Koehler v Cerebos (Australia) Ltd

The High Court of Australia heard an appeal from Cerebos (Australia) Ltd concerning a claim for psychiatric injury brought by its former employee, Ms. Koehler. Ms. Koehler had accepted a position as a part-time merchandising representative after being retrenched from a full-time sales role. Her letter of engagement specified a 24-hour work week, but upon commencing her new duties, she was presented with a territory listing that she immediately stated was impossible to complete within the allocated hours. Despite her repeated oral and written complaints to management about the excessive workload and insufficient time, her concerns were not addressed, and no adjustments were made to her duties or territory. The employer's appeal to the Full Court of the Supreme Court of Western Australia had been allowed, with that court finding that the employer could not have reasonably foreseen the risk of psychiatric injury. Ms. Koehler then appealed to the High Court.

The central legal issues before the High Court were whether the employer breached its duty of care to Ms. Koehler by failing to provide a safe system of work, specifically by not taking steps to mitigate the risk of psychiatric injury. This involved determining whether a reasonable employer would have foreseen the risk of psychiatric injury given the circumstances, and the relevance of Ms. Koehler's agreement to perform the work that led to her injuries. The Court also considered whether the law of negligence should be developed in a way that would inhibit parties from entering into employment agreements that involved performing more work than an industry standard.

The High Court dismissed the appeal, upholding the decision of the Full Court of the Supreme Court of Western Australia. The Court reasoned that while an employer owes a duty of care to its employees to take reasonable steps to avoid psychiatric injury, the employer's duty is not to prevent all risk of injury, but only such risks as a reasonable employer would foresee. In this case, Ms. Koehler's complaints to management, while frequent, focused on the feasibility of completing the work within the given hours and did not suggest that her health was being adversely affected. The Court found that the employer could not reasonably have foreseen that Ms. Koehler was exposed to a risk of psychiatric injury. The Court also noted that the law should not be developed in a way that prevents parties from freely agreeing to terms of employment, including undertaking more work than might be considered standard, provided those terms are not otherwise unlawful.

The appeal was dismissed with costs.