Yesterday was National Stress Awareness Day. It must be having some effect because the threat of stress claims is not as great as it was just 12 months ago. But the Insurance Times round table, sponsored by Weightman Vizards, says it is too early for complacency. Andy Cook chairs

The panel

  • Andy Cook, editor, Insurance Times

  • Mick Flannigan, senior claims controller, Zurich Municipal

  • Rob Smart, deputy technical claims manager, St Paul

  • Chris Wait, underwriting director, Temple Legal Protection

  • Ruth Roberts, UK and Ireland casualty claims manager, Chubb

  • Innes Wood, partner, Weightman Vizards

  • Suzanne Goodband, health industry group leader, Deloitte & Touche

  • Michael Edge, consultant, Weightman Vizards

    In February, the Court of Appeal heard the case of Penelope Hatton v Terence Sutherland. It was a landmark stress case. Hatton took on extra responsibilities in 1993 and then suffered frequent illnesses until 1995 when she was signed off work because of depression and debility. She never returned.

    In August 2000, Liverpool County Court awarded her £90,765. Judge Trigger said that her absences were a warning light to her employer. However, the Court of Appeal disagreed. It found that no one could be blamed.

    The Hatton judgment and three others heard at the same time were due to see the end of the stress claim boom - in 1999, the TUC reported 515 workplace stress claims and in 2000, the union body reported 6,428 cases. Is the industry out of the woods? The Weighman Vizards/Insurance Times round table met to discuss the issue.

    Mick Flannigan: Before Hatton took place we were fighting stress claims tooth and nail and were managing to resist successfully about 85% of stress claims. The Hatton decision has now given us the encouragement to dig in even more firmly. However, within two weeks of the Court of Appeal decision we defended a case in Canterbury County Court, Croft v Broadstairs Town Council, which should've been a stone-cold certain winner for us... and managed to lose it. We went down for £197,000 and immediately attempted to appeal it. Permission to appeal has been refused and that rejection has come from none other than Lady Justice Brenda Hale who was the one who gave us 16 propositions [the 16 propositions, which came from Hatton, set down exactly what the liability criteria are for stress claims] in the first place.

    Even though the number of successful claims is falling, the fact is that investigative costs still have to be incurred, even if we think that we're on stronger ground than ever in defending stress claims. Because of the civil procedure reforms two or three years ago all of these matters have to be investigated upfront in anticipation that the claim is going to proceed all the way to trial, so we're still sending claims inspectors all around the country to investigate these claims or potential claims, even if we're hoping that they're going to fall through.

    I was somewhat unclear about one of the 16 propositions in particular. Hale said: `If the employer provides a confidential advisory service to its employees, there should never be a liability'. I think that is seriously questionable, because for example, at Zurich Municipal, we use an independent outfit called EAR, and you can phone them up and they will lend you an ear and you can pour out your troubles to them. But I fail to see how the provision of a confidential advisory service can override outright negligence, in breach of duty, so how can I be delicate? I can't. If my boss has treated me like shit and is messing me about with impossible deadlines and he can see that I'm visibly wilting and I'm becoming ill through that, then he's clearly being unreasonable and negligent, and it isn't enough to say: "Well you know we provide this counselling service, this advisory service, why don't you have a word with them?" That just isn't enough to overcome legal liability I don't think.

    Rob Smart: We've seen a significant drop post-Hatton, which is very fortuitous. Probably about, I haven't got exact numbers, but I guess around 50% in terms of new stress notifications.

    Now people may seek to bring in cases through the discriminatory route, race discrimination, sex discrimination, disability discrimination, what have you, and of course tribunals have the power to award damages in those scenarios, so in the past we have seen an overlap between us as employers' liability (EL) insurers, and employment practice insurers. Where there is an element of personal injury arising out of stress, the EL policy can be called upon to respond. It will be interesting to see what happens when the Lords hear Barber [Barber v Somerset County Council - Barber failed to tell his employers of his worsening condition]. If it goes our way then I think it won't be the end of stress claims, I think the level at which they're coming in at the moment may continue, but I think other routes will be taken. We're hopeful that the Lords will vindicate what happened in the Court of Appeal and we will escape liability.

    Chris Wait: If we were seeing ten or 20 a week then, we'd be seeing four a week now. This is our money at stake - do we run with this or not? I see over-promotion features in far too many claims, where individuals want higher pay, they need it for bigger houses, new and bigger cars and things like that. It's something that needs to be monitored.

    I would say that EL insurers have a big part to play in this. I'd like to see a lot more risk management in the market and the tests that are laid down. It is not beyond the wit of the ABI to produce a fact sheet for individual EL insurers to use.

    Ruth Roberts: Since Hatton certainly, we have seen a complete downturn in the number of cases, we had a glut just prior to Hatton, but then everything went on hold, you could see solicitors were regrouping, they were trying to think of new ways of formulating these cases. What we have seen since, and they seem to be on the increase, are cases that are presented through the tribunals.

    The problem for us is getting our hands on those before the insurers just settle them. An awful lot of them contain allegations of bullying, that's where we're seeing the increase, and it seems to be the people who have just got standard performance issues are immediately saying, "Well as soon as my employer gets on my back and says well your work's not up to scratch, that constitutes bullying," and then they try to pursue it that way.

    One issue that has come out of that for us is the settlement agreements that insureds are signing prior to going to a tribunal. In a lot of these cases they don't want them to run, there's obviously a cost issue, they may not have insurance backing them so they're negotiating out before the actual tribunal themselves. As I understand it, ACAS now issues this standard form, which is like a settlement agreement, and Innes Wood and I unfortunately had a very bad experience on a specific case of Chubb on these agreements, where they will confirm that the settlement covers the employment practices issues, but it will specifically exclude any settlement for personal injury claims at a later date. In a classic case that we're working on at the moment we have a situation where someone has alleged sexual harassment, they served medical evidence as part of their tribunal proceedings, both on physical as well as psychological injuries. The insured settled the claim, signed one of these standard documents and as soon as that was done and the cheque cashed, we had the EL claim come in.

    We are now looking at potentially having to make a reasonably substantial payment to the lady in question, even though she has already had damages for both physical and emotional injuries.

    We're trying to do a lot of work with our insureds at the outset, to say to them when we give them EL cover initially: "If you have a case come in where there is a potential stress element, please talk to us before you settle." Although we've got no direct control over it, our underwriters and our loss control team are now doing specific stress surveys with clients and actually working with them to try and get protocols in place so we can try to control that. The other side we've seen an increase on is requests for pre-action discovery, and we've had a very good success rate.

    Innes Wood: We have had two straightforward stress cases, Pratley v Surrey County Council, and Simpson v Surrey County Council; in Pratley, the important thing was that the judge accepted work can cause stress. But that is not the key issue, the key issue is when they're that stressed, they then go on to cause the injury. There has to be a real risk of that stress causing the injury and you have to be aware of that and have some knowledge that that's a real risk that's going to happen.

    Suzanne Goodband: The one question that I'd have to ask about the work relationship most people have with their employers today is: How feasible is it to expect an employee to report that [stress] and what effect might that report have on somebody's future career prospects.

    Michael Edge: Hatton per se is not affecting the number of employment tribunal claims and that's because different considerations apply. What you are looking at is entirely different to the way in which employment tribunals look at particular claims. But what we are seeing is that stress is being added as an adjunct to so many more claims, particularly unfair dismissal claims, after the Johnson v Unisys Ltd House of Lords decision last year.

    Policies I'd have to stress are very, very important to employment tribunals. I would have thought that the same considerations would spill over into the ordinary civil courts. And they're particularly important because a harassment policy, for instance, can tell employees what is acceptable behaviour and what is not. Grievance policies are very important, because they explain to people how they go about resolving the problems that they have, and where to turn. And if you haven't spelled it out for them, many employees just don't know what to do and so the problem gets exacerbated.

    It is not a defence per se to have a counselling system, but there are many reports that show that, where you have a counselling service, you don't get the claims.

    Mick Flannigan: I think we've got to go right back and change the worth ethic in this country actually, because it is sad to say that if somebody confesses to his boss that he's suffering, he's likely to be written off as a bit of a wimp, can't stand the pace, he's either been over-promoted or just can't manage.

    Rob Smart: We do actively encourage and perform risk management visits to all our insureds, we have a team of risk managers around the company who go and see local authorities and other clients, and one of the avenues they look at is stress.

    Ruth Roberts: As we've highlighted, it's all very well having a policy, but do you enforce it? What are the procedures there? Can we talk to staff rather than just the risk manager who we might be seeing, to see what's going on? And in real terms, you can tell a lot just by walking around an office and seeing if people are surrounded by paper and slumped over their desks, rather than being told by the risk manager everything's perfect. We're trying to take a more proactive approach, much more as you're suggesting, to try to really work with these people to see what are they doing, rather than just paying lip service to it.

    Innes Wood:What insureds need to look at are absenteeism records and not just for a potential claimant, but for that particular area of work; can we compare other people who are doing that kind of job, are they having a lot of days off work as well, is there a pattern there that you can look at? And that's where you need to have some kind of co-ordination with the HR department on a regular basis, just to review who is off and for what reason. And also it's not just the claimant who will be making a complaint, it could be someone else on his behalf.

    Suzanne Goodband: The reality is that stress is probably an adjustment to a set of circumstances, of which those clinical factors are relevant, but not the core necessarily. It's the coping mechanisms that are important.

    There's then treatment and that's where the Department of Health guidance starts to come in about who is the best qualified. What sort of qualifications do we need to see? What sort of levels of competence? You can register as a counsellor with two weeks training, very different to a psychotherapist who has seven years training.

    And we need some sort of health check for organisations and insurance companies.

    Michael Edge: I can feel the stress rising. I would recommend one thing to you, because we recommend this to our employer clients, and it's equally applicable to insurers dealing with risk management with their insured. Step right back to recruitment.

    Try to persuade them not to recruit potential problems; psychometric testing is quite common for more senior jobs, you should be looking for stress, because if you have a stressful position you're trying to fill, you don't want somebody who's going to manifest stress problems, you've bought yourself a problem.

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