Psychological Injuries in NSW – When Is My Employer Liable?

It is well understood and accepted that employers have a duty of care towards their employees, to ensure that they are not subject to injury and harm whilst at work.

Whilst this may be easy to assess in respect of physical injuries, the situation with psychological injuries is much more complex, and often depends on the specific circumstances and type of employment.

This matter was recently considered by the NSW Court of Appeal.

Karzi v Toll Pty Ltd [2024] NSWCA 120

Background

The Plaintiff was employed by the Defendant, Toll, at its Erskineville depot.

Starting in September 2017, the Plaintiff was subject to racist comments from a colleague, being another employee of the Defendant. This was centred around the Plaintiff's Afghan heritage, and often included derogatory comments about Afghanistan, and linking the Plaintiff with the Taliban.

The Plaintiff reported the harassment to his team leader, and the matter was swiftly investigated. The harassing employee was ultimately terminated.

The Plaintiff ceased working in November 2015, due to an unrelated back injury and the cancellation of his working visa.

Proceedings

The Plaintiff commenced proceedings in the District Court of NSW, alleging that the Defendant was negligent in respect of his psychiatric injury.

The Plaintiff's claim centred around the argument that the Defendant had breached its duty of care, as it was reasonably foreseeable that he could suffer psychiatric harm as a result of the harassment from his colleague, and that his employer did not take reasonable steps to protect him from that harm.

The Plaintiff was unsuccessful in the District Court, and then appealed to the Court of Appeal.

Decision

In determining the appeal, the Court of Appeal had to decide whether the District Court had made any errors.

The Plaintiff was also unsuccessful in the Court of Appeal. The crux of this case turned to whether it was reasonably foreseeable that the Plaintiff would suffer harm, and whether the Defendant's actions were reasonable.

The Court ultimately determined that the nature of the Plaintiff's work did not give rise to an inherent risk of psychiatric harm (unlike, for example, first responders who may be exposed to trauma in the performance of their duties). Therefore, for the risk of harm to be considered "foreseeable", there needed to be complaints or reports from the injured person.

In this case, the Plaintiff did make such reports, and as soon as the reports were made, an investigation was conducted, and the other employee terminated. Therefore, the Court found that the Defendant had done all that was reasonable, as soon as it received the complaints. It could not have done anything earlier, as a psychiatric injury was not foreseeable at the time, due to the nature of employment.

On another note, the Court also determined that even if the Plaintiff was successful on liability and causation, as his working visa had been cancelled, he would not be entitled to damages for economic loss (wages and superannuation) for any period during which the Plaintiff did not hold a visa. This is because the Plaintiff would not have been able to work in Australia, even if the negligence had not occurred.

Key Takeaways

This case highlights the importance of assessing foreseeability in different scenarios.

There will be some situations where the risk of psychiatric harm is inherent, and therefore, employers and prospective defendants have a larger obligation to mitigate such risk. This may include employment that involves exposure to trauma, such as Police Officers or counsellors.

However, in circumstances where the risk of psychiatric injury is not inherent, foreseeability will likely be determined to only exist once the employer has been made aware of the relevant circumstances. This therefore illustrates the importance of employees reporting incidents, so employers have ample chance to respond.

The contents of this publication is for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication. 

By Sebastian Cannavo

Associate