Shearer v iSelect Services Pty Ltd
[2021] VSCA 328
•1 December 2021
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S EAPCI 2021 0060
| GARY RAYMOND SHEARER | Applicant |
| v | |
| ISELECT SERVICES PTY LTD | Respondent |
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| JUDGES: | BEACH, KAYE JJA and FORBES AJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 12 November 2021 |
| DATE OF JUDGMENT: | 1 December 2021 |
| MEDIUM NEUTRAL CITATION: | [2021] VSCA 328 |
| JUDGMENT APPEALED FROM: | [2021] VCC 458 (Judge O’Neill) |
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NEGLIGENCE – Personal injury – Psychiatric harm – Workplace injury – Sales consultant – Reasonable foreseeability of risk of psychiatric harm – Content and scope of duty of care – Causation – Reasonable response by employer – Change in role accommodated by respondent – New role not further modified - Whether judge erred in finding that the response by the employer was reasonable – Whether undue weight was placed on the contractual right to impose targets – Whether judge erred in finding that other modifications would not have prevented further injury – Application for leave to appeal refused.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr J P Brett QC with Ms G B Jardine | Andropoulos & Associates |
| For the Respondent | Mr P H Solomon QC with Mr R Kumar | Hall & Wilcox |
BEACH JA
KAYE JA
FORBES AJA:
Gary Shearer (the plaintiff) worked as a sales consultant in an online environment. His employer, iSelect Services Pty Ltd (iSelect) brokered various types of insurance and energy contracts between consumers and providers. He began work in May 2010. From June 2012, he was suffering from anxiety and was becoming very run down by the hours of work needed to achieve his sales targets. He raised this with his employer in June 2012. He became psychiatrically unwell and ceased work a number of times. He last worked for iSelect in June 2013.
In September 2018, the plaintiff commenced proceedings in the County Court of Victoria against his employer, claiming damages for personal injury. He alleged that from June 2012, iSelect owed him a duty to take reasonable steps to protect him from the risk of psychiatric injury arising from the pressure of his work. The plaintiff’s claim for damages was in negligence and for breach of the employment contract. The case came on for trial before his Honour Judge O’Neill, commencing on 1 February 2021. Over the eight days of hearing, viva voce evidence was given by Mr Shearer and his treating general practitioner, Dr Urie. Both parties tendered a significant amount of documentary material.
In reasons for judgment delivered on 5 May 2021, his Honour concluded that by November 2012 it was reasonably foreseeable to an employer in the position of iSelect that Mr Shearer was at risk of suffering a psychological illness and therefore a duty of care arose in respect of that risk. The plaintiff contended that a reasonable response to discharge that duty required the employer to modify or remove certain aspects of his sales role, particularly performance targets, and this had not been done. The judge concluded that modifications in the way contended by the plaintiff was not a reasonable response and that the steps actually taken by the employer were reasonable so that breach was not made out. His Honour also concluded that if in fact a breach had been established by the imposition of unreasonable targets, he would not have been satisfied that the breach was causative of injury. In accordance with those reasons, he entered judgment for the defendant. The plaintiff now seeks leave to appeal.
Events during employment — the evidence at trial
The employer maintained a website with information comparing various insurance products on offer including health, travel, home and car insurance. At some stage after Mr Shearer commenced work it also began providing comparative advice about energy providers. To access the website, a consumer needed to provide contact details so that a databank of potential customers could be maintained. Sales then were made in one of two ways. A sales consultant would make an unsolicited ‘outbound call’ to a person who had visited the website to effect a sale. Otherwise, potential sales were made by an ‘inbound call’, which was received in the ‘Live Answer’ department and transferred to a sales consultant in an appropriate team.
Mr Shearer’s initial contract identified his role as ‘Sales Consultant — Outbound’.[1] It provided for a base salary of $40,000 and a discretionary performance bonus. Mr Shearer’s evidence was that the base salary of sales consultants varied by the band in which they were placed. His starting salary was at Band 1, the lowest band. Movement up each of the five bands brought with it a $5,000 increase in base salary. In practice, there was also significant opportunity to earn a performance bonus when monthly targets were met. Movement to a higher band was offered to those who consistently met or exceeded targets. Moving to a higher band also meant being set higher targets. Mr Shearer said very few people chose to go the highest band and that, at Band 3, he had felt he could maximise his ability to achieve the targets and so earn a reasonable salary. His evidence was that he preferred inbound calls to outbound ones.
[1]Offer of Employment and Employment Contract dated 31 May 2010 and tendered as Exhibit A at trial.
He began work in an outbound team brokering health insurance. At that time, outbound and inbound calls were handled by different teams. Shortly after starting, he was moved to the inbound health team which was considered a promotion. This was because the rate of calls that were successfully converted to sales was much higher for inbound calls than for outbound ones. Targets were higher for those in inbound call teams to reflect this. By approximately April 2011, he also moved up through the bands to Band 3. Mr Shearer met all monthly targets bar one up until mid-2011.[2]
[2] Agreed Summary for Court of Appeal, 30 July 2021.
Monthly targets varied. They were emailed to sales consultants for the month ahead and were variable depending on business needs. Achieving a target meant payment of a commission. Exceeding the target increased the amount of the commission.
In June 2012, Mr Shearer began to feel rundown and anxious, so he spoke with his Team Leader, Mr Pintar, with whom he had a good relationship. He described chest pain and the fact that he had undertaken a stress test. It was not suggested at that time that symptoms were stress related, but by July 2012, he had informed his employer that he was feeling stressed and under pressure from the demands of his work. By agreement, he was transferred to work in the newly established area of business — Energy. He began work in that team from July 2012. At around this time he also took a reduction of $10,000 to his base salary. At trial, there was a dispute about whether this was linked to the transfer or whether it occurred before, and independently of, any transfer. A new contract of employment was entered into between the parties, effective from July 2012 for the Energy position.
In Energy, the plaintiff worked initially only on inbound calls. He gave evidence that from September, when the database had built up, he was also required to do outbound calls. Energy did not have separate inbound and outbound teams. He said that new targets were imposed at about the same time. The new targets were daily targets, team targets and targets relating to cross referrals. Cross referrals were made where a sale in one area then resulted in a transfer to sell another product to the same customer. At trial there was a dispute about whether or not, on transferring to Energy, monthly targets were applied to the plaintiff’s performance. He gave evidence that on transfer he was not subject to any targets, but that monthly targets were reimposed along with the introduction of the new targets in about September 2012. The defendant’s position was that the plaintiff was set monthly targets throughout the time in Energy.
The plaintiff said he became increasingly anxious again, as a result of the targets and the commencement of outbound calls, and his performance deteriorated. In November 2012, he requested and was given extended leave. At that time, he told iSelect that his doctor had advised him to find a less stressful role. He sought a change of role outside of sales. He applied internally for a position in Compliance, which was not a sales role but involved quality assurance of the performance of sales consultants. He was told that at that time there were no positions available.
While on leave in December 2012, he applied for a similar sales role with Red Energy and was offered a position. He declined as he wanted to ‘re-commit to iSelect’ to whom he remained loyal.[3] There is no suggestion that the employer was aware of this development.
[3] Shearer v iSelect Services Pty Ltd (ABN 87 088 749 955) [2021] VCC 458 (‘Reasons’), [28].
He resumed work in Energy on 7 January 2013 under the same conditions as he had been working before ceasing the previous November. He worked hard but by March 2013 he was again suffering anxiety and having panic attacks, and his work performance was poor. He again took leave. On resuming work after Easter, a meeting was called and concern expressed for his health and performance. His employer requested that he see Dr Kornan, a psychiatrist, for assessment and he was given further time off work until June 2013.
By the time of his return to work in June 2013, the employer had available to it the opinion of Dr Kornan and a report that had been requested from Mr Shearer’s longstanding general practitioner, Dr Urie. The plaintiff’s hours were restricted to working two days for the first week with an additional day being added each week until reaching and plateauing at four days per week. His salary was reduced to Band 1. Expectations were discussed and set. Those expectations, as they were in April 2013, included a daily sales target of 17 sales and a 40% conversion of outbound calls.[4]
[4] Reasons [34]; also contained in the bundle of emails and SMSs tendered as Exhibit F at trial.
Within a matter of days of returning, a meeting was called. Having audited his customer calls, the employer told the plaintiff that his performance was not up to standard. The employer suggested he cease work on ‘income protection’, a policy of insurance held by the employer which paid benefits in respect of employees unable to work. Mr Shearer did so. He did not return to work with iSelect and his contract of employment was formally terminated in 2017.
Reasons of the Trial Judge
After setting out the nature of the employment and the events that transpired during the plaintiff’s period of employment, the judge set out 10 issues that required determination. The first was the reliability and credibility of the plaintiff. His Honour found Mr Shearer generally to be a credible witness who gave a reasonable account of his employment and his psychological symptoms. He rejected a submission that he gave false or exaggerated evidence but accepted some merit in the defendant’s submission that the narrative of events reflected the plaintiff’s own view that his psychological injury was due to iSelect’s failures. Because of this, the judge said Mr Shearer’s recollection was not always accurate. The judge noted that there were contemporaneous emails and texts, and other relevant documentation, which also identified the duties being undertaken, the stress being caused and the steps taken. The defendant’s case rested on the documentary evidence and the concessions made in cross-examination.
Following consultation with counsel, the judge identified the other issues, at least as they are relevant to the grounds of appeal, as:[5]
[5] Reasons [46].
(a) Whether the defendant was on notice? (Foreseeability)
(b) What steps were taken in response and what additional or better steps should have been taken in each period? (Duty)
(c) What was the scope of the duty owed by iSelect to Mr Shearer? (Duty)
(d) What did reasonable care require the employer to do (if anything) (Duty) and was there a breach. (Breach)?
(e) Was any breach a cause of his injury?
The judge’s reasons are structured to deal with three relevant periods of employment: first June to October 2012, then events in November 2012, and finally the two attempts at returning to work in March and June 2013. For each of the identified issues, the answer addressed each employment period, recognising that the level of knowledge of the employer, and the reasonableness of any response by them, might be answered differently at different times.
The pleaded case was that Mr Shearer was subjected to ’unreasonably high sales targets and pressured to work long hours‘. As the trial proceeded it was clear that, apart from the targets set in June 2013, the case presented by the plaintiff was not about whether or not the targets were unreasonably high. It focused on whether, in Energy, the plaintiff should have sales targets imposed at all and whether he should remain doing only inbound calls.
As to the foreseeability of risk of psychiatric injury at July 2012, the reasons of the judge relevantly set out the email correspondence detailing the information communicated by the plaintiff. A meeting in July 2012 confirmed iSelect’s knowledge as to the plaintiff’s stress levels and the agreement they reached to move him to Energy. The employer understood that with the change to Energy, the plaintiff’s stress levels dropped immediately, his new manager was supportive and he found work easier.[6] The judge concluded that:
In July 2012, Mr Shearer complained to his managers of the build-up of stress in meeting his work obligations, including sales targets. It was noted he was working long hours; however, iSelect’s response was to give him some short time off work and then to transfer him to Energy. According to Ms Broekman-Dattner’s email of 10 July 2012, it was made clear it was not expected Mr Shearer be placed under stress or pressure and that he should come back to work when his health was okay. He was told to rest up, take it easy and obtain medical clearance to work again. Mr Shearer thanked Ms Broekman-Dattner for her support.[7]
Around the middle of 2012, I am not satisfied that it was foreseeable to iSelect that, with the duties Mr Shearer was undertaking, and the complaints of stress he made, that he was at risk of psychiatric injury.[8]
The fact that around July 2012, Mr Shearer complained of stress and pressure as a result of work duties, does not, of itself, mean it was reasonably foreseeable later that year, around September or November 2012, he was at risk of suffering psychiatric injury or illness.[9]
[6] Reasons [59]–[63].
[7] Ibid [124].
[8] Ibid [127].
[9] Ibid [128].
His Honour concluded that a foreseeable risk of Mr Shearer suffering psychiatric injury from the nature of his work arose in November 2012 and a duty of care was then enlivened. He said:
I am of the view that by approximately November 2012, it was reasonably foreseeable to an employer in the position of iSelect that Mr Shearer was at risk of suffering a psychological illness. He had made complaints about stress and stress-like symptoms around July 2012, although those matters had been addressed by his transfer to Energy. By 7 November 2012, his sales or “conversion rate” was very low….[10]
At this point, those at iSelect were being told not only of Mr Shearer’s poor sales achievements, but also of the pressure he felt from attempting to achieve sales targets, the stress that led to, and that he consulted his doctor, who had suggested he was “borderline depressive” and was suffering burnout.[11]
In all of these circumstances, it must have been apparent that there was a risk that was not farfetched nor fanciful that his work duties could lead to a diagnosable psychological injury.[12]
[10] Ibid [133].
[11] Ibid [134].
[12] Ibid [135].
Turning then to the scope or content of the duty, his Honour referred to Koehler v Cerebos (Australia) Ltd[13] and set out the need to consider the contractual obligations arising from the employment relationship and any relevant statutory framework.[14] He referred to the earlier contracts of employment and to the terms of the contract covering the work in Energy. It was necessary for him to construe at least the term of the contracts that covered performance pay as the plaintiff submitted that under the contract the performance based commissions were said to require consultation and agreement in the setting of targets. He concluded that the setting of targets and payment of commission under the contract were matters for iSelect as it saw appropriate and not a step requiring consultation or negotiation.[15] That conclusion is not challenged.
[13] (2005) 222 CLR 44; [2005] HCA 15 (‘Koehler’).
[14] Ibid [21]–[22].
[15] Reasons [95]–[96].
The plaintiff submitted at trial that to discharge its duty of care iSelect should have permitted his continuance in Energy undertaking only inbound calls without targets, and should have refrained from imposing additional targets (daily, team and cross referral targets). Alternatively, it should have facilitated a transfer to Compliance or Live Answer, although this aspect was not pursued on appeal. Having done none of those things, the plaintiff argued that breach was established.
His Honour concluded that the failure to take the steps contended by the plaintiff did not demonstrate a breach of the duty owed to Mr Shearer between late 2012 and April 2013. His reasoning was:
It was not reasonable to expect iSelect to create a special position for Mr Shearer outside its Sales Department. I am satisfied there were no positions available in either Compliance or Live Answer.[16]
Presumably, it could have restricted Mr Shearer’s work to inbound calls, and not require him to meet daily, group or cross referral targets. However, this would be putting him in a special position, different from other employees and which may affect his ability to earn an appropriate income. It was not in accordance with the terms of his contract of employment to “fulfill the roles, duties and responsibilities as set out in the attached Position Description which may be reasonably varied from time to time by iSelect having regard to business and operational needs …”[17]
Mr Shearer was employed as a salesman, to sell and achieve targets in a manner directed by his employer. As was said in Koehler, questions of content of the duty of care and breach should be considered in the light of the obligations which each party owed to the other.
[16] Ibid [145].
[17] Ibid [146].
The plaintiff takes issue with the conclusion that the restrictions would put the plaintiff in a ‘special position’.
His Honour considered that the steps the plaintiff contended should have been taken by iSelect should be looked at in light of the various steps that were taken and the information available to it about the plaintiff’s mental health. This included granting time away from work when it was requested, and its request for medical advice in April 2013 as to the impact of his psychological condition on his ability to continue work and any restrictions that should be imposed.[18] His Honour concluded that, until April 2013, the steps taken by iSelect were sufficient to discharge its duty of care and the fact that it did not thereafter restrict work in sales did not amount to a breach.
[18] Ibid [143] where his Honour set out a number of specific matters to be considered.
After April 2013, when iSelect was in receipt of medical advice, the plaintiff contended that it did not act in accordance with that advice by imposing targets when the plaintiff returned to work in June 2013. The medical advice identified reduced hours and days, but otherwise did not recommend any modification of duties. The judge accepted that stress involved in achieving goals was identified as a reason for the diagnosis of depression and anxiety, but ‘other than to limit his work to his job description’, no specific modification was recommended. The medical opinion expected that with the reduction in work load, as well as medication, recovery and a full return to work was likely. His Honour found that iSelect followed the medical advice and breach was not made out.
Finally with respect to the June resumption of work and the imposition of targets at that time, the trial judge noted the contradiction between on the one hand Mr Shearer’s oral evidence that the targets ‘shocked’ him and were not achievable, and on the other hand, his other evidence about targets generally (which were in fact higher than those imposed on him in June 2013)[19] and contemporaneous documentation of the meeting where targets were set which recorded him as being comfortable.[20] His Honour made no specific finding about whether the targets imposed in June 2013 were unreasonable. He said:
Even accepting that the imposition of these targets were unreasonably high (noting neither Dr Kornan nor Dr Urie imposed any particular restriction as to targets), then I am not satisfied that even if that imposition involved a breach of the duty of care, that that breach was a cause of the plaintiff’s psychological injury. Again, the imposition of targets in June 2013, was not, of itself, the subject of comment or opinion in the medical evidence.
In any event, the targets were imposed only a day or two before Mr Shearer resumed work. Apart from being “shocked” by those targets, there was little, if any, time for him to seek to achieve them, with the stress that would involve.
[19]Ibid [162] when working in health an 80% conversion rate for inbound and a 60% conversion rate for outbound were set.
[20]Ibid [34], [76].
Finally on the question of causation, as can be seen above, his Honour held that any breach was not a cause of injury. Assuming breach could have been made out in the steps taken between November 2012 and April 2013, the trial judge concluded:
Even if I were to accept iSelect’s failure to allow Mr Shearer to remain on inbound calls and without the other targets referred to, then I am not satisfied from the medical evidence or from the reports which were tendered, that those steps, themselves, if taken, would have prevented or significantly reduced the risk of Mr Shearer suffering psychological injury. The medical opinions speak of Mr Shearer being overworked and stressed as a result of a range of employment duties.[21]
[21] Ibid [148].
Proposed grounds of appeal
The nine proposed grounds identify the following as errors of the trial judge:
(i) Finding it was not necessary to modify or restrict work required of the plaintiff or the targets associated with it as at November 2012 when the duty of care as found did arise (ground 1).
(ii) Not finding that the reimposition of targets and requirement to take outbound calls between July and November 2012 were likely to expose the worker to a risk of psychiatric injury that was reasonably foreseeable (ground 2).
(iii) In light of information given to the employer and its response on 10 July 2012, not finding that a risk of suffering psychiatric injury was foreseeable at that time (ground 3).
(iv) Not finding that the continued imposition of targets in January 2013, was foreseeably likely to cause psychological injury (ground 4).
(v) Finding, erroneously, that the employer had followed medical advice in relation to the June 2013 resumption of work (ground 5) and that any unreasonable imposition of targets at that time was not in any event a cause of the plaintiff’s psychological injury (ground 6).
(vi) The approach taken by the trial judge as to whether a reasonable response after November 2012 required modification or restriction of duties and targets in a way that might put the plaintiff in a ‘special position different from other employees’ (ground 7), and whether the trial judge placed undue weight on the contractual right of the employer to impose targets where their imposition would foreseeably cause injury (ground 8).
(vii) Not being satisfied that a restriction of duties or removal of targets at any time from September 2012 would in any event have prevented or reduced the risk of injury (ground 9).
The issues in this Court
The application for leave to appeal concerns two fundamental issues. First, was the trial judge in error identifying the content of the duty of care, and as a consequence, erroneously finding that there was no breach? That issue raises some of the questions posed but not answered in Koehler about the content of a duty of care; namely, whether the duty requires the employer to modify the work to be performed, and if so, how far that requirement extends in light of the contractual obligations. Second, whether the finding against the plaintiff on causation was wrong.
Upholding ground 3, that the risk was foreseeable in July 2012, could not alter the liability outcome as the plaintiff conceded that the employer’s response was that of a reasonable employer.[22] Any error identified could only be relevant to an assessment of damages that might arise if other errors of breach and causation are made out. Otherwise, the judge’s conclusion as to a duty of care arising in November 2012 is not challenged. It is convenient to first consider the grounds addressing the scope and content of the relevant duty from November 2012, as well as breach and causation.
[22] Ibid [78].
Submissions of the parties
The plaintiff’s submissions address the question of foreseeable risk at a number of levels. First, they address when the foreseeable risk of psychiatric injury arose, principally in relation to ground 3. Second, they address the question whether the employer knew or ought to have known that the imposition of targets and/or the placing of outbound calls were aspects of the sales work that if continued were likely to cause psychiatric injury; a question going both to the content of the duty of care and a reasonable response to that risk. The response was said to be consistent with the contractual obligations as the contract provided performance pay that was discretionary and subject to consultation.
The plaintiff further submitted that the evidence of improvement on transfer to Energy with no targets and taking only inbound calls, demonstrated the effectiveness of such a response. It should have become clear to the employer from the deterioration after September 2012 and the failed attempts to resume the same duties in January and June 2013, that targets and undertaking outbound calls specifically continued to place Mr Shearer at risk of psychiatric injury. That knowledge was reinforced by each unsuccessful attempt to resume the same sales role.
The plaintiff’s argument is that the response of a reasonable employer required modification of the sales role by not requiring those particular aspects to be undertaken. He submitted there is a tension once a duty is enlivened, between that duty and the obligations under the contract, arguing that the judge placed excessive weight on the employer’s power to set targets and too little weight on the flexibility inherent in the contract. In part, this submission was based upon that the clauses relating to performance pay were consultative and agreed upon between contracting parties, a construction that the judge did not accept. By his conclusion that the modifications urged on behalf of the plaintiff would have placed the worker in a position that was not in accordance with his contract of employment and described it as a ‘special position’, the plaintiff submitted that the judge approached the question of duty too narrowly.
Finally on breach, the plaintiff submitted that the continued imposition of the same duties on each resumption of work did amount to a breach of duty. By May 2013 the employer also had available to it medical opinion as to restrictions that ought to be imposed in order to respond to the risk of psychiatric harm. That medical opinion included reference to the stress associated with achieving set goals and benchmarks and this, together with the earlier episodes of deterioration with previous attempts to resume work, put the employer ‘on notice’ that it should modify duties with respect to targets. He submitted that given these matters, breach was established.
As to the question of whether a failure to modify the duties was a cause of the psychological injury, the plaintiff submitted that the judge took too narrow a view by limiting his consideration to the medical evidence, and further, by overlooking an opinion of Dr Turnbull which was supportive of a causal link. It was said that the judge should have looked at the whole of the evidence, including the evidence of rapid and substantial improvement upon his transfer to Energy in July, which if those conditions remained meant it was likely the psychological improvement would have been sustained and causation was made out.
The plaintiff submitted that while there was no direct evidence from Dr Urie that without targets Mr Shearer’s mental health would not be adversely affected, Dr Urie clearly implicated ‘achieving goals and benchmarks’ as one cause of stress. This opinion, combined with the evidence that Mr Shearer improved when placed in the role at Energy meant that, with no (or reduced) targets, his health was likely to have been significantly improved.
The defendant submitted that on the issues of the scope of duty and breach, the judge properly had regard to the business model and employment of sales people generally, and the specific contracts of employment with the plaintiff. It was for the employer to set appropriate performance targets and remuneration for meeting them. It submitted that as to the factual dispute about the removal and reimposition of targets on the move to Energy, which underpinned the plaintiff’s arguments as to foreseeability of risk and causation, the trial judge accepted that targets were present in Energy from July. The trial judge also had regard to the plaintiff’s own desire to continue with the employer and the absence of an available role outside of sales, together with the plaintiff’s acknowledgment of Dr Urie’s advice about resuming duties. It submitted that comparisons with workplace modifications as might be required as a reasonable response in other cases does not add to the analysis and no complaint is made of the trial judge’s observation of legal principles in relation to the content of the duty of care.
As to causation, the respondent submitted that there was no evidence, medical or otherwise upon which the judge could have concluded that had targets been removed, and the plaintiff confined to taking inbound calls, such steps would have prevented injury or significantly reduced the risk. It submitted that, in circumstances where no medical opinion addressed the question of causation, and where the judge did not accept the plaintiff’s evidence that targets were removed with improvement and reimposed with deterioration, no error is made out according to the respondent.
Analysis
Scope of Duty and Breach
Grounds 2, 3 and 4 deal with questions of foreseeability. Where the duty is to provide a safe system of work that avoids a risk of psychiatric injury, foreseeability of that risk is a threshold question. As was decided in Koehler, a risk of psychiatric injury as a result of performing work duties is not reasonably foreseeable by an employer in the absence of some reason for an employer to ‘suspect that the appellant was at risk of psychiatric injury’.[23] Both the nature and extent of the work being done by the particular employee,[24] as well as any evident warning signs, are relevant to that threshold question of foreseeability. In an orthodox application of the principles in Koehler, the judge considered both the plaintiff’s agreement to perform work at each stage under the contract and whether the employer had reason to suspect a risk of psychiatric injury. No complaint is made of the trial judge’s application of those principles to his threshold finding that a duty of care arose in November 2012.
[23] Koehler (2005) 222 CLR 44, [27]; [2005] HCA 15.
[24]Some work by its nature is anticipated as being likely to result in a risk of psychiatric injury such that a duty might require preventative steps in respect of certain categories of employee. This case raised no such issues.
Thereafter, foreseeability has further work to do on the question of the scope and content of the duty albeit differently to that which addresses the existence of a duty. It is relevant to the question of whether a response, or a range of responses, is reasonable. In Wyong Shire Council v Shirt,[25] Mason J said:
… the general proposition [is] that foreseeability of the risk of injury and the likelihood of that risk occurring are two different things. I am of course referring to foreseeability in the context of breach of duty, the concept of foreseeability in connexion with the existence of the duty of care involving a more generalized enquiry.[26]
[25] (1980) 146 CLR 40 (‘Shirt’).
[26] Ibid 47.
The likelihood of continuing targets and outbound calls in particular being a foreseeable risk fell for consideration in this step.
Questions of the content and breach of duty are raised by grounds 1, 5, 7 and 8. Those matters are also informed by the contractual obligations and applicable statutory framework. At least some of the questions asked but not answered in Koehler needed an answer in this case because it was contended that the employer was obliged to modify the work to be performed. Koehler identified the following considerations that might arise:
At least the following questions are raised by the contention that an employer’s duty may require the employer to modify the employee’s work. Is an employer bound to engage additional workers to help a distressed employee? If a contract of employment stipulates the work which an employee is to be paid to do, may the employee’s pay be reduced if the employee’s work is reduced in order to avoid the risk of psychiatric injury? What is the employer to do if the employee does not wish to vary the contract of employment? Do different questions arise in cases where an employee’s duties are fixed in the contract of employment from those that arise where an employee’s duties can be varied by mutual agreement or at the will of the employer? If an employee is known to be at risk of psychiatric injury, may the employer dismiss the employee rather than continue to run that risk? Would dismissing the employee contravene general anti-discrimination legislation?[27]
[27] Koehler (2005) 222 CLR 44, [221] (McHugh. Gummow, Hayne and Heydon JJ); [2005] HCA 15.
After setting out that passage in Koehler, his Honour said:
To these questions posed by the High Court, I would add, relevant to this case, the following — if there were no suitable positions available outside sales, should iSelect terminate Mr Shearer as a response to a risk that complaints of stress may lead to a psychological illness? Or reduce his duties and hours, construct an artificial position or grant him special favours which may affect his ability to earn and affect the regard in which he was held by managers or other employees? And what of the employee, like Mr Shearer, who wants to keep working a job he enjoys and has committed to the role?[28]
[28] Reasons [118].
Also relevant in determining scope and breach is the need to respect the employee’s right to privacy in respect of mental health matters and the greater uncertainty surrounding the efficacy of interventions to respond to the risk.
The question of content must be considered with a ‘full exploration’ of the obligations imposed by the employment relationship.[29] The trial judge had regard to the relevant contractual provisions. There were three written contracts of employment. All were identical in nominating a ‘sales consultant’ role, and all had remuneration that had a salary/fixed component and a performance pay component. The performance based commission was described in the contract as ‘a discretionary benefit’ and not a ‘contractual term’. The judge considered that the language of discretion and consultation in the setting of targets and the payment of commissions was at best aspirational and the contract did not require consultation in setting targets or the amount to be paid in meeting them. He found that these were matters for the employer to set as it considered to be appropriate.[30]
[29]Koehler (2005) 222 CLR 44; [2005] HCA 15; with reference to Barber v Somerset County Council [2004] 1 WLR 1089, 1101 [35] (Lord Rodger).
[30]Reasons [96].
Importantly, upon the transfer to Energy a new contract was signed. Although it took effect from July 2012 it was not sent to Mr Shearer until November that year. That contract contained both fixed and performance renumeration in the same terms as the earlier contracts. Other than being for a different sales team, the contract did not evidence a new or different agreement. The plaintiff had submitted that it should be seen to confirm employment that the plaintiff had as at 18 July 2012. There was no attempt to lead evidence of some oral agreement to vary the contractual terms of entitlement to performance pay. To the contrary, the plaintiff anticipated that in Energy he would be able to relieve the stress he had been under and said ‘it won’t take long to make up the $10,000 that I’ve taken as a pay drop’ because it was an area where it was seen as easier to achieve targets. The trial judge accepted that with the transfer ‘he was back at work in Energy and meeting his targets up until October 2012’.[31] That conclusion was supported by Mr Shearer’s pay records which were tendered. The judge observed the contract was of an employment relationship of a ‘commercial operation managing a staff of sales people who are expected to achieve sales results in a prescribed manner’.[32] No particular statutory obligations were raised as bearing on the question of duty.
[31]Reasons [128].
[32]Ibid [141].
We do not accept the submission advanced by the applicant, that ‘the power of the respondent to formulate targets etc, then [from November 2012] had to be exercised in the context of its overriding duty not to expose its employee, the Applicant, to unnecessary risk of harm’.[33] First, it does not accurately reflect the reasoning in Koehler which cautions against examining the content of any duty without regard for the limitations imposed by contractual or other obligations. The co-existence of contractual obligations and a duty of care are not balanced by each other, or one ‘outweighed’ by the other. Rather, contractual obligations are fixed when they arise or are subject to terms that permit agreed or unilateral variation. It is that contractual arrangement, and because of it the employer’s right to control the workplace, that generally imposes the duty of care. The duty, when it is enlivened, remains consistently one to take reasonable care to avoid the risk of psychiatric injury, within the parameters of the employment relationship.
[33]Applicant, ‘Applicant’s Written Case’, 16 June 2021, [13].
None of this means that a reasonable response by an employer might not require modification of tasks in certain circumstances. Nor does it preclude a reasonable response that might require an offer of modification of work. Indeed, the plaintiff relied on three cases to illustrate that, in principle, a duty of care might give rise to an obligation to modify work. While each case turns on its own facts, an examination of those cases demonstrates why the judge was correct to conclude in this case that the modifications for which the plaintiff contended would have created a special position not in accordance with the contract and which may adversely affect his ability to earn income under his contract.[34]
[34]Reasons [145].
In Roussety v Castricum Brothers Pty Ltd,[35] an abattoir manager suffered psychiatric injury from undertaking stressful duties without appropriate assistance or support. Zammit J held that a reasonable response would have been to implement various measures, including modifying or removing hours and some duties, and engaging more staff. Those responses were assessed as reasonable in light of his Honour’s findings regarding the contract of employment and the intention of the parties at the time it was entered into. Specifically, it was held that the contract for the position of manager was an arrangement of significant flexibility with the capacity for the parties to discuss relevant matters and the plaintiff had significant input into the position description. Nevertheless, the judge concluded that the hours of work increased steadily because of changes that had occurred sometime after the contract was entered into and resulted in a level of work beyond what was contemplated by the parties when the contract of employment was agreed.[36] Thus, the reasonableness of the response was specifically considered by her Honour, by reference to the contractual obligations.
[35][2016] VSC 466.
[36]Ibid [60], [226].
In The Age Company Ltd v YZ,[37] the Court of Appeal confirmed that the employer might be required to give consideration to rotating a journalist to other areas of reporting if remaining in a particular area exposed that worker to traumatic events in the face of a foreseeable risk that this might cause psychiatric injury. The trial judge found, and the Court of Appeal confirmed, that a ‘sympathetic rotation policy’ was a reasonable response, recognising that rotation frequently occurred for a variety of reasons and rotation between subject areas was not inhibited in any way by the terms of the contract. The plaintiff’s initial request for rotation away from reporting on traumatic subject matter was responded to, however, it was a subsequent decision by the employer which she resisted, to transfer her back into a role that again exposed her to traumatic and violent content, which was the basis for a finding of breach.[38]
[37](2019) 60 VR 189; [2019] VSCA 313 (‘YZ’).
[38]YZ [2019] VSCA 313, in particular [153]–[157], [186].
Likewise in Doulis v State of Victoria,[39] consideration of a known risk of psychiatric injury in the type of classes allocated to a teacher was identified as a reasonable response. This is to be contrasted with Taylor v Haileybury[40] which centred on an allegation of excessive classroom work in breach of contractual arrangements and a duty of care, but which determined the work to be consistent with the contractual arrangements agreed to by the teacher concerned.
[39][2014] VSC 395.
[40][2013] VSC 58.
The modifications contended for by the plaintiff in the present case sought to excuse performance of particular sales tasks that are common across its sales workforce. There was no suggestion that any sales roles were not subject to performance criteria. In sales roles, increased remuneration was provided when targets were met. The contract from July 2012 in Energy provided for these terms. There was, it appeared from the applicant’s evidence as to bands of fixed pay, an element of negotiation and agreement to the bands that might be applicable, and certainly movement between those bands and the applicable targets might arguably be a reasonable response, but the case at trial was not put on that basis. Nor did the applicant make a request to forego performance pay. Had he done so, a very different inquiry might be needed into what a reasonable response might have been, by reference to business and operational needs.
To relieve the plaintiff from meeting targets would carry with it a loss of opportunity to maximise potential income, presumably even if it turned out that targets were in fact met. To do so without agreement of the worker would not be in accordance with the parties’ contractual obligations. The judge was correct to reject the argument that removal of targets was consistent with performance of its contractual obligations where the judge had found (on the evidence before him) that performance was not so qualified or limited by consultation and agreement under the contract.
Further, the position of responding to the foreseeable risk by remaining on inbound calls was a secondary focus on appeal. In fact, the plaintiff had worked in teams taking only inbound calls in all but the first months of his employment. Thus, outbound calls were not a feature of his employment implicated at the time of the request to transfer to Energy and it was not clearly articulated how, on their introduction in September 2012, this particular aspect of his duties gave rise to a foreseeable risk of injury.
Although the duty owed by an employer is personal to each employee, the response required of a reasonable employer is not similarly only individual. The inquiry is prospective, it must be to provide a safe system of work that is capable of extending to all comparable employees in order to address a foreseeable risk of psychiatric illness in those persons where it arises.[41] A system that relieves those sales persons at risk of suffering psychiatric injury from performance targets or permits them to remain in an open-ended way, without targets on those calls that were generally allocated to the best salespeople would have obvious implications for the sales model of the business.
[41]State of NSW v Briggs (Leeming JA); as discussed in YZ [2019] VSCA 313, [121].
Finally, the judge took account of the steps that the employer in fact took in response. There was no suggestion that those steps themselves were not an appropriate part of a reasonable response. Essentially they comprised an accommodation of a request to transfer to a different sales team, granting time off work when requested, ensuring a medical clearance to return, and finally taking proactive steps to obtain more detailed medical opinion to inform its future decision making. That medical advice did not avert to the likelihood that continuing targets or outbound calls might pose a continuing risk of injury. The employer was aware it had other obligations towards an employee who had ‘voluntarily told us he had medical advice suggesting he is unsuited to the role’[42] and escalated the medical advice it sought after that time.
[42]As at November 2012; Reasons [133].
The grounds dealing with foreseeability, content and breach (grounds 1 to 5, 7 and 8) must be rejected.
Causation
While the employer clearly understood that attempting to achieve targets was part of the pressure of a sales role it was not so clear that removing or reducing this aspect, or avoiding outbound calls, would be an intervention that might lessen the plaintiff’s symptoms. By November 2012, the plaintiff’s articulated complaint is of symptoms associated with a sales role generally.
There is considerable difficulty for an employer to pinpoint the particular aspects of a stressful role that might be addressed to relieve the risk of injury. As Keane JA said in Hegarty v Queensland Ambulance Service:[43]
Whether a response to a perceived risk is reasonably necessary to ameliorate that risk is also likely to be attended with a greater degree of uncertainty; the taking of steps likely to reduce the risk of injury to mental health may be more debatable in terms of their likely efficacy than the mechanical alteration of the physical environment in which an employee works.[44]
[43](2007) Aust Torts Reports 81-919; [2007] QCA 366.
[44]Ibid [41] (citation omitted).
It may be that an employee identifies a particular aspect of their role and a change is accommodated. Where the identified change does not lead to the avoidance of injury, it does not necessarily follow that cause and effect are made out. The causes of psychiatric injury are complex. As the judge observed, iSelect did not have the medical expertise to identify the particular aspects of the role that might lead to psychological illness. The causal connection between particular tasks and the occurrence of injury was said to be made out by the pattern of deterioration on each occasion when targets remained or were reimposed. The factual basis for such a conclusion was muddied by the conflict as to the removal of targets in July 2012.
When medical advice was sought, the connection between targets or outbound calls was not identified. By March 2013, the employer had medical advice from the plaintiff’s medical practitioner, Dr Urie and from Dr Kornan, a psychiatrist. Relevantly, Dr Urie’s report said:
Mr Shearer suffers from Depression and Anxiety. The causes of this are multifactorial but have been exacerbated by his long work hours, lack of downtime, deadlines and the stress of achieving the goals and benchmarks which have been set by his employer .
There is no need to modify his duties other than to limit his work to his job description. I do not want him to take on additional tasks during his shifts.[45]
[45]Report from Dr Urie dated 21 May 2013, which was tendered as part of Exhibit K at trial.
Dr Kornan’s report said:
In general terms, whether he works in modified pre-illness duties, does alternative duties or returns to his actual pre-injury duties, should be a matter of joint discussion between himself and the employer. The best results are obtained with the patient, and the employer, coming to a mutually agreed conclusion. …
My recommendation is that if he returns to modified duties, it should be that he returns to a significant number of hours, which may well be four days per week, with perhaps Wednesdays off, so that the week is broken into two sections. In general terms once the depression lifts he should be able to work full time.[46]
[46] Report from Dr Kornan dated 15 May 2013, which was tendered as Exhibit 15 at trial.
The plaintiff submits that these reports alerted the employer to ‘be careful’ with its imposition of duties, in particular with the imposition of targets. Imposition of targets was not an identified stressor other than in the context of describing a multitude of factors impacting upon the diagnosis and symptoms. Both Dr Urie and Dr Kornan gave considered opinion about a resumption of work and there was no error in the judge’s conclusion that the advice was followed.
All of that said, even if the duty had required limitation of the tasks of the applicant’s sales role in the way contended by the plaintiff, to succeed in any appeal the applicant must establish error in the trial judge’s conclusion as to causation. That conclusion was concise:
No treating or consultant practitioner was asked to determine whether Mr Shearer remaining on inbound calls, and without other introduced targets, would have prevented or reduced the risk of his psychological condition. Absent such evidence I am not satisfied as to the causative relationship between any breach and the onset of his injuries.[47]
[47]Reasons [149].
From the above material, it is plain that neither Dr Urie nor Dr Kornan limited the tasks involved in the role other than by the reduction of hours and days of work probably for a finite period. Accordingly, neither opinion addressed the fundamental issue whether any such limitation of tasks would have been likely to reduce or avoid the risk of injury.
The applicant relies on the failure of the judge to refer to a medico-legal report of Dr Turnbull of 18 January 2021 in relation to causation. In particular, the opinion expressed that:
The main preventable part, in my opinion, is the continuation and return to phone based work, sales and performance targets. Overtime or working out of regular hours was not helpful. These particular types of work were a significant cause of his psychological deterioration. A shift away from them could potentially have saved him from developing his injury as it stands today.[48]
[48]Report from Dr Turnbull dated 18 January 2021, which was tendered as part of Exhibit O at trial.
Read fairly, this opinion is consistent with both Dr Urie and Dr Kornan, implicating all key aspects of the sales role. In any event, the judge’s conclusion on causation made reference to consultant opinion and there is no reason to think the opinion of Dr Turnbull was overlooked. There was quite simply no medical evidence that was directed at what would have been likely to occur if the proposed limitations had been implemented or sustained.
The plaintiff otherwise identifies error by the judge referring only to the medical evidence. The argument was that the evidence of Mr Shearer, that the improvement in July 2012 was followed by deterioration when targets and outbound calls remained part of the duties undertaken, was a basis to conclude that causation was made out. That argument would require at the very least for the trial judge to have accepted Mr Shearer’s recollection that targets were removed between July and October 2012 as a basis to draw such an inference. As set out earlier the judge did not accept this.
The grounds dealing with causation (grounds 6 and 9) must be rejected.
Conclusion
The proposed appeal has no real prospect of success. The application for leave to appeal must be refused.
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