Employment Update: Managing Employees with Mental Health Conditions

Gerrad Brimble, Geoff Bevan

A recent Employment Court case has highlighted that employers shouldn’t resort to a performance management process when there are signs of underlying health concerns.  Going through a standard and otherwise “legal” process might be unjustified (and therefore costly) if the employee has evident mental health issues. 

Employers who suspect or are aware of these issues need to take them into account and act on them – for example by seeking medical advice early, and / or treating the issue as a medical problem, rather than a disciplinary or misconduct situation. 

What happened?

In FGH v RST, the employee (who we will call Helen*) worked for RST, a government organisation. Concerns arose around Helen’s work, and she was subject to informal, and then formal, performance management processes.

Helen suffered from attention deficit disorder (ADD).  She told her manager Julie** about this, fairly early on in the process. Julie sought advice about how to deal with and support someone with ADD, and was advised it may be necessary to seek an assessment of Helen’s physiological health. However this didn’t happen, and no other steps were taken to obtain medical information about Helen for several months. It also transpired that Helen suffered from an anxiety disorder, although this was not disclosed to the employer until much later.

The employer met with Helen regularly to review and provide feedback about her performance, and provided support and guidance over several months. Helen found the performance improvement process very stressful, and her relationship with Julie deteriorated markedly. Helen and her support people complained at various times that she was being bullied, that she was being treated unfairly and that she was not being provided with a safe working environment. There were repeated requests to move Helen to a different team. As the performance improvement process progressed Helen’s behaviour deteriorated and she became more erratic and irrational.

Eventually, after several months of performance management Helen was signed off unfit to work. The employer sought medical information about Helen’s condition, so that it could understand the nature of her condition and what support it could provide to assist her successful return to work. In the event, Helen remained away from work and raised a personal grievance for unjustified disadvantage.


The Court held that the employer’s actions were not what a fair and reasonable employer could have done in all the circumstances. The employer knew at an early stage that Helen suffered from ADD and that obtaining medical advice was recommended. Helen’s behaviour deteriorated as the performance improvement and disciplinary processes wore on. The employer was advised on several occasions that Helen was experiencing work related stress, and that this was impacting on her health and wellbeing.

The Court said these things should have put the employer on notice that all was not well and that medical information about Helen’s condition should have been sought.

Despite that, the employer’s focus throughout remained on addressing its concerns with Helen’s performance. The employer’s response to the bullying allegations was that performance management was not bullying. Requests by Helen to move teams were denied on the basis she needed to improve consistency in her performance, and develop resilience.

The Court held that the employer should have linked Helen’s deteriorating behaviour to her health condition. It should also have asked whether the processes it was following were appropriate in light of her health condition, and sought medical advice sooner, rather than waiting several months. The employer’s failure to request that information in a timely way and its rigid adherence to routine and highly structured performance management and then disciplinary processes led the Court to conclude it had failed to provide Helen with a safe and healthy work environment.


These situations are never easy to manage, and there’s certainly no “one size fits all” answer.  Taking a disciplinary and “by the book approach” is always instinctive, because the employee’s behaviour will often amount to poor performance or (sometimes serious) misconduct.

However, a disciplinary approach will often be long, unproductive and sometimes (as this case shows) unlawful. 

In our experience these situations generally call for a humane and steady approach.  Where possible, it’s often best to either take “fault” right out of the equation, or at least put it in the back seat.  Instead, it can be better to focus on the employee’s capacity, and essentially ask whether they are medically able to do their job, to the standard required.  That may involve seeking medical information, standing the employee down (on pay for a time, but if they remain incapacitated, potentially without pay), providing counselling or even psychiatric assistance and (eventually, after following a process) dismissing for medical incapacity. 

On the other hand, if the employee’s medical issues aren’t serious enough to warrant standing them down, the employer will normally move ahead with the disciplinary process.  However that process should acknowledge and take into account the employee’s vulnerabilities.  Doing that usually won’t change the eventual outcome – dismissal is the right result if the employee can’t perform the job.  However it will often change the manner in which the employer deals with (and potentially dismisses) the employee.  That in turn can mean a substantial reduction to the degree of legal risk, and the practical likelihood of a challenge. 

In these types of scenarios the reality is that a lawful dismissal (for either incapacity or misconduct/poor performance) is virtually impossible to achieve without the commitment of significant resources and management time.  Even then, there are no guarantees.  For that reason a settlement / agreed resignation is often the best outcome, but that outcome normally requires an employer that is willing to listen and think laterally (rather than simply pursue an outcome) and willing to demonstrate a degree of generosity, both in terms of patience and (sometimes) money.  

Clearly, these views are generalised and they may or may not be applicable to your particular situation.  If issues of this nature arise - either with you personally, or in your business - we recommend you speak to us as soon as possible.

*Not her real name – the names of the parties to the case have not been published.

** Again, not her real name.