Workplace Mental Health: Employer Responsibilities Explained
Australian courts have delivered landmark decisions regarding employer responsibilities towards 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.
High Court Confirms Compensation for Psychiatric Injury Unfair Dismissal Case
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 hazards, 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
Fostering 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 their right to work in an environment that protects mental health as much 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 paths to compensation.
When 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.
Key Takeaway: Mental Health Is a Legal Workplace Obligation
These cases confirm a decisive shift in Australian employment 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 work conditions.
The message from the courts is clear: mental health is a legal obligation, not an optional extra.
How Veritas Law Firm Can Help
If you are facing challenges related to workplace mental health, whether you are an employer seeking guidance on compliance or an employee seeking clarity about your rights Veritas Law Firm can assist you in understanding your options and obligations.
¹ Elisha v Vision Australia Limited [2024] HCA 50 (High Court of Australia, 11 December 2024). Available at: https://www.hcourt.gov.au/cases-and-judgments/cases/decided/case-m222024
² WorkSafe Victoria, Court body fined almost $380,000 over deadly work culture (Media Release, 19 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/
