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Employee receives compensation for “perceived” harassment

The Administrative Appeals Tribunal has ordered an employer to pay compensation to an employee who acquired a psychiatric illness from “perceived” sexual harassment. The compensation was ordered despite the Tribunal finding the sexual harassment did not occur, and the employee’s perception that it did occur was “objectively unreasonable”.

Implications for employers

This decision confirms that employees of the Commonwealth Government and licensed government authorities can claim compensation for injuries that are “contributed to” by the person’s employment, even if the injury is caused by an employee’s misinterpretation of the actual events. The decision requires Commonwealth government employers to consider employees’ particular susceptibilities and how particular conduct may be interpreted by them.

Although non-Commonwealth employers should note the decision, private sector employers are subject to a different test to determine liability for employees’ injuries, according to the applicable legislation. For example, in Victoria, employers are liable for injuries “arising out of or in the course of” the employment, and compensation is not payable for psychological illnesses arising predominantly from an employer’s reasonable actions.


The applicant was employed by Australia Post. She suffered a shoulder injury in the course of her employment and was placed on restricted duties. During a shift, the applicant complained of shoulder pain and was told by her supervisor to sit in an office and apply a heat pack.

As the office had no high-backed chairs that were appropriate for application of the heat pack, the applicant sat on the floor against a filing cabinet. Over the course of the shift, other employees entered the room and were forced to step over her. The applicant alleged that one co-worker reached into to a pigeon hole above her, and stood, straddling her legs, with his groin near her face.

The applicant alleged some days later that the co-worker had “dangled” his genitals in her face. The co-worker denied the allegation, claiming to have only stepped over the applicant’s feet and legs.

The applicant subsequently developed a psychiatric condition which she said was due to the alleged incident of sexual harassment and claimed workers’ compensation for the psychiatric injury.

Australia Post denied that the alleged incident of sexual harassment had occurred, and on that basis rejected the applicant’s claim for compensation.

The applicant sought a review of that decision from the Tribunal.

Compensation payable even though alleged incident did not occur

Under the Safety, Rehabilitation and Compensation Act 1988 (Cth), Commonwealth agencies such as Australia Post are liable to compensate employees for injuries resulting in incapacity for work which were “contributed to, to a significant degree, by the employee’s employment”.

The Tribunal found that the general circumstances alleged by the applicant were accurate, in that she had suffered shoulder pain, been told to sit in an office, had sat on the floor, and other employees had walked over her causing her some embarrassment and humiliation.

However, the Tribunal found on the evidence before it that the critical incident of alleged sexual harassment did not occur.

The Tribunal also found that the applicant’s supervisor, although acting unwisely in sending the applicant to an office to recuperate, could not have expected the applicant to react in the way she did.

However, the question for the Tribunal under the legislation was whether the injuries were “contributed to” by the applicant’s employment, and considered the applicant’s perceptions of the events that did occur to be “critical” in resolving this matter.

Importantly, a psychiatrist who gave evidence before the Tribunal concluded that the applicant had a tendency to overinterpret or misinterpret others’ conduct, and that the applicant’s psychiatric disorder was indeed contributed to by the “incidents at her work place” on the relevant day.

In essence, the Tribunal concluded the applicant genuinely perceived what happened to have been an incident of sexual harassment, even though when viewed objectively, it was not. Ultimately, the Tribunal held that “an employee’s perception of events, even a flawed perception, may provide the requisite causal relationship” with the employment, and that in this case it was the flawed perception that had led to the applicant’s illness.

Accordingly, the applicant was entitled to compensation for her psychiatric illness.

Solway and Australian Postal Corporation [2009] AATA 386 (29 May 2009).


Who does this affect?
All Australian employers

What do you need to do?
Review how the issues and developments covered in our publication impact your business. Consider if your internal processes need to be revised. We can help.



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