17 Apr 2014

"Go put some lippy on": recent case demonstrates how not to respond to a bullying complaint

by Hedy Cray, Laura Hillman

While the Fair Work Commission's stop orders for bullying do not contemplate compensation, compensation may be awarded for personal injury, breach of contract and breach of statutory duty at common law when bullying is found to have occurred.

All employees are different, with each person comprising different personality traits, strengths, vulnerabilities and backgrounds. What employees have in common, however, is that employers throughout Australia have a legal duty to take reasonable care for their safety.

Consequently, even where the behaviour complained of is perceived as low-level, or even trivial by a manager, how employers respond to complaints is crucial to not only resolution of the matter within the business but also managing legal risk, including the risk of workers' compensation claims.

As a recent decision by the Supreme Court of Queensland decision in Keegan v Sussan Corporation (Aust) Pty Ltd [2014] QSC 64 demonstrates, failing to appropriately deal with a bullying complaint can be costly.

Ms Keegan, a former assistant manager employed by retail chain Sussan, alleged that she suffered a major psychiatric injury over 11 days due to bullying and harassment by her new manager, Ms Clarke. As a result of her severe mental decline, Ms Keegan was certified as unable to return to work again.

Ms Keegan sued Sussan, claiming $1.2 million in damages for personal injury and consequential loss as a result of Sussan's negligence, breach of contract and breach of statutory duty.

The new manager

Ms Keegan was assistant manager at Sussan's Cairns central store for about six years. In April 2010, Ms Keegan took a period of parental leave. While she was on leave, Ms Keegan's store manager left Sussan and Sussan's Queensland Business Manager, Ms Makarein, hired Ms Clarke to replace her.

During the recruitment process, Ms Makarein contacted a former employer who Ms Clarke nominated as a referee. The former employer informed Ms Makarein that she would not hire Ms Clarke again and that she "did not believe that Ms Clarke was manager material and she would need to learn management skills and people skills".

Despite this unflattering reference, Ms Makarein employed Ms Clarke. Ms Clarke, who had never worked in retail fashion, was given training by Ms Makarein that was limited to on the job training and induction which included Sussan's bullying and harassment policy.

Ms Keegan returned to work in September 2010 and over three days Ms Clarke subjected her to conduct Ms Keegan believed was bullying. Ms Keegan complained that Ms Clarke's conduct included:

  • being left out of business management matters;
  • spoken to aggressively, including during a confrontation about a mop where Ms Clarke held a mop head about 10cm from Ms Keegan's face and challenged Ms Keegan's comment that the mop was peeling; and
  • unwarranted criticism about various matters such as the previous state of the store.

On Day 3, Ms Makarein telephoned Ms Keegan to ask how it was going between Ms Keegan and Ms Clarke. Ms Keegan stated that Ms Clarke "was good".

However, following criticism by Ms Clarke in relation to Ms Keegan's floor mopping the following day, Ms Keegan telephoned Ms Makarein in tears and raised her concerns again.

How Ms Keegan's complaint was dealt with

After listening to her complaint, it was alleged that Ms Makarein advised Ms Keegan to "put some lippy on and go home to [her] bub" and Ms Makarein would speak with Ms Clarke.

However, Ms Makarein did not follow Sussan's bullying and harassment policy, which required that complaints be taken seriously, treated confidentially and investigated. Instead, Ms Makarein informed Ms Clarke about Ms Keegan's allegations and told her to be "more mindful" of how she dealt with Ms Keegan in the future.

On Ms Keegan's return to work, Ms Clarke confronted Ms Keegan about her allegations and her behaviour worsened. Upon complaining to Ms Makarein that matters were worse, Ms Makarein responded that Ms Keegan had to "work it out for herself".

Ms Keegan consequently declined mentally and was certified as unable to return to work. Ms Keegan's mental decline was so severe that she became incapable of caring for herself or her child, requiring her husband and mother to care for both.

Damages and the impact of Ms Keegan's personality traits

Ms Keegan brought a common law claim for negligence, breach of contract or breach of statutory duty.

Sussan denied liability for Ms Keegan's psychiatric injury and argued that:

  • Ms Keegan's psychiatric injury was extraordinary and unforeseeable given Ms Clarke's "essentially unremarkable behaviour";
  • Ms Keegan had pre-existing personality traits that made her prone to psychological injury; and
  • assistance from Ms Keegan's husband and mother exacerbated her injury.

The Court disagreed with Sussan's arguments. Instead, the Court found that that Sussan breached its duty of care to Ms Keegan and caused her injury. Specifically, the Court found that:

  • Ms Clarke engaged in unreasonable and excessive behaviour against Ms Keegan;
  • Sussan knew that Ms Clarke was "inexperienced" and should have expected some challenge on Ms Keegan's return from leave. However, it was initially not aware of Ms Clarke's behaviour and therefore a reasonable person would not have foreseen Ms Keegan suffering a psychiatric injury;
  • However, Ms Keegan's call to Ms Makarein "put Sussan on notice" that if the matter was not dealt with appropriately, it was reasonably foreseeable that Ms Keegan would suffer psychiatric injury;
  • Ms Makarein completely failed to apply and follow Sussan's bullying and harassment policy or otherwise take another appropriate approach to address Ms Keegan's complaint. Instead Ms Makarein's "patronising advice" and method of dealing with the issue clearly indicated that she did not take the complaint seriously;
  • Sussan was responsible for Ms Makarein's and Ms Clarke's actions;
  • While Ms Keegan's personality traits made her more vulnerable to suffering an injury and Ms Keegan's husband and mother's assistance impeded her mental recovery, these factors were not causative of her injury.

Consequently, Ms Keegan was awarded just under $240,000 (after deduction of approximately $66,000 refund to WorkCover).

Lessons for employers

Bullying complaints and stress claims/psychological injury claims are not confined to Queensland. Employers Australia-wide have a legal duty to take reasonable care for the safety of their employees.

It is important that appropriate training is provided to managers, their performance monitored and deficiencies addressed. If a manager is new, this should be assessed during the probation period to determine if employment should continue. Assisting managers to respond and communicate with employees about complaints is essential to support not only employees but also managers in responding and addressing such matters consistent with the organisation's policies.

As this case demonstrates, however, simply having a policy is not enough – employers need to ensure that their policies are followed and complaints are addressed.

Ms Keegan's psychiatric reaction and inability to return to work or take care of her child arising out of the events she complained of may be considered extreme. However, as this decision demonstrates, employers have to take their employees as they find them – personality traits and all.

Although employers cannot change employees' underlying personality traits, they can proactively and appropriately deal with bullying complaints and employee behaviour to manage and defend against claims.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.