Workplace accidents, injuries and industrial diseases vary with the kind of work people do. Someone had to invent powered looms before scores of cotton weavers could lose their fingers in them. Likewise, it took the invention of pneumatic power tools to create problems with vibration white finger.

Improved health and safety legislation has done much to curtail the traditional type of industrial accident, and consequently employers' liability claims – unguarded machinery is almost a thing of the past.

The next big wave of industrial illness claims will also be down to changing work patterns: hitting mainly white collar workers, they will reflect the strains of too few people trying to do too much work, with poor training and under poor management. Unless employers mend their ways, they face a tidal wave of claims for workplace stress.

A general increase in the level of stress claims seems almost inevitable. Employees today are more aware of their rights to pursue a claim against their employer. It is almost impossible to turn on the television or radio and not see or hear an advert encouraging potential claimants to come forward.

This kind of claims culture means that employers must be particularly aware of their legal duties to safeguard employees' health – they should make every effort to reduce the likelihood of workplace stress.

Stress affects each person differently. Some employees feel they benefit from being required to perform under pressure; it can bring out the best in them. Others, however, simply crumble under the strain.

At worst, excessive stress can trigger mental illness, a breakdown or induce clinical depression. These knock-on effects can make it impossible for a person to return to work and therefore can lead to significant claims for loss of future earnings. Stress can be caused by a wide range of factors, again affecting each different employee in different ways.

What brings on stress

Recent cases to come before the courts have seen stress leading to psychiatric damage caused by too much work and excessive hours, by a change of job from a back-office function to one dealing with aggressive members of the public, and by shifts from work in a team to a more isolated role.

In each case, the claim may not have arisen if the employer had handled the situation differently.

Stress is a far more subtle issue than the traditional employers' liability claim. Unlike most industrial accidents, causation is sometimes difficult to prove. It is more akin to the bad back, a crippling condition if genuine but very tricky to diagnose, which opens the door to potential malingering and bogus claims.

One common factor in the stress cases mentioned above appears to be a lack of consultation with the employee. A new job or extra work that was dumped on the person without sufficient warning or appropriate training could lead to stress. Another common cause is a domineering or bullying manager, and no way for staff to communicate their concerns to a higher level.

Providing an outlet

These factors suggests some ways to try and combat stress in the way of some basic risk

management. Firms should try and make independent counselling services available to employees. They need an outlet to discuss problems, either work or personal. Companies need to coach line managers to be more aware of stress issues. Too many companies still revel in a macho office culture that rewards survival of the fittest. While this may look good on short-term sales reports, managers need to be aware of the potential costs of long-term stress claims.

And staff should not be dropped in at the deep end. If they are to take on a new role, training should be adequate and there needs to be extra support in the early days. No matter how well managed an employer, a handful of staff may still fall victim to stress. But even then, companies can still prevent these victims turning into an insurance liability. They can run absence management programmes to keep in touch with staff. These may help coach them back to work, perhaps in a different role or on a part-time basis. Think of stress as an injury that needs to be rehabilitated and you will not go far wrong.

Stress is not a hopeless situation for employers and insurers. The courts have shown that employers who can demonstrate that they have taken steps to prevent or reduce the risk of psychiatric injury through stress or who have tried to give appropriate medical assistance may escape liability (Ramwell v Tesco Stores, 2000). Typically, larger firms are aware of the potential problems and are starting to put safeguards in place. But many smaller employers are not. This is where brokers, working together with other experts such as loss adjusters, can educate their clients to be more aware of the risk. Through advice and education they can add value to the insurance process.

A company that has tackled stress successfully will help keep its employers' liability premiums low – and perhaps more importantly, will have a happier and more productive workforce, suffering from fewer staff absences.