A Canberra bureaucrat who claims she was bullied through forced private counselling sessions with her boss has lost her fight for workers' compensation.
A tribunal last month found Maria Martinez's employment with the National Indigenous Cadet Program significantly contributed to her mental illness.
But her bid for compensation was rejected because her manager had followed reasonable administrative actions.
Ms Martinez who applied for workers' compensation in November 2010, alleging she was patronised, bullied, made to feel stupid, and work colleagues spoke ill of her.
She claimed the Department of Education, Employment and Workplace Relations acted unreasonably by initiating one-on-one meetings between her and her superior to manage her poor performance.
Commonwealth public service workplace insurer Comcare twice rejected the claim because it thought management had been reasonable in attempting to improve her work.
But the Administrative Appeals Tribunal in 2012 found DEEWR's approach had been insensitive to Ms Martinez and humiliated her.
The tribunal acknowledged the department had been correct to offer leave, counselling and support to improve her work.
But it decided the personalised talks were unreasonable and contributed to the public servant's adjustment disorder.
Comcare launched a Federal Court challenge, which overturned the tribunal's findings.
The court found the AAT failed to correctly interpret the insurer's guide to bullying that says "management action is reasonable if conducted fairly, transparently and in line with approved processes".
Justice Alan Robertson said an employee's reaction cannot determine whether the management action is reasonable or not and that "some degree of humiliation may often be a consequence of a manager exercising his or her legitimate authority at work".
The matter was remitted to the tribunal for further consideration.
In a decision published last week, Member Simon Webb concluded that Ms Martinez suffered from a disease to which her employment contributed to a significant degree.
“Her disease resulted, in part at least, from actions [her supervisor] took from 21 June 2010 to 17 September 2010 in respect of Ms Martinez's performance,” Mr Webb wrote.
“The particular actions ... are within the meaning of reasonable administrative actions undertaken in a reasonable manner in respect of her employment.
“It follows that Ms Martinez's disease is not within the meaning of an injury for the purposes of the Act, and she is not entitled to compensation.”
The member affirmed Comcare's original decision.