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Significant general protections damages award – Employee Rights/ Labour Relations


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.



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