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Spotlight on: Northern NSW Local Health Network v Heggie [2013] NSWCA 255 – disciplinary action taken without proper consideration of the workers response is unreasonable

Published on February 21, 2025 by Mahen Manokarathas

Psychological injuries can arise in the workplace in a number of ways.

Section 11A of the Workers Compensation Action 1987 (NSW) (the 1987 Act) Act provides that no compensation is payable for a psychological injury if it is wholly or predominantly caused by reasonable action taken by the employer with respect to discipline, transfer, demotion, promotion, performance appraisal, retrenchment, dismissal, or the provision of employment benefits.

Employers and their workers compensation insurers continue to rely on section 11A of the 1987 Act to decline liability for claims for psychological injury despite a number of decisions by the Commission and Courts that have found against the employer and their workers compensation insurer and determined that the action taken by the employer was ‘unreasonable’ and therefore determining that the injured worker is entitled to workers compensation.

The case of Northern NSW Local Health Network v Heggie [2013] NSWCA 255 (NNLHN v Heggie) continues to remain the benchmark for Courts that are required to consider the reasonableness of disciplinary action taken against an employee.

Background and Facts of NNLHN v Heggie

1. Heggie was an employee of the Northern NSW Local Health Network (the Employer).
2. He faced disciplinary proceedings regarding alleged misconduct.
3. The issue arose when it was found that the decision-maker for the employer may have already formed a view on Mr. Heggie’s guilt before he had an opportunity to respond.
4. Heggie challenged the decision, arguing that he was denied procedural fairness.

Legal Issues and Principles Considered in NNLHN v Heggie

1. Procedural Fairness and the Right to be Heard

Procedural fairness (or natural justice) requires that a person affected by a decision must be given a fair opportunity to respond before an adverse decision is made.

In this case, the Court of Appeal found that Mr. Heggie was not given a genuine opportunity to respond because the decision-maker had already made up their mind before considering his response.

2. Apprehended Bias and Predetermination

A key question in the case was whether the decision-maker had already prejudged the issue before allowing Mr. Heggie to respond.

The test for apprehended bias is whether a fair-minded observer might reasonably conclude that the decision-maker was not impartial.

If a decision-maker approaches a case with a closed mind, it amounts to predetermination, which is a breach of procedural fairness.

Court Findings

The New South Wales Court of Appeal ruled in favour of Mr. Heggie, holding that:

1. The decision-maker had already made a decision before hearing Mr. Heggie’s side of the story.
2. This constituted a breach of procedural fairness.
3. A fair-minded observer would have a reasonable apprehension of bias.
4. The decision should be set aside because it was made unfairly.

Key Takeaways and Significance of NNLHN v Heggie

1. Decision-makers must have an open mind

It is not enough to allow an affected person to respond, the response must then be genuinely considered before making a final decision.

2. Predetermination invalidates a decision

If a decision-maker has already decided on an issue before hearing a response, this is a breach of natural justice.

3. Implications for employment law and administrative decision-making

This case serves as a warning for employers, disciplinary bodies, and administrative decision-makers to ensure fair processes.

If an employee is given a chance to respond, the response must be carefully considered before making a decision.

Subsequent Cases have Applied these Principles to Determine the Applicability of the Section 11A defence

The principles established in NNLHN v Heggie have been influential in subsequent legal decisions, particularly concerning the application of Section 11A of the 1987 Act.

Most recently, in Granger v State of New South Wales (NSW Police Force) [2024] NSWPIC 666 the insurer accepted that Ms. Granger has suffered a psychological injury but that her injury arose from reasonable action taken with respect to performance management and discipline. Ms. Granger alleged bullying and harassment, poorly defined job description, ostracization and marginalisation during her employment. The Personal Injury Commission considered all of the circumstances that contributed to the injury, drawing from the principles established in NNLHN v Heggie. The Commission concluded that the action was reasonable but found in favour of Ms. Granger, saying that her injury was caused by all events at work and not wholly or predominantly from performance management.

In Green v Secretary, Department of Regional NSW [2021] NSWPIC 37: The Personal Injury Commission considered the section 11A defence in the context of an employee’s claim of psychological injury due to alleged bullying and unfair treatment. The employer and their workers compensation insurer asserted that Ms. Green’s psychological injury was caused by the reasonable actions taken by the employer concerning her transfer. The Commission evaluated whether the employer’s actions, such as ending a secondment and returning the employee to her original role, constituted reasonable management action but that the employer failed to address her concerns regarding her transfer and that the insurer could not rely on section 11A; leading to the Commission finding in Ms. Green’s favour. The principles from Heggie guided the assessment of reasonableness in this context.

In Seif v Secretary, Department of Family and Community Services [2020] NSWWCCPD 6: Deputy President Wood applied the reasoning from Heggie, emphasising that the assessment of an employer’s actions should focus on the information available at the time and the reasonableness of the inquiries made. The decision highlighted that the absence of malice or negligence does not solely determine reasonableness; instead, a comprehensive evaluation of fairness and the circumstances is required.

Conclusion

The decision in NNLHN v Heggie continues to have an enduring impact in shaping the interpretation and application of the section 11A defence, guiding the Commission and Courts in balancing employer objectives with employee rights when assessing the reasonableness of management actions.

If you or someone you know has been the subject of unreasonable management action and you have suffered from a psychological injury either directly or indirectly as a result of this action, you may be entitled to workers compensation.

Contact Mahen Manokarathas at Carroll & O’Dea Lawyers for an obligation free initial consultation.

Disclosure and important note: This article is based on our own legal research and thinking. Some of its content has been drafted with the assistance of artificial intelligence. The authors have checked and approved this article, including the AI generated content, for publication.

Please note that this article does not constitute legal advice. If you are seeking professional advice on any legal matters, you can contact Carroll & O’Dea Lawyers on 1800 059 278 or via our Contact Page and one of our lawyers will be able to assist you. You can also use our Personal Injury Claim Check at any time here.