100-year law overturned in landmark case In a momentous outcome for all workers, this week the High Court of Australia ruled in our client’s favour and reinstated a $1,442,405 damages verdict for breach of contract previously awarded by the Supreme Court of Victoria in December 2022. For well over 100 years, the common law courts have denied workers a right to recover damages for psychiatric injury suffered as a result of breach of contract on the basis that such damages were not available per the old English case of Addis v Gramophone Co Ltd [1909] AC 488.However, on 10 December 2024 the High Court of Australia delivered a landmark judgement in the matter of Elisha v Vision Australia Limited [2024] HCA 50, overturning this hundred-year law and thereby securing Arnold Thomas & Becker’s legal team a victory for all workers. The matter of Elisha v Vision Australia Following his dismissal, Elisha commenced proceedings in the Supreme Court of Victoria against his former employer, alleging that he sustained a severe psychiatric injury resulting from the “disgraceful” investigative process, administered by Vision Australia, which ultimately led to the termination of his employment. The primary judge found that Vision Australia was in breach of Elisha’s employment contract, in how it investigated the alleged misconduct, determining that Vision Australia should pay damages for the psychiatric injury that Elisha suffered as a result of the process. At the time, Elisha was awarded $1,442,405 in damages. However, in November, after an appeal by Vision Australia, the Court of Appeal decided to overturn the damages awarded. After this decision, Arnold Thomas & Becker – representing Elisha – sought special leave to appeal to the High Court, seeking a determination on the matter in regards to the Court of Appeal’s conclusion that damages for psychiatric injury were not recoverable for breach of employment contract. The matter was heard by the Full Court in October. Now, the High Court has held that the liability for psychiatric injury is not beyond the realm of contractual duty. Therefore, the psychiatric injuries Elisha suffered by way of the disciplinary process were not too remote to be recovered as part of the breach of contract claim. The High Court determined that, although the precise way in which the breach by Vision Australia caused Elisha’s psychiatric injury was somewhat irrelevant, an important element in the causal sequence by which Elisha’s psychiatric injury occurred was that “without Vision Australia’s breach, Elisha would not have been dismissed for alleged misconduct”. The judgement held that “for many workers ‘dismissal is a disaster’. It has been described as a ‘social reality’ that a person’s employment ‘is usually one of the most important things in his or her life. It gives not only a livelihood but an occupation, an identity and a sense of self-esteem.’” “An unfair process of termination for alleged misconduct could affect all three of those interests; i.e., a person’s livelihood, identity, and self-esteem,” it said. According to the High Court, the Court of Appeal’s finding “omits the relevant detail of the breach that actually occurred and the manner by which it caused psychiatric injury. [Therefore] the ground of appeal concerning breach of contract by Vision Australia should be upheld.” As a result, the High Court ordered that the original damages award be reinstated to Elisha. What does this mean for workers? It cannot be understated how much of a landmark decision this is for workers. Not only does it draw extra attention to the process in which dismissals based upon allegations are carried out, but it also creates the potential risk of breaching an employee’s contract, by which they can claim notable damages for psychiatric injury. Nick Korkliniewski, a senior associate at Arnold Thomas & Becker, believes this sets a precedent for the “destigmatisation of psychological injury”. “In its simplest form, our client’s case was that his employer should have taken reasonable care and properly followed their own disciplinary procedures if they were to terminate his employment,” Korkliniewski said. “Community expectations around rights to psychological safety at work and the destigmatisation of psychological injury means that the time was right for the law to recognise the requirement of an employer to consider their employee’s psychological health in the course of investigative and disciplinary processes.” Contact us If you have been injured at work, we’re here to help with your compensation entitlements, and if you don’t win, there’s no fee. To speak to a lawyer for a confidential, no-obligation discussion, call us on 03 9034 8433 or email [email protected]