Australian courts have delivered landmark decisions regarding employer responsibilities for employee mental health, particularly in relation to psychosocial hazards in the workplace.
These rulings represent an important shift in employment and workplace safety law. They recognise that workplace stress, unsafe systems of work, and flawed disciplinary processes can cause serious psychological harm. As a result, both employers and employees must understand how mental health obligations now operate under Australian law.
Unfair Dismissal and Psychiatric Injury: High Court Expands Employer Liability
High Court Confirms Compensation for Psychiatric Injury Following Unfair Dismissal
In a landmark decision, Elisha v Vision Australia Limited [2024] HCA 50¹, the High Court of Australia ruled on 11 December 2024 that an employee who is unfairly dismissed and suffers a psychiatric injury as a result may claim compensation for that mental harm.
Mr Elisha was dismissed by Vision Australia following an internal disciplinary process that the court found to be unfair, unlawful and contrary to the employer’s own procedures. Those disciplinary procedures formed part of Mr Elisha’s employment contract and required Vision Australia to follow a clear and fair process before termination. This included giving the employee a genuine opportunity to respond to allegations and ensuring procedural fairness throughout the investigation.
Vision Australia failed to comply with these contractual obligations. As a result, the High Court found that the employer had wrongfully terminated Mr Elisha and caused him significant psychiatric injury.
In a decisive shift in employment law, the Court overturned a long-standing precedent that had previously prevented employees from recovering damages for psychiatric injury arising from unfair dismissal. The High Court recognised that employment is not merely a source of income, but a fundamental contributor to a person’s identity, dignity and psychological wellbeing.
Following the ruling, Vision Australia was ordered to pay $1.4 million in compensation for Mr Elisha’s psychiatric injury. This decision represents a significant expansion of employer liability for mental harm caused by unfair dismissal in Australia.
Employers Held Accountable for Psychosocial Risks in the Workplace
The High Court’s approach aligns with broader developments in workplace health and safety law. In a separate case heard by the Magistrates’ Court of Victoria in October 2023, Court Services Victoria was fined almost $380,000² for failing to prevent psychosocial risks that contributed to the suicide of an employee.
The Court found that Court Services Victoria failed to identify and manage known psychosocial hazards, including excessive workloads, poor workplace relationships and bullying. These failures led to a serious deterioration in the employee’s mental health.
Court Services Victoria admitted to breaching section 21³ of the Occupational Health and Safety Act 2004⁴ by failing to provide a safe working environment. The Court made it clear that employers are responsible not only for physical safety, but also for psychological health and wellbeing.
Implications for Employers: Managing Psychosocial Hazards Is No Longer Optional
Together, these decisions send a strong message to employers across Australia. Employers must take proactive and documented steps to prevent and manage psychosocial risks in the workplace.
Employers are now expected to:
- Identify psychosocial hazards such as high workloads, bullying and poor job design
- Provide early support and intervention when employees show signs of stress or mental health issues
- Ensure disciplinary and termination processes strictly comply with contractual and legal requirements
- Train managers to recognise and respond to mental health risks
- Foster a workplace culture that prioritises psychological safety
Failure to take reasonable steps may expose employers to significant compensation claims, regulatory penalties and reputational damage.
Implications for Employees: Stronger Rights and Expanded Compensation Pathways
For employees, these rulings reinforce the right to work in an environment that protects mental health as seriously as physical safety.
Employees who suffer psychiatric injury due to:
- Unfair dismissal
- Bullying or harassment
- Excessive workloads
- Exposure to traumatic material
- Poorly managed workplace relationships
may now have clearer legal pathways to compensation.
Where an employer fails to take reasonable steps to protect an employee’s psychological wellbeing, the law increasingly recognises the resulting harm and holds employers accountable.
Mental Health Is a Core Workplace Obligation
These cases confirm a decisive shift in Australian employment and workplace safety law. Employers can no longer treat mental health as a secondary concern or a discretionary policy issue.
Workplaces must actively identify, assess and manage psychosocial hazards. At the same time, employees now have stronger legal protection and access to compensation where psychological injury arises from unfair treatment or unsafe workplace conditions.
The message from the courts is clear: mental health is a legal obligation, not an optional extra.
Need Advice on Workplace Mental Health or Unfair Dismissal?
If you are an employer seeking guidance on psychosocial risk management or an employee concerned about unfair dismissal or psychiatric injury, our employment law team can help.
We provide clear, practical advice on:
- Workplace mental health obligations
- Psychosocial hazard compliance
- Unfair dismissal and psychiatric injury claims
- Disciplinary and investigation processes
Contact us today to discuss your situation. Early legal advice can prevent serious legal, financial, and personal consequences.
Protect your rights. Protect your workplace.
¹ Elisha v Vision Australia Limited [2024] HCA 50, available at https://www.hcourt.gov.au/cases-and-judgments/cases/decided/case-m222024
² WorkSafe Victoria, Court body fined almost $380,000 for deadly work culture (6 October 2023), available at https://www.worksafe.vic.gov.au/news/2023-10/court-body-fined-almost-380000-deadly-work-culture.
³ Occupational Health and Safety Act 2004 (Vic) s 21, available at https://classic.austlii.edu.au/au/legis/vic/consol_act/ohasa2004273/s21.html.
⁴ Occupational Health and Safety Act 2004 (Vic), available at https://www5.austlii.edu.au/au/legis/vic/consol_act/ohasa2004273/.
