The High Court of Australia has awarded major damages of $1.4m to a worker who suffered psychiatric injury in the form of a major depressive disorder after having his employment “wrongly’ terminated for serious misconduct in circumstances in which the then employer failed to comply with its own disciplinary procedures and thus was held liable for breach of contract.
At common law, damages for breach of contract are ordinarily limited to those consequences, both financial and non-financial which would be likely to be suffered with a range of the reasonable expectations of the parties, in other words could not reasonable be contemplated by the parties as a consequence of a breach of contract.
The High Court observed
“It has been described as a “social reality” that a person’s employment “is usually one of the most important things in his or her life. It gives not only a livelihood but an occupation, an identity and a sense of self-esteem.” An unfair process of termination for alleged misconduct could affect all three of those interests; ie, a person’s livelihood, identity and self-esteem.”
It might be thought that an unfair dismissal, certainly an unlawful dismissal within the meaning for example of the Fair Work Act, might also one day be held to not be contemplated by the “reasonable expectations of the employer and the employee” and therefore not sanctioned by the express or implied terms of an employment contract and consequently a risk of attracting common law damages; but that is an argument for another day.
Elisha v Vision Australia Ltd [2024] HCA 50