Performance management and disciplinary processes are often stressful experiences for employees and can trigger or exacerbate underlying health conditions, including psychiatric illness. It is key that when employers begin this process, that they genuinely listen to their employees and make accommodations where reasonable to do so.
Under the Employment Relations Act 2000 (ERA) and the Health and Safety at Work Act 2015 (HSWA), employers are required to act in good faith and provide a safe workplace. This article provides practical guidance for employers when conducting a process with an employee who is struggling with mental health.
What obligations do employers have?
The primary duty to provide a safe workplace comes from the HSWA. Under section 36 of the HSWA, employers have an obligation to take all reasonably practicable steps to avoid harm to an employee. Harm is defined as including the infliction of any new condition, and the aggravation of any existing or underlying condition, and expressly includes mental health issues.
In April 2025, WorkSafe released practical guidance confirming that performance management and disciplinary processes can be sources of psychosocial risk that may harm workers’ mental health. Accordingly, employers must take all reasonably practicable steps to avoid inflicting or aggravating mental health conditions in their employees.
From principle to practice
In practice, it can be difficult to eliminate the inherent level of stress in performance management and disciplinary processes. Under the ERA, employer actions are assessed against the standard of a ‘fair and reasonable employer’ in all the circumstances.
FGH v RST, a landmark employment case, addressed how employers must manage performance and disciplinary processes when an employee has underlying mental health conditions. The case involved the same employee (Ms H) in two separate proceedings against RST (the employer).
2018 proceeding
The first case in 2018 involved RST initiating a performance management process (and later a disciplinary process) against Ms H, who had Attention Deficit Disorder (ADD) causing significant anxiety. During the process, Ms H disclosed her condition to RST, which responded with various support measures, including EAP assistance, gym time, a desk move, and business coaching.
Despite these genuine measures, the Court held that RST had failed to discharge its health and safety obligations. The core finding was that RST had commenced and maintained disciplinary processes without first obtaining adequate medical advice, in circumstances where it was foreseeable Ms H would continue to react adversely. Specifically:
- RST failed to proactively obtain adequate medical advice, despite recognising early in the process that such advice was needed.
- RST managers interpreted Ms H’s deteriorating behaviour and inability to cope as an objection to being performance managed, rather than as a symptom of her known ADD condition.
- Despite being aware of Ms H’s diagnosis, RST did not adequately adjust the process or seek further information about its likely impact on her.
- RST used a routine performance management and disciplinary processes to control behaviour that was, in reality, a manifestation of Ms H’s ADD condition.
The Court accordingly held that Ms H had established a personal grievance for unjustified disadvantage.
2022 proceeding
In contrast, the second case resulted in the opposite outcome. RST initiated a disciplinary process in response to disparaging social media posts Ms H had made about RST’s former lawyer and work colleagues. Ms H’s father put RST on notice that advancing the disciplinary process would have a severe effect on his daughter, as Ms H had been in residential care as a result of a serious mental health relapse in 2020 (primarily due to COVID-19 lockdowns and personal challenges). In response, RST suspended the process and placed Ms H on paid special leave while medical advice was sought.
In the meantime, Ms H went back to work on reduced hours. During this time, another incident occurred where Ms H made suicidal comments to colleagues, causing distress. RST found that she needed to be removed from the workplace as a health and safety precaution. The allegations against Ms H were updated to include this incident.
In 2021, an independent psychiatrist confirmed Ms H was fit for work and able to participate in the disciplinary process, and RST accordingly reinitiated the process. Ms H then raised claims for unjustified disadvantage, which the Employment Court dismissed on the basis that:
- RST was not aware that she had relapsed and Ms H did not provide medical information to this effect.
- RST suspended its process once it knew Ms H was unwell.
- It was fair and reasonable for RST to seek independent medical advice, and the outcome confirmed Ms H was fit to participate.
The Employment Court summarised its judgment:
“An employer is not obliged to cocoon employees from stress/harm, nor is it the guarantor of an employee’s health and safety”
This principle is not new. It echoes the Court of Appeal’s language in A-G v Gilbert, stating that “an employer does not guarantee to cocoon employees from stress and upset, nor is the employer a guarantor of the safety or health of the employee” and that what is required is “reasonable steps which are proportionate to known and avoidable risks.”
Important takeaways and practical considerations
An employee suffering from a mental health condition because of an employer-initiated process is not in itself a breach of the HSWA — but the employer must take steps to accommodate and adjust the process accordingly.
When conducting a performance management or disciplinary process with an employee suffering from a mental illness, employers might consider:
- Where the employer suspects or has been put on notice of mental health concerns, seek further medical information.
- Suspend the process until independent medical advice is obtained, confirming the employee is fit to participate.
- Enquire into whether the process can be adjusted to facilitate meaningful participation from the employee, considering their mental health.
The most important thing for employers to consider when conducting performance management or disciplinary processes is whether they are genuinely listening to their employees and making accommodations where reasonable. Employers can only act on known and avoidable risks but, simultaneously, must be careful not to turn a blind eye to warnings signs. Employers who approach these processes with empathy, flexibility, and a willingness to engage in good faith with their employee will likely be upholding their legal obligations.
For assistance or more information on the managing mental health in performance management and disciplinary process, reach out to our specialist Employment Team.
