psychological injury.  It did not matter that the factual evidence, including statements from the worker’s colleagues, did not corroborate her version of events.  The fact the events occurred was enough to establish there had been a work-related injury.  

The arbitrator’s finding was therefore inconsistent with the decision in Chemler.  The decision of the arbitrator was overturned and the Certificate of Determination was revoked with the proceedings referred to another arbitrator for re-determination.  

This decision is a timely reminder of the well-established principles governing cases of psychological injury involving perception.  It does not matter if the worker’s evidence is different to the evidence of their co-workers.  The relevant consideration is whether the events occurred and, if so, whether they were perceived by the worker as creating a hostile work environment, and a psychological injury resulted.  If these three things are satisfied, work-related injury is established. 

Authors: Jessica Maiuolo and Mick Franco