Elisha v Vision Australia Limited: HCA Rules on Psychiatric Harm

Elisha v Vision Australia Limited [2024] HCA 50

Judgment date: 11 December 2024
High Court of Australia
The bench of judges: Gageler CJ; Gordon, Edelman, Steward, Gleeson, Jagot and Beech-Jones JJ
Damages; Breach of contract; Scope of contractual duty; Remoteness

The case Elisha v Vision Australia Limited [2024] HCA 50 revolves around employment law, focusing on breach of contract and negligence claims following the dismissal of the appellant, Mr. Adam Elisha, from his role at Vision Australia Limited. Given below is a summary of the facts and judgment.

Facts and Case Background (Elisha v Vision Australia Limited)

Mr. Elisha was employed by Vision Australia as an adaptive technology consultant under a 2006 employment contract. The contract made reference to compliance with regulatory requirements and the employer’s policies and procedures.

In March 2015, an incident occurred at a hotel during work-related travel where Mr. Elisha was accused of aggressive behaviour toward hotel staff. Vision Australia’s disciplinary process culminated in a “stand down letter” and subsequent termination of employment, alleging misconduct based on prior aggressive behaviour, which had not been formally raised or substantiated.

The process was described as a “sham” by the primary judge. Allegations of prior aggression were relied upon without informing Mr. Elisha or allowing him to respond. The decision-makers had limited direct interaction with Mr. Elisha and relied on vague and unsupported claims.

Following his dismissal, Mr. Elisha was diagnosed with major depressive disorder and adjustment disorder. Evidence suggested these were directly tied to the unfair dismissal process.

Legal Proceedings

Mr. Elisha initiated legal action claiming:

• Breach of contract due to non-compliance with the disciplinary procedures.

• Negligence for failing to provide a safe system of investigation and decision-making.

The primary judge awarded damages for breach of contract but dismissed the negligence claim.

The Court of Appeal overturned the primary judgment, finding that psychiatric injury damages were too remote and could not be recovered for breach of contract. It also ruled out negligence claims.

High Court Judgment (Elisha v Vision Australia Limited)

The High Court upheld that Vision Australia’s disciplinary policies were incorporated into Mr. Elisha’s employment contract. The breach of these policies, particularly the failure to provide procedural fairness, caused Mr. Elisha’s psychiatric injury.

The injury was not too remote as psychiatric harm was a foreseeable consequence of a flawed dismissal process.

The court deemed it unnecessary to decide whether a tortious duty of care existed (negligence), given the success of the contractual claim.

The High Court reinstated the primary judge’s decision to award damages for breach of contract, emphasizing the seriousness of the procedural breaches. The appeal was allowed, and the orders of the Court of Appeal were set aside.

Significance

This case suggests that procedural fairness in employment dismissals is really important and clarifies the scope of recoverable damages for breach of contract in such contexts. It also throws light on the limits of negligence claims in employment law. The Court declined to expand the duty of care owed by employers to cover the disciplinary process, citing potential incoherence with employment law and existing statutory regimes.

Quotes from the case

“The disciplinary process conducted by Vision Australia was found to breach cl 47.5 of the Vision EA and the 2015 Disciplinary Procedure, both of which were held to have been incorporated into the 2006 Contract.” (Primary judge O’Meara J)

“The disciplinary process conducted by Vision Australia was found to breach … the 2015 Disciplinary Procedure … If a proper process had been undertaken, a proper consideration of the hotel incident would have led to the conclusion that the events probably involved no element of harassment or bullying … Mr Elisha would not have developed the serious psychiatric injury from which he suffers.” (Primary judge O’Meara J)

“It was reasonable to expect that Mr Elisha would have been so distressed by the manner in which Vision Australia breached the 2006 Contract and by the consequences of the breach for him, including his dismissal for alleged misconduct from the employment that he had held for nearly a decade, that there was a serious possibility that Mr Elisha would suffer a serious psychiatric injury.” (Gageler CJ, Gordon, Edelman, Gleeson, and Beech-Jones JJ)

References:

https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2024/50.html

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Deliveroo Australia Pty Ltd v Diego Franco – Key Gig Work Case

Case name & citation: Deliveroo Australia Pty Ltd v Diego Franco [2022] FWCFB 156

Court: Fair Work Commission – Full Bench
Date of Decision: 17 August 2022
Judges: Vice President Hatcher, Vice President Catanzariti, Deputy President Cross
Areas of Law: Employment Status; Worker Classification; Unfair Dismissal

Background of the Case (Deliveroo Australia Pty Ltd v Diego Franco)

Diego Franco worked as a delivery rider for Deliveroo Australia Pty Ltd from April 2017 to April 2020. His work arrangement was governed by a “supplier agreement,” which was revised multiple times.

In April 2020, Deliveroo identified Mr. Franco as having delayed delivery times. On April 23, 2020, Deliveroo emailed him stating he had failed to deliver orders on time, breaching his agreement. On April 30, 2020, Deliveroo disabled his access to the Rider App, effectively terminating his engagement.

Franco filed an unfair dismissal claim with the Fair Work Commission (FWC), which ruled in his favour.

Initial Fair Work Commission Ruling (May 18, 2021)

Commissioner Cambridge determined that Franco was an employee of Deliveroo, not an independent contractor. His dismissal was unfair, as it was harsh, unjust, and unreasonable. He was not given clear expectations regarding delivery times. Further, he was not given an opportunity to respond before being terminated. He should be reinstated with lost wages restored.

Deliveroo’s Appeal

Deliveroo challenged the decision, arguing Mr. Franco was a contractor, not an employee. They contended the Commissioner had misapplied the legal test for employment classification. The dismissal had a valid reason (poor delivery performance) and proper procedural fairness was followed.

Full Bench of the Fair Work Commission Decision (August 17, 2022)

The Full Bench reviewed the appeal in light of new High Court precedents in Personnel Contracting and Jamsek, which emphasized that employment relationships should be determined primarily by contract terms. The contract’s written terms are the deciding factors, rather than the actual working relationship.

Reassessment of Employment Status:

The Full Bench ruled that Franco was not an employee but an independent contractor. It based this on the terms of the 2019 supplier agreement, which:

Did not establish an employer-employee relationship.
Allowed Franco to choose when and where to work.
Permitted him to work for competitors simultaneously. (He also worked for competitors Uber Eats and DoorDash.)
Gave him control over delivery routes and equipment.
Allowed him to delegate work to others.

Ignorance of Actual Working Relationship:

Despite evidence that Deliveroo exercised significant control over Franco’s work in practice—through its algorithm, performance monitoring, and branding—the court ruled against considering these real-world conditions. Instead, it focused solely on the written contract.

Jurisdictional Error in Original Decision:

Since Franco was found to be a contractor, he was not protected from unfair dismissal under the Fair Work Act 2009. This rendered the original FWC decision invalid.

The Full Bench admitted that Deliveroo treated Franco unfairly, but it stated that it had no jurisdiction to remedy the unfairness due to his independent contractor status.

Here is an excerpt from the judgment

“The ……… conclusion is that Mr Franco was not a person protected from unfair dismissal within the meaning of s 382 of the FW Act and the Commission had no jurisdiction to entertain his unfair dismissal application nor power to grant him the remedies that it did. The Commissioner’s decision and order must therefore be quashed, and Mr Franco’s unfair dismissal application must be dismissed as incompetent. Regrettably, this leaves Mr Franco with no remedy he can obtain from the Fair Work Commission for what was, plainly in our view, unfair treatment on the part of Deliveroo.” (p. 57)

Outcome of the Appeal:

The appeal was upheld. The original decision was quashed and Franco’s unfair dismissal claim was dismissed.

Takeaway from the case (Deliveroo Australia Pty Ltd v Diego Franco)

The ruling clarified that in the gig economy, contractual terms, rather than practical work conditions, determine employment status. The case highlights the challenges gig workers face in securing employee protections under Australian labour laws.

References:

https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FWCFB/2022/156.html

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Williams v Compair Maxam Ltd [1982]: Facts and Principles

Case name & citation: Williams v Compair Maxam Ltd [1982] IRLR 83; [1982] ICR 156

Court and jurisdiction: Employment Appeal Tribunal, England and Wales

Decided on: 22 January 1982

The learned judge: Browne-Wilkinson J

Area of law: Redundancy; unfair dismissal

What is the case about?

When an employer is contemplating having to lay off employees, he or she cannot cherry-pick the employees they wish to retain. Instead, they must have appropriate redundancy criteria from which to select the employees who are at risk of being made redundant or laid off. This requirement for redundancy criteria was established in Williams v Compair Maxam Ltd.

Case facts (Williams v Compair Maxam Ltd)

In this case, Compair Maxam Ltd was experiencing a drop in business and recognized the need to implement cost-cutting measures. Its departmental managers decided to select a team of core staff members who they deemed necessary to retain to ensure the continued viability of the business. They did not have any particular criteria for redundancy and instead chose based on personal preference; the Union was not consulted at any point. As a consequence of this, the remaining staff members were dismissed on the grounds of redundancy.

After that, a few of the employees attempted to file claims for unfair dismissal. They were unsuccessful at the tribunal, which found that the managers’ preference was a reasonable way of doing the job. They filed an appeal against this on the grounds that it was unfair, and their appeal was ultimately successful. It was held by EAT that there was an error of law when the tribunal reached the conclusion and that the dismissal selection was unfair.

The principles of redundancy

In the given case of Williams v Compair Maxam Ltd, the Employment Appeal Tribunal (EAT) outlined some guidelines that a reasonable employer should adhere to in the event that they intend to dismiss an employee on the basis of redundancy. It was emphasized by the EAT that these were not legal precepts but rather standards of conduct. They served as important guidance on the selection of employees for redundancy.

These principles are:

1. Notice of impending redundancies:

The employer would do their best to provide employees and their representatives with as much advanced notice as possible when there was going to be a redundancy.This will enable the union and employees who may be affected to take early steps to inform themselves of the relevant facts, consider the possibility of alternative solutions, and, if necessary, find alternative employment either within the undertaking or elsewhere.

2. Consultation with the union:

The employer will have a discussion with the union about the most effective ways by which the desired management result can be accomplished in a way that is fair to the employees and causes them as little hardship as possible. In particular, the employer would consult with employee representatives to establish selection criteria.

3. Objective criteria:

The selection criteria would be based, as much as possible, not on the personal opinion of the person making the selection, but on objective criteria. That is, the criteria should be such that it can be judged against things such as attendance record, efficiency at the job, experience, or length of service.

4. Selection based on criteria:

The employer would make every effort to ensure that the selection is made fairly based on these criteria. And it will take into account any representations or suggestions that the union may make regarding the selection.

5. Alternative employment:

Instead of dismissing the employees, the employer will look into providing them with alternate employment opportunities. He would see whether he could offer alternative employment.

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