Work-related stress in Australia: The effects of legislative interventions and the cost of treatment

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Abstract

The Australian Institute of Health and Welfare data published in 2002 shows a continued rise in health care costs to the Australian community due to the growing number of people diagnosed with mental health disorders. Those mental health disorders may originate from a number of sources, including work and non-work-related factors. The so called work-related stress claims in all Australian jurisdictions are the most expensive form of workers compensation claim. In the most part this is due to the lengthy period of absence (duration) and complicated medical care which are characteristic of these claims. In Australia, in the last decade, attempts have been made to reduce the costs of compensable stress-related claims by imposing special legislative thresholds on such claims. This ‘back end’ approach to cost reduction has resulted in an array of legislative formula designed to exclude work-related stress claims. This article surveys the various legislative provisions dealing with work-related stress claims in Australia and provides an analysis of their effectiveness. A range of options are presented as alternatives to the exclusion of particular forms of work-related stress claims. The use of a corporate citizenship approach to the prevention and management of stress claims is also discussed as a proactive alternative to occupational safety and health legislative provisions and the workers compensation legislative exclusions.

Introduction

Mental health disorders have been described as “a disturbance of mood or thought that can affect behaviour and distress the person or those around them, so that the person cannot function normally” (AIHW, 2002). The International Classification of Diseases — 10th revision (ICD-10), Classification of Mental and Behavioural Disorders refers to mental disorders as ‘the existence of a clinically recognisable set of symptoms or behaviour associated in most cases as distress and with interference with personal functions’ (WHO, 1992). Commonly mental disorders affect a person's capacity to carry out their usual activities such as work and employment. Although mental disorder is of course found in the community in general there has been growing awareness of the costs of mental disorders which are caused by or contributed to by work (Dollard and Winefield, 2002). Dollard and Winefield in a survey of the effects of work or the lack of it upon public health concluded that:

Recent modern work environments are increasingly characterised by ‘too much work,’ ‘not enough work’ and ‘no work’ due to economic rationalism and local imperative. Each of these unfavourable work states, emerging themselves from the way jobs are constituted, constructed and managed, has been associated with economic and social costs (for example family issues), and increased risk of stress-related disorders and mental health problems (Dollard & Winefield, 1996).

As to the direct economic costs of mental health, Australian data, collected by the Safe Work Australia shows a general trend of increased workers compensation claims, as well as increased duration of claims and claims costs in relation to stress-related conditions and mental disorders. For example the number of claims for mental disorders (which is a proxy for work-related stress claims) in Australia increased from 5700 in 1997/8 to 8260 in 2004/5. This is against a background of generally declining claims in relation to other forms of injury and diseases suffered at work. In other words this represents not just a rise in compensable claims but a proportionate rise in mental health disorder claims as against all other workers compensation claims. Likewise for the 1997/8 to 2004/5 the median time lost for mental disorders suffered at work rose from 6.8 weeks absence per claim to 9.7 weeks per claim. The peak period was 2001/2 with a median duration per mental disorder clam of 10.6 weeks. The causes of mental stress were classified by Safe Work Australia by allocation of incidence with reference to number of mechanisms, including exposure to a traumatic event or occupational violence, harassment, work pressure, workplace bullying, suicide or attempted suicide and other factors. In effect claim types with fall into the categories of physical–mental claims (such as trauma leading to a psychological sequel), and mental–mental claims (such as harassment, workload pressure and bullying). These classifications are generally consistent with academic literature which notes the stressors may be physical or psychological and may affect physical and psychological health. A person's state of health may also act as a stressor as it may sensitise a person to other sources of stress by reducing the ability to cope (Dollard and Winefield, 2002). The leading mechanism for a mental stress claim is work pressure which also has the highest median absence from work rate of 17 weeks per claim (in 2000/1). Interestingly those workers who made claims for exposure to a traumatic event or occupational violence were absent from work for approximately half the time of their colleagues who made claims for work pressure stress (Safe Work Australia, 2009). This phenomenon might be explained given that claims arising from traumatic incidents are more readily identifiable in terms of medical causation of injury and condition as opposed to the more difficult mental–mental claims which often elicit a range of medical views on causation. Research also indicates that there seems to be little difference in the levels of work stress as between public and private sector workers (Macklin, Smith, & Dollard, 2006). Overall this data shows that the costs of stress-related/mental disorder workers compensation claims are a matter of concern for employers, workers compensation insurers and administrators. However, as will be discussed below, the approaches to dealing with these issues is fraught. In 1996 Dollard and Winefield observed that:

[t]he politics involved in conceptualising the stress problem and in recognizing psychological disorder as a leading occupational health issue in Australia has impaired advances towards prevention and treatment and the status of occupational stress as a national policy issue (Dollard & Winefield, 1996).

A review of occupational stress interventions in Australia in 2004 by Caulfield, Chang, Dollard, and Elshaug found that overall the focus in Australia had been on individual level intervention and that little data was available on organisational level interventions. Put another way, the research undertaken showed that the emphasis in relation to workplace stress had been placed on the individual coping mechanisms and strategies (2004). We argue in this paper that in the last two decades legislators have dealt with the ‘stress problem’ by increasingly reducing the potential for workers to claim compensation for work-related stress conditions. This approach has had a number of consequences. First, compensation litigation has become more complex, expensive and delayed. Second, the costs of stress claims have not been reduced by the legislative intervention. The current legislative provisions focus on excluding stress claims thereby providing few incentives for employers to implement organisational stress management interventions. Third, the increasing exclusion of claims from the workers compensation schemes must in time have some consequences for the general health system. The Heads of Workers Compensation Authorities of Australia (HWCA) has identified that the flow on or cost shift of compensation costs to the general health and social security systems seems not to have been investigated in detail to date (HWCA, 2000).1 The Australian Health care system involves a complex interaction between State and Federal governments and allegations of cost-shifting have been constant in recent years (Buckmaster & Pratt, 2005).

This paper sets out to examine some of the relationships between the policy considerations behind the legislation governing work-related stress claims and how those policies, practices and legislative provisions might impact on the use of health care facilities outside of the compensation system. This paper is in four parts. First, it will briefly outline the data on mental health disorders in Australia. This section will also look broadly at the causes of work-related stress and mental health disorders. Second it surveys the range of legislative approaches adopted in Australia in related to work-related stress. Third, it provides an analysis of the effectiveness and implications of those interventions upon employers and the broader Australian community. Finally it proposes a corporate citizenship approach that engages all stakeholders in developing proactive alternatives to the prevention and management of stress claims.

Section snippets

Mental health disorders in Australia

The starting point for consideration of issues relating to mental health in Australia is the study completed by the Australian Statistician for the Australian Bureau of Statistics in 1997 entitled the Mental Health and Wellbeing: Profile of Adults, Australia (The Health and Wellbeing Report). This study has been the reference point for numerous other contributions to the issue of mental health in Australia. The Health and Wellbeing Report found that almost one in five (18%) of Australians had a

Causes of work-related stress and mental health problems

The foregoing section has briefly outlined the incidence of mental health disorders in the Australia community and some of the issues which arise from this. The following section considers the causes of work-related stress. The European Agency for Safety and Health at Work (EASHW) has identified 10 emerging psycho-social risk factors. Emerging in this sense means new and increasing. New refers to a risk which emerges as consequence of new processes, new technologies or social and organisation

Legislative requirements for work-related stress conditions

As noted in the introduction, claims for injury, disease or disability caused or contributed to by stress at work are costly and time consuming (Medibank Private, 2008). Australian State and Territory governments have attempted to reduce these costs, usually by legislating to exclude stress-related claims. Specifically, where the worker's injury, disease or disability arises in circumstances involving the exercise of reasonable administrative, disciplinary or related powers by the employer and

Workers compensation for disease based conditions

The definition of disease is similar under most Australian compensation schemes. For example, disease is defined under the Workers Compensation and Injury Management Act 1981 (Western Australia) as “any physical or mental ailment, disorder, defect, or morbid condition whether of sudden or gradual development.” This form of words also appears in the Safety Rehabilitation and Compensation Act 1988 (Cth) and most other State and Territory provisions. In Comcare v Mooi (1991) 137 ALR 690 a decision

Discipline, disciplinary and administrative action by the employer

The Commonwealth, New South Wales, Victoria, Western Australia and ACT have similar legislative provisions which limit the scope of stress claims where the stress arises out of various management and industrial relations issues. The Commonwealth, in particular, precludes compensation where the stress arises out of reasonable disciplinary action. South Australia, Northern Territory and Tasmania however, have provisions that exclude compensation for reasonable administrative action. Queensland

Disciplinary action

In Re Rizkallah v Australian Postal Corporation (1996) 23 ALD 572 the question arose as to whether or not an employee who had received counselling in her workplace due to her poor work performance and as a consequence developed an anxiety disorder had been subject to reasonable disciplinary action. It was held that disciplinary action was an action that contained “all aspects of the system of rules for the conduct of employees and enforcement of those rules by any means.” In a very detailed

Performance appraisal

New South Wales, the Commonwealth and ACT specifically refer to performance appraisal as being a ground for excluding a stress claim. In South Australia, Northern Territory, Tasmania and Queensland a performance appraisal could be included as reasonable administrative or management action and would therefore fall outside the exclusions. As noted the South Australian and Tasmanian exclusion provisions in relation to stress refer to reasonable administrative action by the employer as being action

Unreasonable and harsh behaviour on the part of the employer

Even where it is established that the stress is related to the discipline, disciplinary or administrative action of the employer the worker may succeed with a stress claim where the behaviour of the employer is regarded as unreasonable. In Catholic Care v Wrafter, (unreported, CM (WA), 60/96, 28 October 1996) it was held that the manner in which a disciplinary meeting was held was unreasonable and harsh, therefore resulting in the worker suffering stress. This decision was followed in other

Reasonable discipline, disciplinary and administrative action by an employer

The discipline, disciplinary or administrative action taken by the employer in dealing with an employee may be regarded as reasonable; so that if it is established that the stress is predominantly related to such action the workers claim will fail. The employer's disciplinary actions will usually be reasonable where there are allegations of criminal conduct by the worker, for example, a worker failing to disclose pre-employment convictions (Fernandez v South Australia (unreported, SC (SA), No.

The Commonwealth's position since 2006

The Australian Safety and Compensation Council (now known as Safe Work Australia) commissioned a survey of the respective exclusion provision in Australian workers compensation legislation entitled Australian Workers' Compensation Law and it Application — Psychological Injury Claims (the Pearce Report). The Pearce Report concluded that the stress exclusion provisions in each jurisdiction were largely homogenous and whilst there were some semantic differences in the threshold work contribution

The effectiveness of exclusion provisions

As noted earlier in this paper, compensable stress-related claims are the most expensive form of compensation claim in almost every Australian jurisdiction. To combat the rising costs, each State and Territory has implemented legislative amendments to reduce the number of compensable stress-related claims lodged by workers. In order to assess whether such provisions have been successful, it is essential to analyse statistical data from each jurisdiction, highlighting when amendments were

Trends evident from statistical data

By analysing the statistical data from each State and Territory as set out in Fig. 4 below (which should be read with Table 1 above), it can be seen that compensable stress-related claims have been on the rise, regardless of legislative amendments being implemented. The interesting exception to this is the Commonwealth. Although in some jurisdictions, such as Tasmania, New South Wales and Queensland, implementation of amendments has seen a very slight decrease in compensable stress-related

Corporate citizenship: another approach to the prevention and management of work stress

Limiting access to stress claimants through legislative exclusions is a reductionist approach that does not encourage interventions at the organisational level that may prevent or reduce the development of stress disorders among workers. As Larsson and Betts have observed ‘changing the cost carrier by shifting costs, or excluding certain types of types of injury from compensation, however does not necessarily reduce the size of those costs and consequences’ (Larsson & Betts, 1996). Rather they

Future directions

In relation to stress-related conditions in the community, cost and liability shifting is taking place between Federal and State and Territory Governments in Australia as well as between employers, private workers compensation insurers and private and public health insurers. The positioning and re-positioning of these agencies should not have a detrimental effect on injured workers. The data discussed above establishes that compensable stress-related conditions are significant health issues in

Conclusion

This paper has discussed the prevalence of mental health disorders in Australia following the introduction of stress exclusion clauses. Requirements for the compensation of work-related disease exist within the workers compensation legislation of the various jurisdictions in Australia. The introduction of exclusion clauses pertaining to stress-related claims across all jurisdictions has limited worker access to compensation. The incidence and prevalence of stress claims since the introduction

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