A ‘poorly drafted’ law introduced to protect victims of stalking increasingly is being used to sue employers for harassment. Insurance Times reports on the possible fall-out for insurers

Stalking, where one person persistently intimidates and threatens another, can leave victims terrified and, in some cases, afraid for their lives.

However, until the 1990s there was little legal protection for victims. But a number of high-profile cases involving celebrities sparked a wave of new laws including, in the UK, the Protection from Harassment Act 1997. But since its introduction, the use of the loosely worded act has taken some unexpected twists.

Landmark rulings have paved the way for claimants to sue employers for harassment in cases traditionally heard in an employment tribunal or as workplace stress claims. In 2006, William Majrowksi, a former audit controller for Guy’s and St Thomas’ NHS Trust, claimed that he had been bullied by his manager and sued his employer for a breach under the Protection from Harassment Act.

The case went to the House of Lords, where it was ruled that although the act had been drawn up primarily to deal with stalking, an employer could be held vicariously liable for workplace harassment. Over the past four years, these types of claims have trickled steadily through the courts.

Claims to spiral

Former soldier Donna Rayment successfully sued the Ministry of Defence (MoD) last month after claiming that she had been subjected to harassment by male colleagues and unfairly dismissed. This case is widely seen as lowering the threshold for the type of behaviour that constitutes workplace harassment. Now many are predicting that insurers should become primed for a greater spiral of employer liability claims.

Beachcroft partner Paula Jefferson calls the act “quite an interesting piece of legislation”, being introduced for one purpose and often used for another. She explains that while the “poorly drafted” act was introduced to curb stalking, it does not actually use this precise word – offering an unintended loophole for other liabilities.

Moreover, there are a number of advantages for claimants to bring a harassment claim against their employer instead of using the traditional route of a workplace stress claim. In 2002, the courts laid down stringent criteria for such claims, making them more difficult for claimants to pursue. This in turn sparked an interest in the ambiguous wording of the act.

Consequently, harassment claims are now often tagged on to workplace stress claims or used as an alternative. “Claimant solicitors had to become more imaginative about how they pursue stress-at-work claims … and fair play to the claimant solicitor who thought of using the act. It is quite an unusual piece of legislation to use,” says Berrymans Lace Mawer employment partner Vanessa Latham.

First, new principles set by the court for workplace stress claims state that claimants need to prove they have sustained a psychiatric injury. But this is not necessary in a harassment claim. Cunningham Lindsey’s complex loss specialist Craig Faulkner says: “Section three of the act merely refers to anxiety or stress – that means the usual criteria for injury claims are bypassed. You don’t have to show an identifiable psychiatric injury. Anxiety would fall short of a recognised psychiatric condition, but claimants are still entitled to damages as a result of that.”

Other benefits

Further, if claimants have sustained a psychiatric injury, they do not need to prove that employers should have foreseen this – another contrast to the standards set for workplace stress claims.

And, perhaps most importantly, the limitation period for bringing a claim for harassment is six years, as opposed to just three years for claims for stress. This presents a big problem for insurers. “Bringing a claim after a longer passage of time makes it all the more difficult to investigate, particularly if the alleged harassment wasn’t raised at the time,” Jefferson says. “It is hard enough investigating something three years after the event, but trying to investigate something six years later is very, very difficult.”

The act can also be seen as an attractive alternative to a tribunal, the traditional site for thrashing out workplace disputes and allegations of unfair dismissal. In an employment tribunal, the limitation period for bringing forward claims is generally only three months. Plus, taking harassment claims through the courts instead of opting for a tribunal is much more attractive financially to both solicitors and claimants.

Stephensons partner and head of insurance Andrew Welch says that while a lawyer takes contingency fees from the claimant’s settlement in a tribunal, he or she can recover legal costs from the other side if successful in the courts. “It makes it more attractive for claimant solicitors, and therefore it will be an attractive route for the client. They will find solicitors that are happy to take them on. Plus, the client loses nothing out of the damages,” he says.

Faulkner believes that the courts need to clarify the act. “It was not brought in to cover an employment situation. That is adequately covered by employment legislation.” He says that while damages are often capped at a certain level in an employment tribunal, there is no limit imposed on the courts.

What’s more, Latham believes that there has been a softening in the attitude of the courts towards harassment claims. She points out that the standards set by the Majrowksi case mean the courts have to ensure the harassment can be regarded as ‘criminal’ – that the person could have been prosecuted successfully in a criminal case.

Secondly, the court has to agree the behaviour is ‘unacceptable’ and ‘oppressive’. But Latham points out that less emphasis was placed on the criminal test last year, in the case of Veakins v Kier Islington, in which an electrician successfully sued her employer after she was bullied by a supervisor.

The courts did not apply the criminal liability test when Rayment took on the MoD. “I think that fewer courts will be applying the criminal liability test and the emphasis will be more on whether the behaviour is ‘oppressive’ or ‘unacceptable’,” Latham says. “I certainly think we are going to see more claims on the back of the Rayment and Veakins cases because claimants are going to see a weakening of the approach by the courts.”

‘Brokers must educate their clients’

Hiscox head of professions and specialty commercial John Heaney says insurers should keep an eye on developments. “There is potential for employees to bring actions against their employers. Brokers must educate their clients on the appropriate level of employers’ liability and employment practices liability cover.”

However, Allianz claims director Roy Hebburn believes the threshold of behaviour set by courts remains a tough hurdle for many claimants. “There has been some pretty serious and sustained activity on the part of the employee to create a liability and, in the majority of workplaces, that is not going to be tolerated because any reasonable employer would take action against them,” he says.

“The level of proof has to be oppressive and unacceptable behaviour and that is a high barrier to overcome.”

Even if few claims actually succeed, however, the expected increase in notifications will push up costs for insurers. “There is potential for more claims. Even if they don’t go to trial, even if there are no damages paid, it still means an increase in costs. At the end of the day, that increases premiums,” Jefferson says.

Zurich’s technical claims manager, Alan Hunter, believes that claimant solicitors have become more adept at presenting behaviours that match the criteria for harassment. “People now understand what the test is and are able to articulate in evidence a much clearer picture of the sustained campaign that some individuals are on the receiving end of.”

Furthermore, some speculate that the act could be further extended. Welch suggests that an employer could one day even be held liable for stalking; the offence that it was originally designed to tackle.

For example, he argues that if a staff member gets a client’s address and phone number through work and then harasses him or her outside business hours, liability becomes a thorny issue. “The question is whether the employer would be liable because the employee acquired the information to engage in that activity via their employment,” he says.

Additional costs

Welch adds that if the employer successfully staves off the claim by reasonably disputing liability outside work hours, insurers will still incur additional costs by having to investigate and defend the claim.

Elsewhere, Jefferson thinks the act could one day be used in public liability claims. “Let’s say a child is being bullied in school by another child … there might be an argument that the school might have some liability,” she says.

Insurers have little inkling of what liabilities may yet emerge, however. As Welch points out: “It is developing law. Who knows what is going to happen?” IT