A recent decision of the District Court of Western Australia provides some positive news for employers facing a workers’ compensation claim for a stress-related injury caused by disciplinary action.

At first instance in Woodside Energy v Kieronski [2016] WADC 144 the arbitrator held that Ms Kieronski was entitled to compensation for a psychiatric condition caused by stress from being stood down pending an investigation into allegations of serious misconduct. Woodside successfully appealed this decision to the District Court.

The case turned on the interpretation and application of an important carve-out that exists in other jurisdictions across Australia.[1] The carve-out places the onus on employees to demonstrate that their psychiatric injury did not result from “reasonable management action”.

In Western Australia, the carve-out is found in the definition of ‘injury’ in section 5(1) when read with section 5(4) of the Workers’ Compensation and Injury Management Act 1981. It applies when an employer dismisses, retrenches, demotes, redeploys or disciplines an employee. Provided the disciplinary process is not “unreasonable and harsh”, employers will not be required to compensate employees for stress-related conditions that an employee develops as a result.