Be respectful and maintain relationships when dealing with mental health issues

FWC (Mr Luke Wilson (nee Miller) v Services Australia [2025] FWC 3328) recently awarded $33,348.62 plus superannuation to a former employee after finding his resignation amounted to a constructive dismissal. FWC ruled the employer should have given the employee “space” to recover his mental health before treating his resignation as final.

The employee experienced worsening mental health following workplace disputes and the temporary closure of his office for mould treatment. Despite clear signs of distress—including emails and testimony confirming he was “in a very dark place”—the employer continued engaging with him, which FWC found exacerbated his condition.

Although the employee was described as “difficult” and “irrational,” FWC found that the employer failed to clarify his intention to resign and gave him “no effective or real choice” due to financial pressure and deteriorating health. The termination was deemed harsh, given his demonstrated capacity to contribute positively when well.

Our Take

There are usually no ‘winners’ in cases like this. Mental health issues require a measured, structured response. They are tough on the employee and the managers who are required to deal with them. The widespread fallout is usually evident to an outside observer and difficult to rationalise from those caught up in the ‘coalface’ of the dispute.

Results with respect is achievable even when an employee is challenging to manage. FWC has regularly found in other decisions that an employee cannot unilaterally derail processes designed to determine capacity.

Employers must avoid actions that exacerbate a known mental health condition. Sometimes employers need to more fully weigh up the need to ‘finish things now’ against the benefits of ‘one more request for compliance/clarity’ or further medical evidence to remove any lingering doubt.

Procedural fairness isn’t just about process—it’s about empathy and risk management. When mental health is in play, engagement strategies matter as much as compliance.

Action Items

1. Identify Warning Signs Early -

   Train managers to recognise indicators of mental distress and escalate appropriately.

2. Pause Before Accepting Resignation -

   If an employee resigns under stress, allow a cooling-off period and confirm intent after reasonable time.

3. Limit Engagement During Crisis -

   Avoid excessive communication that may exacerbate mental health issues. Assign a single point of contact and ensure communication is in line with the recommended medical evidence.

4. Document All Interactions -

   Keep clear records of conversations, emails, and steps taken to support the employee.

5. Review Mental Health Protocols -

   Ensure policies include guidance on handling resignations linked to psychological distress.

Edge Legal

Relationships. Respect. Results