Employee wellbeing: a director's duty of care

Wednesday, 01 April 2020


    Though workplace health is a core legal responsibility for boards, the risks continue to grow. More employers are now seeing staff wellbeing as a driver of culture and business reputation, writes Julie Robotham.

    News reporter “YZ” was awarded $180,000 in damages in the County Court of Victoria in March 2019. The court heard she had been among the first on the scene at dozens of violent crimes and fatal accidents. YZ was threatened by criminals and attended court hearings in harrowing rape cases. Her exposure to trauma was high and, after a decade as a journalist at Melbourne’s The Age, she had developed post-traumatic stress disorder (PTSD).

    Judge Chris O’Neill concluded her job, “brought with it distress and discomfort at such a level that it was no great leap of logic to conclude [it would cause] significant psychological injury.” Further, “there was no great expertise needed to understand that exposure of the plaintiff could result in something far more substantial than simply tears and stress after a particularly difficult story.”

    The damages award, which The Age’s owner Nine is contesting, marks what is thought to be the first time a court has ordered a payout for the mental health effects of a journalist’s work — not just in Australia, but worldwide. It is sending shockwaves well beyond the media, through organisations whose staff are on the front line of human distress: those that employ health workers, social workers and lawyers as well as the military, police, fire and rescue, and paramedics.

    Jennifer Wyborn, a partner in the workplace relations, employment and safety (WRES) practice at Clayton Utz, says the judgement “is putting employers on notice that there’s an expected minimum. Especially in the context of what would be regarded as a large employer, you should have an [employee assistance program], you should offer opportunities for debriefing. The risk of mental health injuries in particular professions is well known and must be proactively managed.”

    The YZ case is part of “a trend in the legal community to want to make employers accountable [for foreseeable harm]”, says Wyborn. While it was brought under common law, directors should be mindful of their individual liability for mental health injuries under WHS and fair work legislation.

    Careful directors would be asking questions about psychological risk and following up on the responses, she says. “Directors don’t have to personally fix things, but the test [under WHS laws] is one of due diligence and there has to be some level of inquiry and challenge.” Employers are on notice: they cannot turn a blind eye and let their people carry the consequences of psychologically dangerous work. And the pressure is not only from the courts.

    Two decades of campaigns to reduce mental health stigma by Beyond Blue and other advocacy groups such as the Black Dog Institute have heightened awareness of bullying, burnout and other psychological risks, and many more people are ready to call out “toxic workplaces”.

    Flip that proposition, though, and you reveal a much more positive opportunity for companies: by promoting good mental health at work they can keep people well, reduce sick leave, and build reputation, loyalty and performance.

    "You get unique responses from different people. Some respond really well to high work demands, some don’t. And what determines an individual’s health can also come from outside the workplace.

    Carolyn Davis
    ex-Safe Work Australia

    Questions for all directors

    What are the “reasonably foreseeable” psychological risks in your industry and organisation?

    How does your organisation mitigate the impact on individuals of workplace change, workload demands, interpersonal conflict and other stressful situations?

    What is your organisation doing to ensure employees (and contractors and volunteers) can recognise and act on mental health symptoms in themselves and others?

    Should you do more to ensure your organisation’s risk management framework appropriately accounts for mental health risk?

    Dr Toby Ford GAICD, founder and CEO of Queensland corporate health and wellbeing firm Ford Health, says business leaders are used to thinking about, and investing in, employees’ health as an engine of productivity and performance. For older, executive workers, Ford uses a balance sheet metaphor. “We ask them, ‘Is your health in such a state that it’s a liability… that you’re trading insolvent?’ “But now a new driver is emerging: the effect of workplace mental health and wellbeing on business reputation. In an era of shorter role tenures and rapid social media feedback — through platforms such as Glassdoor, Seek and Indeed — employers need not only to care for their workers, but also be seen to care for them. Younger people, especially if they join a company to complete a particular short-term project or as lower-skilled casuals, are unlikely to be restrained by loyalty from publicly commenting on their experience, says Ford. This group — Gen Y and the Millennials — appreciate value-adds such as workplace health programs, especially when the individual benefits may last beyond their time at the company.

    Ford Health’s most intensive program offers six-monthly check-ups, referrals and advice to employees. Based on this information, it provides anonymous, aggregate data to its corporate clients about the mental and physical health risks of their workplaces — and advises how to prioritise and manage these.

    The workplace is a key focus of the Productivity Commission’s current inquiry into mental health. Its draft report, released in October 2019, estimated mentally unhealthy workplaces cost Australia up to $12.8b a year (2015–16) — in absenteeism, lowered productivity and workers’ compensation payments, which cost on average three times as much per claim as physical injuries. Among workplace risk factors the commission nominates, only a few — such as the exposure to trauma considered in the YZ case — go to the fundamental nature of the sector in question.

    Most psychological risks are linked to the design and expectations of particular roles, and to organisational culture, putting them at the heart of directors’ responsibilities. Workers are most at risk when their job or workplace:

    • Makes high emotional or cognitive demands, but offers little control over how to do the work.
    • Does not provide appropriate reward, financially or otherwise.
    • Is insecure, and the person feels powerless to address this.
    • Is unfair or inequitable.
    • Does not create a reasonable balance between productivity and workers’ wellbeing.
    • Makes it hard for people to seek help early for an emerging mental health issue.

    Moving target

    Margo Lydon, CEO and company secretary of workplace mental health non-profit SuperFriend, which specialises in the financial services sector, says boards and executives should be mindful that psychological safety is a moving target. You can fix a trip hazard or develop a protocol for chemical handling, but the effect of the workplace on mental health is in constant flux, she says. “Someone might have a great relationship with a colleague, but if something changes in their roles, then the relationship can change and that psychological safety won’t be there anymore.”

    As caring for employees’ mental wellbeing as well as their physical safety becomes a new benchmark for those seeking “employer of choice” status, Lydon says employers should think in very broad terms about how to achieve this. Visible, actionable policies to protect staff’s wellbeing are important. “For example, with things such as travel policies, where employees have to travel for work, you can make a provision for them to come in later the following day if their flight has landed after, say, 7.30pm,” she says. “You can offer flexible work arrangements and make sure people are able to balance work and personal life commitments more sustainably.”

    But basic organisational practices are in the frame, too. “It’s also about a positive culture and good decision-making and communication that give people certainty in a complicated world,” she says.

    Southern Cross Austereo (SCA) has taken those messages on board. On paper, SCA is a perfect storm of psychological risk: sites are distributed across the nation, some of them tiny and in isolated areas. The broadcasting industry attracts young people, who may be more fragile than their battle-toughened elders, and it is also populated by creatives, known for high levels of perfectionism and related anxiety.

    "It’s also about a positive culture and good decision-making and communication that give people certainty in a complicated world.

    Margo Lydon
    CEO and company secretary SuperFriend

    A workforce planning major project group, which operated throughout 2018 and conducted staff and management surveys, identified mental health as one of three key human resources issues (the others were gender balance and flexible working conditions). “People were not feeling confident. They feared losing their job and they feared people treating them differently [if they acknowledged experiencing mental health issues],” says Arthur Georgiou, a talent acquisition manager in SCA’s people and culture team and a member of the company’s wellness committee.

    The company took the opportunity to engage mental health organisations Black Dog Institute and, more recently, Beyond Blue as charity partners, offering them airtime for community messages to the value of millions of dollars, while reinforcing the company’s support for mental health.

    At the same time, SCA built the Wellness Connection, an online platform that provides mental health self-help resources and videos, including one of chief operating officer John Kelly describing how he uses mindfulness and meditation to support his own psychological health. The goal is to embed this understanding as business as usual, says Georgiou, “so these practices are starting to be seen as part of our internal vocabulary”.

    SCA has also taken a hard look at how the work itself affects people’s wellbeing. “We’re best known for our radio assets, and we live or die by the ratings every six weeks,” says Georgiou. “If they’re not good, you feel that, and it can put great pressure on the sales teams. The good days are amazing, but there are big highs and lows.”

    Did you know?

    Mentally unhealthy workplaces are estimated (2015–16) to cost Australia up to $12.8b a year in absenteeism, lowered productivity and workers’ compensation payments, which cost on average three times as much per claim as a physical health claim.

    Source: Productivity Commission 2019

    In this context, the company is working to break down stigma by reminding employees that it is normal to struggle sometimes, and equipping managers to better handle day-to-day situations. To take the heat out even more, the company has stopped doing performance reviews and moved to ongoing feedback.

    Recruitment is focused on selecting people who can be resilient amid unavoidable stresses, and ensuring hiring managers discuss the challenges, “as honestly as possible with candidates, so we’re setting them up for success,” says Georgiou.

    The changes went to the SCA board for approval, where Georgiou says they readily won support as directors were persuaded by the comprehensiveness of the internal research and the strong and consistent messages it relayed from staff. The investment seems to be paying off. Employee turnover is around 25 per cent a year, which Georgiou says is notably low for a creative, youth-oriented industry.

    Lydon says work can be immensely important to good mental health, even if people are having a rough time personally.

    “If the one area going really well is your work, that’s going to promote positive wellbeing across the whole of your life,” she says. “You may be dealing with other stresses, but work can give you a sense of opportunity and contribution. That’s going to be a protective factor, even if you don’t work in a high-risk industry.”

    Risk mitigation

    Carolyn Davis is an independent consultant, past member of Safe Work Australia and a former director of Work Health and Safety and Workers Compensation at the Australian Chamber of Commerce and Industry. She says organisations should conduct risk assessments to deeply understand — as Lendlease and SCA did — which aspects of their business present psychological risk to workers. Then they need to do whatever is reasonable to mitigate those risks, remembering their primary duty of care extends beyond employees to contractors, subcontractors, apprentices, trainees and volunteers.

    In a draft recommendation, the Productivity Commission calls for psychological risks and mitigations to be spelled out in detail in model national WHS legislation — as is the case for physical safety.

    Davis is not a fan of further regulation. The model law, developed by Safe Work Australia and adopted by nearly all states, already clearly affirms “health means physical and psychological health,” and Davis is unconvinced extra legislation will produce lasting behaviour change. “It’s much more complicated with psychological issues,” she says. “You get unique responses from different people. Some respond really well to high work demands, some don’t. And what determines an individual’s health can also come from outside the workplace.”

    For these reasons, practices established for physical hazards may not translate well to psychological risk. “With noise, for example, it’s easy to measure, assess and control the risk. There is a number above which it’s not acceptable,” says Davis. “I worry about how you can apply those processes to psychosocial issues. I’m concerned [employers will] use or abuse numbers or results in screening processes, which could then exclude people from workplaces just for being potentially vulnerable to psychological risk.”

    Davis points out that directors’ responsibility for mental health is not contained only within WHS laws — fair work, anti-discrimination and privacy legislation all apply. Rather than new laws, she says, “We need a lot more education and more knowledge about how we can meet the needs of the people we work with. We also need to know what programs are effective for the long term. The question for directors is, ‘Is it reasonably foreseeable that the way our organisation operates could cause some sort of an issue? Is there a foreseeable risk?’ It’s just a fundamental part of managing your business well.”

    Case study: Lendlease

    It was, in Jane Gardner’s words, “Time to expand the H in WHS.” Physical safety was core business for Lendlease, while the environment was a main focus amid growing community attention. Health, meanwhile, was overdue for serious attention.

    So Gardner, Lendlease’s head of health and wellbeing global strategy and foundation programs, began with two studies: a gap analysis of Lendlease’s policies and procedures that might impact people’s wellbeing; and an optional survey sent to 13,000 people across 780 active projects, including analysis of how employees used sick leave, annual leave and employee assistance programs.

    This 2013 work produced foundational insights that Gardner says gave Lendlease board members the evidence to support change and strategic investment — notably in three “wellbeing days” (one every four months) made available to all employees in addition to annual, sick and other personal leave as a result of the findings. Seven years on, more than two-thirds of people at the development and construction giant use their wellbeing leave entitlement, and the proportion is growing as mental health discussions are normalised. “Our senior leaders openly talk about how they take a wellbeing day,” says Gardner.

    In an industry that runs on rapid bid turnarounds and intense construction timetables, it is not always possible to eliminate psychological stress, but a day off can mitigate the impact.

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