Lessons from Kozarov: the potential for psychiatric injury claims

In April, the High Court handed down its judgment in Kozarov v Victoria, an appeal that sheds light on an employer’s duty of care to prevent psychiatric injury to its employees. The Court reinstated the appellant’s first instance damages award of $435,000, and awarded costs in the appellant’s favour.

The short of it:

  • The Court accepted that some types of employment may be inherently and obviously dangerous to the psychiatric health of an employee, and in the case of such roles, an employer is duty-bound to provide measures to enable the work to be performed safely.
  • This expanded on the decision of Koehler v Cerebos (Australia) Ltd. In Koehler, it was held that an employer engaging an employee to perform stated duties is entitled to assume, absent evident signs warning of potential psychiatric injury, that an employee considers that they are able to do the job. Koehler remained good law in that the scope of an employer’s duty of care is informed by whether psychiatric injury to the employee is reasonably foreseeable.
  • However, Kozarov suggests that there are roles that are inherently or obviously dangerous to the psychiatric health of employees performing the role, and for which an employer is obliged to take proactive steps to prevent risk of psychiatric injury to the employee, even absent the ‘evident signs’ required in Koehler. This included the role performed by the appellant, a solicitor for the Office of Public Prosecutions, who was frequently exposed to graphic and disturbing material when prosecuting sexual offences.
  • The Court did not differentiate between an employer’s duties to assess and minimise risk of physical injuries, and assess and minimise risk of psychiatric injuries, perhaps reflecting broader societal shifts in thinking about mental health.
  • The decision may raise concerns for employers of employees in high volume, high stress environments who would read it as imposing an obligation to take active steps to manage their employees’ mental health.
  • With psychiatric injury already a focus of WorkSafe Victoria and other statutory insurance regimes, employers, panel insurers and general insurers by now are clearly on notice of the potential for significant general damages awards arising from mental health claims, and the need to ensure employers, subcontractors and labour hire employees are adequately supported in the workplace.