Employment Lawyers NSW

What Can You Do If Employees Make a Workers’ Compensation Claim When Being Counselled For Poor Work Performance?

It is not uncommon for employees to lodge a workers’ compensation claim (usually associated with stress or anxiety) when they are warned for poor work performance or inappropriate conduct in the workplace, particularly if termination of employment is imminent.

While such a tactic may delay the performance management process it does not need to derail it altogether!

In NSW, an employer cannot terminate an employee within 6 months of being injured, if the reason for the termination is due to the employee being on workers’ compensation. However, a person’s employment can be terminated at anytime providing it is for a valid reason and it can be clearly demonstrated that the termination is for a reason unrelated to the employee’s workers’ compensation claim. Eg. a disciplinary matter.

Employees are not entitled to receive workers’ compensation if their injury is a psychological injury and a result of their employer exercising what is commonly referred to as “reasonable management action”.

Section 11A of the NSW Workers’ Compensation Act 1987 states:

“No compensation for psychological injury caused by reasonable actions of employer. No compensation is payable under this Act in respect of an injury that is a psychological injury if the injury was wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers.”

Employers still need to be mindful of their workers’ compensation obligations. For example, you could not direct an employee to attend work for the purposes of attending a disciplinary meeting if their treating Doctor has certified them unfit to attend work. However, the disciplinary process should continue as soon as practicable.

Additionally, employers should ensure that their Workers’ Compensation insurer is informed where you suspect an employee’s workers’ compensation claim has resulted from “reasonable management action”.

If you require assistance with workers’ compensation or employment law matters, please contact our Employment Law Team.


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