The delicate balance employers must strike when performance management and dismissal decisions involve employees with mental health concerns is paramount.
Dismissal for poor performance often comes at the end of a slow spiral, where repeated feedback, performance plans and missed targets compound into a situation that feels unsustainable for everyone involved. But when the employee in question is also dealing with mental health challenges, dismissal decisions tend to become far more sensitive.
Workplace claims for mental health conditions are continuing to rise. Moreso, a growing recognition of psychological harm is trickling down into legal decisions. So, what does a fair, defensible dismissal process look like when mental health challenges are involved?
Managing performance issues relating to mental health
While mental health challenges do not exempt employees from performance expectations, they do require employers to tread with greater caution during the performance management process, particularly if dismissal is being considered.
In these situations, there is significant risk in relation to disability discrimination, general protections, and unfair dismissal so the processes really do need to be managed carefully and sensitively.
It is often the case that the employee’s mental health challenges are contributing to their performance issues, so it can be helpful to start by addressing any underlying psychological hazards or stressors. This includes whether any reasonable adjustments can be made to support an employee who might have mental health issues.
Where reasonable adjustments and standard performance management processes prove ineffective and a decision to consider dismissal is made, employers should move slowly and ensure they are meeting the legal requirements associated with each stage of the process.
Mental health conditions are considered disabilities
Mental health conditions are generally considered disabilities under the Disability Discrimination Act 1992. As a result, if an employee argues their performance was impaired due to a diagnosed condition, and that their employer either did not accommodate it or used it as grounds for dismissal, the termination could potentially breach discrimination law.
Mental health issues can justify a late unfair dismissal or general protections claim
Dismissed employees typically have 21 days to file an unfair dismissal application or a general protections claim related to the dismissal with the FWC. But what if their mental health prevents them from acting in time?
There are several considerations the FWC will look at when deciding whether a late application can proceed, in situations where an employee submits their claim past the standard deadline due to a mental health condition which prevented them from acting sooner.
This will include the employee’s reason for the delay, and whether they took any steps after the dismissal to try to resolve the issue with their employer. The FWC will also consider the merits of the underlying application, and whether it has good prospects of success.
What happens if the dismissal negatively impacts an employee’s mental health?
Even if the decision to terminate is valid, the way it is handled can still create legal risk. If an employer fails to consider the psychological impact of how the dismissal is delivered, and does not afford procedural fairness, further aggravating the employee’s psychological distress, the FWC can reasonably award compensation to the employee.
Claims such as these would need to be substantiated by medical evidence, for example, the employee providing a letter from their treating psychologist outlining the impact the dismissal and the unfair dismissal proceedings have had on their mental health and ability to work.
Employers can mitigate risk by ensuring the dismissal process is compliant, transparent, and empathetic. When the dismissal is communicated, the employee should also be provided with the opportunity to have a support person present, including clearly explaining the reason for the dismissal and what is going to happen next. Taking these steps not only satisfies procedural fairness requirements, but also helps reduce the risk of unnecessary psychological harm in an already stressful situation.
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