The Employment Relations Authority has recently instructed the Warehouse Group to pay a former employee almost $50,000 after he left his job due to intense stress and burnout.
Mr Perry had worked for Noel Leeming as an Education Specialist. He identified six unjustified grievances, leading to him suffering burnout around June of 2021. He resigned in October 2021 but said he was constructively dismissed. The essential issue for HR professionals for determination in this case was whether Mr Perry had a personal grievance for unjustified constructive dismissal due to the delay in responding to his mental health concerns in the workplace. It was found that The Warehouse Group did breach their employer duties, and Mr Perry was found to have been constructively dismissed.
Throughout his employment at Noel Leeming and The Warehouse Group Ltd, Mr Perry encountered obstacles that worsened his mental health. An example brought by Mr Perry was his budgets being set too high or too low, thus affecting his ability to make commissions. There was also an effective restructuring, and while his role was not formally involved, Mr Perry said that his role was significantly impacted due to losing after-sales support. In April 2021, Mr Perry says he began to experience severe medical symptoms related to stress. This was further exacerbated by losing the colleagues integral to meeting his sales targets, and he was left to do the tasks previously undertaken by others.
Around June 2021, Mr Perry met with a development manager for The Warehouse Group, Mr Halling. Mr Perry said the purpose of the meeting was to discuss his medical condition because he had commenced a period of sick leave and believed he was "…burnt out…". During the meeting, Mr Perry described how upset he was and explained to Mr Halling that he could not continue because he "…was broken by the workload." Mr Halling said that Mr Perry seemed stressed, but in his view, the stress was more closely related to his personal life than his work. He did not believe that Mr Perry's workload differed from the other staff. Mr Perry also said that he had attempted to access EAP services through The Warehouse Group's provider, but the therapist did not return his calls. He says following this experience, he accessed his own therapy.
On September 2021, Mr Perry attended a meeting with Mr Halling and Mr Gibson through video call to discuss Mr Perry's wellbeing. During this meeting, Mr Perry discussed his work-related stress and listed his grievances. Correspondence between them indicated that Mr Gibson was aware of the challenges but did not see them as serious, whereas Mr Perry found them incredibly serious.
On October 21 2021, Mr Perry emailed to "arrange termination of his employment with TWG effective immediately". The reasons he stated in the email for the termination of his employment are:
- The breach in his employment contract
- The injury he sustained was due to mental burnout because of the actions of the company.
Deciding whether Mr Perry was constructively dismissed
The Authority cited Auckland Shop Employees Union v Woolworths for the non-exhaustive categories of constructive dismissal which are when:
1) An employer gives an employee a choice between resigning or being dismissed
2) An employer has followed a course of conduct with a deliberate and dominant purpose of coercing the employee to resign
3) A breach of a duty by an employer causes an employee to resign
The Authority considered the third category for Mr Perry's termination of the employment relationship.
A breach of duty by an employer under the third Auckland Shop category must be so severe that it goes to the core of the contract and deprives the innocent party of its benefit. There must be a causal link between this breach and the tendering of the resignation. Additionally, the possibility of resignation in response to that conduct should be foreseeable.
Mr Perry submitted that TWL breached its duty to provide a safe working environment, and these breaches resulted in his suffering burnout. Mr Perry had made it clear to Mr Halling in June 2021 that he was considering resigning due to the mental health issues he was dealing with. While Mr Halling took some steps to alleviate pressure on Mr Perry by allowing him leave on pay "off the books", the Authority considers a fair and reasonable employer with TWL's resources would have taken more formal and proactive steps to understand Mr Perry's mental health situation at the time, which appeared to be somewhat acute around the time of the Matamata meeting.
After Mr Perry presented again suffering from burnout on September 24 2021, HR was contacted, but the continuing issue of burnout was not escalated between September 24 and October 21 2021, at which point Mr Perry resigned.
It is clear that a material reason for the resignation was the stated injury sustained due to burnout because of the company's actions. The Authority accepts that TWL knew or ought to have known Mr Perry's resignation was likely. Mr Perry's personal grievance for constructive dismissal was established, and he was entitled to consideration of remedies.
Learnings
While TWG could offer some informal and temporary solutions, the Authority held that these actions were not those of a fair and reasonable employer. The months of delay between Mr Perry raising his concerns breached TWG's duties to Mr Perry. It was reasonably foreseeable that Mr Perry's employment would be untenable unless his burnout concerns and other issues were addressed.
This determination demonstrates the importance of acting promptly and formally when an employee comes to HR with concerns of burnout. There is a positive obligation of an employer to properly investigate the causes of the mental health condition if it may be related to the work environment and ensure they take all steps possible to understand their employee's mental health situation. If this is not done formally and promptly, this may be considered a breach of the employer's duty to the employee and may provide the conditions under which the contract can be regarded as repudiated.
For further information on managing employee experience on burnout and understanding the obligations of employers, check out the Stress section of the Managing Sick Leave Issues HR Guide (Members Only), the Wellbeing HR Guide (Members Only) and the Health and Safety HR Guide (Members Only) here.
Written by HR Research Analyst Alice Croucher