Mental health risks in performance management: an important discussion for employers

10 December 2018

A recent case in the Employment Court provided guidance on how an employer may conduct a performance management process while also accounting for an employee's mental health.

​​​The prevalence of mental health issues in New Zealand, and how individuals who live with mental health issues can be better supported, are topics that have heavily featured in public conversation in 2018. For employers, these issues have particular importance when determining how to provide genuine performance feedback while also providing a supportive work environment for employees who have mental health concerns.

The recent case of FGH v RST1 in the Employment Court (the Court) provides further guidance on how employers may manage these difficult situations in the context of performance management and still effectively discharge their health and safety obligations.​

An employer has a legal responsibility to take all reasonably practicable steps to prevent harm to their employees. An employer's failure to address concerns or instances of undue stress or bullying can give rise to a personal grievance under the Employment Relations Act 2000 on the basis that the employee was disadvantaged because of the employer's failure to provide a safe workplace. An employee can also make a complaint to WorkSafe New Zealand under the Health and Safety at Work Act 2015.

FGH v RST [2018] NZEmpC 60

In FGH v RST, Judge Corkill provides guidance on how an employer may conduct a performance management process while also accounting for known mental health conditions.

The case involved Ms H, a public servant who worked for RST, a government organisation. Ms H was generally an "average" performer, but over time, performance concerns arose in relation to the way that she performed her role (which involved processing applications). ​Early in the performance management process, Ms H advised RST that she had an attention-deficient disorder (ADD) and an anxiety disorder, which affected her during this process to the point where she became so ill that she was unable to attend work for some weeks. In response, RST implemented additional support measures to accommodate her needs during the performance management process, including EAP assistance, time off to attend the gym, a desk move and support from RST's business coaches.

The Court held that RST took these measures in the genuine belief that it was providing a safe workplace and counterbalancing any stress caused by the performance management process. However, it also stated that these measures were not enough to discharge RST's obligations and, in fact, Ms H's anxiety was only worsened as a result of the ongoing process. His Honour found that RST's managers had incorrectly interpreted her behaviour and inability to cope with the performance management process as her objection to being 'performance managed', when in fact her poor behaviour was a symptom of her known mental health conditions.

His Honour noted that RST maintained a harassment policy that acknowledged that unreasonable work demands could amount to covert bullying.2 Judge Corkill stated that these provisions of the policy were fair and reasonable, and imposed a duty on RST's managers to take proactive steps to address any bullying complaints. His Honour noted that there was no doubt that Ms H found her employer's scrutiny to be "unwanted, intimidating and humiliating". However, Judge Corkill also stated that legitimate criticism cannot be categorised as "unwarranted" unless it is expressed "in an unprofessional or hostile manner".3 Therefore her manager's "tenacious" approach had "not been unprofessional or hostile", and it was not correct to characterise this as bullying. The mere fact that Ms H had invoked the term "bullying" at one point during the process did not require RST to automatically commence an independent investigation under its harassment policy.4

Judge Corkill concluded that RST undertook the review of Ms H's performance with a clear understanding of her disability and knowledge of her concerns regarding her ability to perform. Despite this, RST's managers failed to take proactive steps to clarify how the review may negatively impact Ms H, and unreasonably expected her to provide updates on the state of her health.

Ultimately, the Court held that Ms H had successfully established a disadvantage grievance on the basis that RST had used a routine performance management process, and then a disciplinary process to control her behaviour. However, the Court did not accept that any unjustified disadvantage arose because of RST's failure to investigate Ms H's bullying allegations, given that the level of review from her manager was "tenacious" but still appropriate.​​

Where to from here?

This decision confirms that employers need to be aware that stress or anxiety associated with performance management processes is not necessarily counteracted by additional support measures. Employers need to consider whether the process itself causes harm, or has the potential to cause harm to the employee, especially in cases where mental health issues are identified. Once concerns are known, proactive steps need to be taken to manage risks and maintain a safe work environment. This will always involve clear and ongoing communication with the employee and a willingness to seek further information to clarify the reasons behind their poor performance. This may even include asking if the employee would agree to be examined by a medical professional to determine their capacity to work.

Our experienced employment and workplace safety team regularly advises employers on managing health and safety risks in the workplace. If you or your business has any questions regarding any of the issues raised in our article, please contact one of our team or your usual Bell Gully adviser.​

1 [2018] NZEmpC 60.

2 At [212]–[213].

3 At 287.

4 At 288.​

Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.