Performance Management and the Impact of Mental Health Issues

10 December 2018

DianaMore and more frequently we are experiencing employees claiming stress as reason for being unable to participate in or complete a performance management process.  In the worst case scenario the employee may also claim they are being bullied as a result of the process.  This can be extremely frustrating for an employer, as the process may be brought to a halt without any resolution being achieved for either party.

There are, however, occasions where an employee may have a very real health issue, and the employer must take this seriously.

A recent decision of the Employment Court considered what steps an employer must take to manage an employee’s mental health issues in the context of a legitimate performance improvement process (PIP), in order to meet its obligations under the Health & Safety at Work Act 2015 (HSWA).

In FGH V RST, H worked for a government organisation processing and reviewing applications, termed “approval work”.  She had attention deficit disorder (ADD) and also suffered from an anxiety disorder which affected her work performance and her ability to cope with performance management.  She raised a disadvantage grievance on the basis that her employer had failed to provide a safe work environment while dealing with performance issues.  H claimed she was bullied and that RST failed to properly investigate those allegations.  The Authority dismissed her claims and she appealed that decision in the Employment Court.

The timeline provides some guidance for employers:





H commences permanent employment.  Performance was satisfactory.



H undergoes a PIP in June, which lead to a warning in October, and another PIP in November.



Performance improves and was again satisfactory.


May 2015

Performance concerns arise again. H’s manager, Ms B commences another PIP.  Ms J takes over from Ms B as temporary team leader.  Ms B was aware that H had trouble sleeping and focusing on tasks and that she was on medication to treat anxiety, but did not pass this information to Ms J.


Jul 2015

Ms J is concerned that H is not complying with the action plan and decides to limit her duties and her eligibility for overtime work.  In response, Ms H informs Ms J that she suffers from ADD.  Ms J then seeks advice from EAP around how to manage an employee with ADD.


Sep 2015

H has meeting with management (Mr H attends as support).  She says she is unhappy in her role, is not sleeping and fears she will “crack” or fall ill from the pressure of the process.


Early Oct 2015

H certified as medically unfit to work.  Management are again told that H is suffering from lack of sleep and that the stress and anxiety from the way she was being managed are impacting her health.  Mr H also raises with management health and safety concerns emphasising that all employees were entitled to a safe workplace.


Mid Oct 2015

There is a formal mediation to address performance management concerns and H’s stress caused by lack of clear timeframes and encouragement as to her progress.  It is agreed that: H would be placed on a three-month formal performance improvement plan; she would recommence approval work at that time; and upon successful completion of one month of performance management, H would again be eligible for overtime.  It was recorded in the plan that H was receiving treatment for an anxiety disorder.


Early 2016

H’s anxiety and stress was not alleviated over the seven month period.  H felt confused about what was expected from her, the steps in the process, and her time for achieving them.  She felt micromanaged and unsupported by management, particularly by her manager Ms J.

H raised a disadvantage grievance.


What the Court found

The Court held that from at least July 2015, RST was required to manage Ms H’s ADD and anxiety disorder as far as is reasonably practicable.

RST argued that it took all reasonably practicable steps in relation to Ms H’s anxiety around the performance management process itself and the impact of her ADD on her work performance.  In relation to the performance management process RST took a number of steps, including extending Ms H’s time for responding to steps in the process; providing discussion points ahead of meetings; and postponing and reprioritising meetings to suit Ms H’s needs.

To improve Ms H’s work performance and manage her ADD and anxiety, Ms H was: offered EAP counselling; allowed time to attend the gym; provided support from business coaches; and allowed to move desks and to spend time on another floor when needed.

The Court agreed that these were genuine and reasonable steps to reduce Ms H’s work-related stress BUT that they were not sufficient to discharge RST’s statutory and contractual obligations.  The Court did not doubt that the managers genuinely believed these were all fair steps, but, even with these steps, Ms H continued displaying obvious signs of heightened anxiety.  The Court concluded that RST management believed Ms H’s reactions to, and inability to cope with, the process stemmed from the fact she didn’t like being performance-managed when in reality her actions (such as absenteeism and outbursts) were symptoms of her anxiety disorder.

Ultimately, the Court concluded that RST used a routine performance management process, and then disciplinary processes, to control Ms H’s adverse behaviour arising from her ADD condition and anxiety.  The Court held that a fair and reasonable employer in RST’s position would have requested further medical information and assisted Ms H in obtaining this, not simply expected Ms H to provide medical evidence.

Take Outs!

On first read this decision seems somewhat harsh for the employer.

The Court appears to be sending a signal that the employer’s focus first should have been on understanding Ms H’s mental health issue rather than (or before) running or continuing a standard performance management process and managing the stress as a natural consequence of the process.

Where mental health issues are known to the employer, or suspected, the employer will need to try and get to the bottom of the issue, which may include requesting the employee to undergo a medical examination (at the employer’s cost and check your agreement provisions), and then determining the employee’s fitness or capacity to perform work duties.  If the employer is able to identify or clarify any mental health issues and then is able to provide some measures to mitigate the situation, this may also resolve or help prevent any performance issues.

Performance management processes require sensitivity and clear, effective management.  While employees may feel scrutinised and singled out, reasonable management actions delivered in a reasonable way do not amount to workplace bullying (see Worksafe guidelines).  However, where mental health issues are, or become apparent, the standard imposed on employers by HSWA is onerous.  Measures taken to manage risks to an employee’s health must be tailored for the circumstances and situation of the employee.

If you find yourself facing this difficult situation, please seek advice from our legal team before embarking on a formal process - we would much prefer to be your fence at the top rather than the ambulance at the bottom of the increasingly expensive personal grievance crevasse!


Diana Hudson | Managing Solicitor


Legal Team


Diana Hudson | Managing Solicitor | 03 456 1804 | 021 816 469 |

David Browne | Solicitor | 03 456 1812 | 021 225 6938 |

Grant Walker | Advocate | 03 455 5165 |

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