13 July 2022
In a recent series of decisions before the Federal Court of Australia, a long-serving employee who had been harassed and bullied by the company’s CEO successfully obtained a very significant order for compensation for breaches of the Fair Work Act 2009 (Cth) (FW Act), after the Court held that it was not confined by the restrictions imposed on a claim by the employee for the same events under state workers compensation laws.
This article examines the decisions of Justice Rares of the Federal Court who had to consider, amongst a number of complex issues:
The First Decision
Mr Rudolph commenced employment with the Club Hawkesbury Race Club (Club) in May 2016 as CEO. At that point in time, Ms Leggett was in a senior position and had worked at the Club for over 20 years in a sponsorship and marketing role.
From the very beginning of Mr Rudolph’s employment, it was alleged that he began to micromanage, bully and harass Ms Leggett. Mr Rudolph’s conduct towards Ms Leggett was said to have included:
The Court heard evidence that Mr Rudolph’s behaviour was demeaning towards Mrs Leggett and that his intention was to force Ms Leggett out of her position by making her job unbearable to perform.
During her employment, Ms Leggett made several complaints about Mr Rudolph micromanaging her, and how his conduct was affecting her psychiatric wellbeing. Despite Ms Leggett’s cry for help, both Mr Rudolph and the Club’s directors dismissed her complaints.
On 9 October 2016, Ms Leggett sent an email to Mr Rudolph making a further complaint that she has, “… felt down trodden, excluded and questioned unreasonably as I carry out my duties as Sponsorship and Marketing Manager. I feel like we are reaching an untenable situation which needs to be resolved.” In response to this complaint, Mr Rudolph sent an email inviting Ms Leggett to a meeting to discuss her “work performance” (October Incident). Ms Leggett did not attend this meeting as she commenced a period of sick leave later that day.
Following the October Incident, Ms Leggett was rendered unfit for work and subsequently diagnosed with major depressive disorder with anxiety. Ms Leggett made a successful claim under the WC Act alleging that she suffered a workplace injury in 2016 (referring to the specific conduct that occurred that year) and received compensation for weekly benefits and medical expenses. Ms Leggett also brought a claim in the NSW Workers Compensation Commission for a lump sum compensation.
Ms Leggett also made an adverse action claim in the Federal Court of Australia under the FW Act, alleging that the bullying conduct of the Club was adverse action which injured her in her employment and led to the termination of her employment. This claim was separate from the WC Act claim, although it related to similar factual matters and also sought compensation.
At the Federal Court hearing, Drs John Roberts and Brian Parsonage provided an expert psychiatrist report supporting Ms Leggett’s injury – they described the October Incident as her “last straw”.
His Honour accepted that Ms Leggett was injured in her employment and that she should be entitled to compensation, finding that the Club had completely “shut its eyes” to the problem. The Club was ultimately found to have breached its duty of care owed to Ms Leggett by failing to take reasonable care to prevent her from being exposed to the risk of psychiatric injury. His Honour also noted, “the Club’s conduct, through Mr Rudolph, effectively destroyed Mrs Leggett’s life”.
One of the questions that His Honour needed to consider was how and in what manner should Ms Leggett’s entitlement to compensation be assessed, given the past statutory compensation, including the lump sum compensation, already paid to Ms Leggett under the WC Act.
During the case management of the First Decision, a constitutional issue emerged as to whether the provision of the WC Act could regulate the assessment of Ms Leggett’s claim for compensation under the FW Act.
The Club argued that if Ms Leggett recovered compensation under the FW Act, that recovery would be a recovery of damages in respect of an injury that it, as an employer, is liable to pay compensation under the WC Act. Accordingly, the Club sought orders that Ms Leggett’s work injury damages claim be dismissed to avoid her being doubly compensated for the same injury. His Honour dismissed the Club’s argument on this issue, finding that, amongst other things that:
On that basis, His Honour concluded that Ms Leggett’s claim under the FW Act should be assessed undr the unlimited general common law rules, and was not subject to the restrictive terms of the WC Act.
His Honour considered Ms Leggett’s losses arising from the October 2016 injury for breaches of the FW Act. His Honour accepted that Ms Leggett could not return to employment due to the injury and pursuant to the FW Act and awarded economic and non-economic damages. However, His Honour agreed that Ms Leggett should not be doubly compensated for the same injury. Given that Ms Leggett had already received significant compensation under the workers compensation scheme for a similar injury, His Honour, where he considered appropriate, reduced the compensation payable under the adverse action claim to take into account compensation already received under the WC Act.
The Leggett Decisions demonstrate that an employee can obtain uncapped payments of compensation under the Fair Work Act, even though the injuries may be the same or similar to those addressed under claims pursuant to state workers compensation schemes.
The Decisions also highlights the importance for employers to properly deal with complaints raised by its employees, failing which significant claims for compensation can be awarded if total incapacity arises from the contravention.
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Authors: Michael Selinger, Sladjana Skoric & Olivia Lawrence
1 Leggett v Hawkesbury Race Club Ltd (No 3)  FCA 1658.
2 Leggett v Hawkesbury Race Club Ltd (No 4)  FCA 622.
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