Compensation litigation is a hot issue – every day, cases of workers suing their employers are under the media spotlight, from stressed secretaries to bullied bankers.
Stress-related personal injury claims are big business and there's no doubt that the advent of no win, no fee claims firms encouraging workers to pursue lawsuits is hitting employers hard in the pocket.
Recent years have seen record payouts. One teacher won £250,000 from Newport
Education Authority after suffering two nervous breakdowns teaching special needs children without proper back-up.
Another major factor is that stress at work seems to be on the rise. A recent survey of more than 1,000 workers by insurer Unum showed that two-thirds felt under pressure at work. More than 73% said their performance in the workplace had suffered because of the stress they experienced.
All of this is of great concern to insurers, who are already seeing their balance sheets hit by rising claims costs in other areas.
But, in an industry in which workers are feeling the strain of poor results and a spate of mergers and acquisitions, how much are insurers focusing on the needs of their own staff?
What is stress?
Most of us have felt pressured in the workplace before. In moderate doses, stress can be good, producing adrenaline, which helps to focus the mind and senses. But, according to research by the Cooper Institute in the US, when the cause of the stress is persistent, it can turn into distress and can manifest itself physically, as the adrenaline builds up in the body and is not released.
Stress-related symptoms can range from recurring colds and flu, to headaches and addictive behaviour.
“Physical symptoms of stress often become worse if the stress continues to build,” the report says. “Chronic stress also can lead to more serious conditions such as heart disease, depression, alcoholism and cancer.”
Figures from the Trades Union Congress (TUC) show that two-thirds of 9,000 safety representatives questioned believed stress to be the number one concern in the workplace.
The TUC found that one of the most common causes was work overload, particularly when employees found their ability to make their own decisions was hindered.
Training is another key factor. When employees are assigned to a new position without adequate training, this leads to feelings of uncertainty and failure.
Other causes include cuts in staff, shift work and bullying.
Problems for employers
A problem from companies' point of view is employee absence. According to PPP Healthcare, in the case of stress-related illnesses, work absence lasts an average of 7.8 days and costs employers a total of £10.7bn a year, or £434 per individual. White-collar workers are fast catching up with their blue-collar counterparts when it comes to absence, recording an average of 6.3 days absence, compared to blue-collar workers' 9.5 days.
Some companies are spending up to 20% of their payroll costs on ill health (the figure for well managed companies is 8%). However, ill-health costs are not measured on most companies' balance sheets.
PPP outlines five measures that would allow companies to better manage worker absence. This includes collecting information on how many times employees require more than three days absence, how many people were made ill by work, how many retired for health reasons, time lost due to sickness and totting up the total costs.
Doing this also helps the company to meet their duty to safeguard employees' health and safety.
Under the EU Framework Directive 89/391/EEC, employers have “a duty to ensure the safety and health of workers in every aspect related to their work”. The directive sets out that employers must avoid and evaluate avoidable risks, combat the risks at source and adapt work to the individual.
What are insurers doing?
Some insurers are already taking the issue of stress very seriously, particularly after recent mergers.
Fortis Insurance tries to ensure that employees can cope with their role, and offers a time management course for anyone to take part in.
Norwich Union has several measures in place to support employees. HR director John Ainley says:
“Obviously mergers are a stressful time for people, as they are worried about keeping their jobs, which is the biggest stress you can have in the workplace.”
Norwich Union offers staff a free 24-hour counselling service, where they can talk about any problems, either in or out of the workplace.
But Ainley adds that it is important for a company to make sure that stress levels do not reach unmanageable proportions. The company offers training programmes to help people to cope with their workloads and there are also courses for managers on building leadership skills.
“We have to measure how people are feeling about their jobs and understand how to deal with it,” says Ainley. “The solution is to design jobs to fit people, instead of the other way round.”
Monitoring employee absence and why people leave is a key part of this. “Staff retention is very important – losing 1% of staff can cost the company £1m a year and it is important for managers to see that it matters and the costs of recruiting and training new people add up,” he says. “Compensation culture is being encouraged, and legislation also states that we must look after people.”
The long-term view
Stress prevention policies are a good thing when it comes to keeping costs down, by avoiding long absences from work and making sure that employees are not overworked and optimally efficient.
The new wave of industrial illness claims look to be here to stay and now is the time for employers to implement stress prevention, or risk massive lawsuits.
