Elisha v Vision Australia: What It Means for Employer Liability and Mental Health Risks

| June 24, 2025

A Decision That Reshapes the Landscape

The High Court’s decision in Elisha v Vision Australia Ltd [2024] HCA 50 has changed how the law treats psychiatric injury in the context of dismissal. It confirms that employers can now be liable for psychological harm if they breach their own disciplinary processes, especially when those processes form part of the incumbent’s employment contract. 

This case does not just raise legal eyebrows. It forces employers to take a closer look at how they manage internal investigations, processes and whether their actions could have serious mental health consequences. 

What Happened in Elisha? 

Mr Elisha was terminated after an incident during a work trip. Vision Australia accused him of misconduct and dismissed him after a disciplinary process that relied on past allegations he had never been given a chance to address. 

The catch? Vision’s disciplinary procedures were written into Elisha’s employment contract. That made them legally binding. The High Court found that by not following those procedures of investigation, Vision breached the contract, and that breach caused Mr Elisha to suffer serious psychiatric injury. 

Vision was ordered to pay over 1.4 million dollars in damages.

Contractual vs Tortious Liability

Tortious liability means being legally responsible for harm caused by negligence or other wrongful conduct—even outside a contract. 

In this case, the High Court did not say that employers owe a general “tortious” duty to avoid causing psychological injury during investigations or dismissals. In other words, it did not create a new legal rule that all employers can be sued in negligence for distress caused by a flawed process. 

Instead, the ruling was based on contract law. Because the disciplinary procedure was part of the employment contract and was breached, the employer was liable. That is very different from being liable in tort—which usually applies when someone causes harm through carelessness without breaching a contract. 

But this distinction is important. If the procedures were not part of the contract, the outcome may have been different. 

Key Implications for Employers

This decision sends a clear message about procedural fairness and contractual compliance. Even though it did not change tort law, it reflects how seriously courts are beginning to treat psychological safety. Employers should:

• Audit your contracts
  If your policies or procedures are referred to in contracts, check if they are incorporated. If they are, they are enforceable. 

• Train your managers
  Ensure all decision-makers know how to follow proper procedure when conducting investigations or disciplinary processes. 

• Treat psychological risk seriously
  Even without a tort claim, failing to act fairly or thoughtfully can cause real harm and lead to real liability. 

Final Thoughts

The High Court has not gone so far as to say every flawed investigation could lead to a negligence claim or decomposable psychiatric injury. But the direction of travel is clear. Psychological harm is now firmly on the legal radar. 

For employers, this is not just a legal technicality, it is a cultural shift. A fair process is no longer just good practice. It is becoming a legal obligation with serious consequences, if ignored. 

Need help reviewing your contracts or investigation practices? At IRiQ Law, we help employers in ensuring your policies align with evolving legal standards. Contact us today to discuss how we can help your organisation manage disciplinary processes with confidence.