There are a number of legal obligations and risks that an employer must consider when implementing any form of disciplinary or dismissal process. These are not limited to claims made under the Fair Work Act 2009 (Cth) but can also include the risk of claims made under anti-discrimination or workers compensation legislation.
The recent decision of Khan v Hitachi Energy Australia Pty Ltd [2025] NSWPIC22 in the NSW Personal Injury Commission (NSWPIC) has shown the potential consequences under workers compensation legislation where an employer fails to follow its own policies and procedures (or its legal obligations) in relation to such processes.
The worker had been employed as a Country Tax Manager by Hitachi Energy Australia Pty Ltd (the Employer) for nearly 27 years. The worker, at the time being 66 years old, had made it known to the Employer that he intended to continue working for the Employer well past his retirement age.
In June 2023, the CFO invited the worker outside of the office to get a cup of coffee and walk along a main street of Sydney. During the course of this walk, the CFO informed the worker that he had been made redundant and would cease working with the company at the end of 2023. The CFO explained that the Employer was considering a restructure of the company, and the worker would not fit within it.
The worker stated that he “felt helpless and sick in the stomach” by the sudden shock of the decision and ceased work the next day. The worker then attended a doctor’s appointment and was certified unfit to return to work.
The worker made a workers compensation claim, claiming that he had sustained a psychological injury from the conversation. This claim was disputed by the Employer on the basis that any injury sustained by the worker had been caused by the Employer’s reasonable action, a defence to claims of workers compensation provided by s 11A(1) of the Workers Compensation Act 1987 (NSW).
The worker submitted that the conversation between the CFO and worker while having a coffee on a main street in Sydney “could hardly be regarded as best practice for the redundancy consultation process”. Therefore, the worker argued that the ‘redundancy process’ was not reasonable action by the Employer.
The Employer denied the worker’s claims and argued that the meeting over coffee between the CFO and worker was reasonable action. The Employer submitted that the CFO was endeavouring to take a “pastoral approach” rather than a “clinical, de-sensitised approach” because the content of the meeting was very unfortunate. The Employer also submitted that the worker was provided with context for the decision, including that the company was being re-organised, and that the worker’s role was going to become “more stressful and complex”.
The NSWPIC ultimately found that the process taken by the Employer to inform the worker of his redundancy was not reasonable action. It found that:
The NSWPIC further noted that the Employer had failed to follow its own redundancy procedures provided by the Employer’s workplace policies, and this failure could not be regarded as reasonable action.
The NSWPIC noted that redundancy process does not require perfection, but it does require reasonableness and stated that it “defies belief” that the conversation between the CFO and the worker could be regarded as “best practice for the redundancy consultation process”.
Therefore, the NSWPIC found that the Employer’s redundancy process was unreasonable and failed by its own policy standards, and that the worker should be compensated for the psychological injury sustained as a result of that process.
In this matter, the Employer’s failure to follow its own policies and procedures as well as its failure to comply with its legal obligations relating to redundancy processes were significant factors in the NSWPIC ultimately awarding workers compensation to this worker.
Employers should be mindful of the types of claims that may be open to workers in such circumstances and always obtain legal advice in relation to minimising exposure to such risks.
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