Employer liability for intentional harm by a manager
Highlighting the breadth of an employer’s responsibility for bullying at work, Allianz has been held liable by a NSW court for the deliberate actions of
a senior manager who verbally and physically bullied a claimant for over 14 months, even though the court found that Allianz was not negligent.
Mr Ward was employed by Allianz after leaving school and by 2003 was promoted to account manager. A new State Manager, Mr Smith, was aggressive towards
staff and on many occasions yelled at Mr Ward, telling him he was hopeless, berating him for his performance and even slapping him hard across the
back of the head and shoulder charging him as he walked past. The behaviour continued for 14 months.
Mr Ward’s behaviour was investigated after a complaint by another employee and Mr Smith was transferred and later left Allianz’s employ.
Some years later Mr Ward began to struggle with his work, took leave and did not return to his position. He claimed injury damages for various psychological
conditions he claimed arose from Mr Smith’s bullying for which Allianz should be vicariously liable. Allianz did not challenge the behaviour but argued
it was not negligent, and also that it could not be held liable for the physical abuse by Mr Smith as they did not authorise it.
Mr Ward’s claim for intentional harm required him to prove that Mr Smith’s conduct was ‘calculated’ to cause harm, including psychological injury. The
court accepted that some form of psychiatric condition was a likely consequence of Mr Smith’s conduct to which Mr Smith was ‘recklessly indifferent’.
The court also found that the physical abuse by Mr Smith occurred when he appeared to be in a position of exercising authority vested in him by Allianz
as State Manager and so Allianz was liable for his deliberate actions.
Although it did not change the outcome, the court found that Allianz was not negligent as it had a system to deal with bullying, and enforced the system
by removing Mr Smith after the complaint about his behaviour was received, and at the time there was no indication that Mr Ward was suffering from
any psychiatric effects.
Judgement was entered against Allianz for over $1.3 million plus costs.
Implications and Actions
This case makes it clear that an employer is expected to protect employees from deliberate conduct connected with the exercise of a manager’s authority,
as well as negligent behaviour.
A surprising aspect of the history is that the extreme elements of behaviour by Mr Ward could continue for as long as 14 months in an office environment
before a complaint came to the attention of other management for action.
To reduce the risks of claims employers should:
have an effective workplace policy to manage the risks of bullying;
encourage a culture by which workers are able to voice complaints early; and
investigate and deal with complaints efficiently and fairly to all parties so there is confidence in the system.