In the case of Elisha v Vision Australia Limited HCA 50, the High Court of Australia made a significant ruling on December 11, 2024. The court overturned a 115-year legal precedent, allowing workers who have been terminated in breach of their employment contract to claim damages for psychiatric injury 

Key facts of the matter are as follows: 

• Mr. Elisha was employed by Vision Australia Limited from 2006 under a written employment contract. 

• On March 23 and 24, 2015, while staying in a hotel for work, Mr. Elisha was involved in an incident where he complained about excessive noise. The hotel moved him to another room but later reported that he had been aggressive and intimidating. 

• Vision Australia Limited stood Mr. Elisha down on May 19, 2015, alleging serious misconduct. Despite Mr. Elisha’s denial, his employment was terminated on May 29, 2015. 

• Following his termination, Mr. Elisha was diagnosed with major depressive disorder and adjustment disorder with depressive mood, rendering him unable to work in the foreseeable future. 

Mr. Elisha commenced proceedings against Vision Australia Limited on August 27, 2020, in the Supreme Court of Victoria.
 

The key points of Mr Elisha’s arguments were that: 

• Breach of Contract: Mr. Elisha argued that Vision Australia Limited breached the employment contract by not following its own disciplinary policies. Specifically, the 2015 Disciplinary Procedure Policy required a formal disciplinary meeting where the employee could respond to allegations. Vision Australia failed to put a key allegation to Mr. Elisha, thus not providing him with the opportunity to respond. 

• Psychiatric Injury: Mr. Elisha claimed damages for psychiatric injury resulting from the breach of contract. He argued that the unfair and unreasonable termination process led to his major depressive disorder and adjustment disorder with depressive mood. 

The key points of Vision Australia’s arguments were that: 

• Scope of Contractual Liability: Vision Australia contended that damages for mental distress were not generally within the scope of their contractual duties. They relied on a principle from a 1909 House of Lords case, Addis v Gramophone Company Ltd, which found that mental distress was generally “unrecoverable as a head of damages” in connection with contractual relationships 

• Remoteness of Liability: Vision Australia argued that liability for psychiatric injury was too remote in the circumstances of the particular contract. They claimed that the psychiatric injury was not a foreseeable consequence of the breach of the employment contract 

The primary judge found the termination process to be “unfair, unjust, and wholly unreasonable,” breaching Vision’s disciplinary policies incorporated into the employment contract. Mr. Elisha was awarded $1,442,404.50 in damages, including an amount for psychiatric injuries. 

The High Court allowed the appeal, confirming that damages for psychiatric injury could be claimed for a breach of an employment contract arising from a flawed workplace investigation.