Psychological safety obligations in workplace investigations

A safe system of work now extends to the potential psychological impact of workplace misconduct investigations and decision-making.

A recent ruling in the High Court of Australia makes it clear that employers have a duty to adhere to psychosocially safe work practices, and that this duty extends to workplace misconduct investigations and decision-making.

Some background

In 2015, the appellant, Mr Elisha, was staying at a hotel during approved business travel. It was alleged that whilst at the hotel, Mr Elisha acted aggressively towards a hotel employee. The conduct was reported to Mr Elisha’s employer, which undertook an internal investigation and subsequently issued a stand-down letter to Mr Elisha. Mr Elisha denied the allegations; however, he was terminated from his employment ten days later. Shortly after his termination, Mr Elisha was diagnosed with depression and post-traumatic stress disorder which was attributed to the discipline process undertaken by the employer.

In 2024, a landmark legal case (Elisha v Vision Australia Limited HCA 50) made a number of important findings concerning workplace misconduct investigations.

The ruling

The Court, after reviewing the investigative practices and procedures undertaken by the employer that led to the discipline outcome, determined that the methodology used and the resulting disciplinary procedures, were not only breaches of Mr Elisha’s employment contract, but that they caused psychological damage. Furthermore, the Court found that the employer breached its disciplinary procedures by not adequately informing Mr Elisha of key allegations.

In summary, the court found that an employer owes its employees:

“a duty of care to provide a safe system of work that extends to investigation and decision-making with respect to discipline and the termination of employment.”

Mr Elisha was awarded $1,440,0000 in damages.

The High Court’s ruling has several important implications:

1. The decision affirms that psychiatric injury can be considered a form of personal injury for which damages are recoverable in breach of contract cases. This broadens the scope of what can be claimed under employment contracts
2. The ruling emphasises that employers have a duty to consider the potential psychological impact of their actions on employees.

This ruling is a prompter for organisations to develop robust protections for employees whilst accepting greater accountability for the overall outcome when handling disciplinary matters.

Important learnings

Employers must now strictly adhere to the disciplinary procedures outlined in employment contracts. This case sets a precedent whereby employees can recover damages for psychiatric injuries caused by serious breaches of disciplinary procedures and flawed workplace investigations.

The High Court’s decision in Elisha v Vision Australia Limited significantly impacts how an employer must respond to allegations or suspicions of workplace misconduct:

• Employers must ensure investigations are fair, conducted without favour or bias and managed in a manner that is not detrimental to the mental health and wellbeing of person involved. The ruling reinforces the employer’s duty of care towards employees, emphasising the need to avoid actions that could, in reasonable circumstances, foreseeably cause or unduly contribute to harm

• It is essential to engage investigators (internal or external) who are skilled in psychosocial investigative techniques

• It is critical to adhere to employment contractual terms and conditions, particularly those related to disciplinary procedures and employee treatment.

• Employers must ensure investigators and decision-makers understand the organisation’s employment contract and policy provisions as they apply to investigations and workplace misconduct procedures.

PKF Integrity has highly skilled investigation specialists who can support your organisation throughout the investigative and workplace misconduct process, whilst ensuring the wellbeing and psychosocial safety of your people are protected. We offer the expertise to help.