The courts are coming round to the idea that stress is part of life and not an illness. But a pending House of Lords appeal may shift responsibility back to employers. Mark Fowles weighs the arguments
In the aftermath of the decision of the Court of Appeal in the four test cases Hatton v Sutherland, it seemed that you could not move for pundits and plaudits. Most were breathing collective and pent-up sighs of relief at the robust dismissal of three of the four claims and the setting of limiting guidelines for future employers' liability (EL) claims.
That decision may have been lamented by certain claimant lawyers and trade union representatives - but met with apparently unanimous approval in the press.
The Court of Appeal handed down its decision in the same week that the TUC reported that the number of work-related stress claims had increased twelve-fold in the previous year.
So what was the Court of Appeal saying? That stress was not a problem? Surely not.
The HSE estimates that 10% of the workforce suffers from stress at any one time and that the loss to UK business is something in the region of 90 million working days.
According to various surveys over the past weeks, the UK labour force works harder than any other in Europe. UK workers take fewer holidays, work longer hours, spurred by the need to climb the property ladder. The insurance industry had begun to pay the cost - in terms of increasing numbers of six figure settlements.
Fundamentally, the Court of Appeal made two points. First, stress is part of life. For too long claimants have been putting cases on the basis of stress rather than illness. Stress is not an illness, it said. Causing someone to be stressed is not necessarily negligent. Causing someone to become ill, psychologically or physically because of a laissez-faire attitude to workloads, environment or bullying is a different matter.
Second, the Court of Appeal placed right, proper and timely emphasis on the duty of the claimant.
Andrew Hogarth put at the heart of his submissions a vital distinction between stress claims and other EL claims. In a nutshell, that distinction boils down to the uniquely subjective nature of stress claims.
He said an employer's knowledge of an employee is limited to what he knows about him in terms of his behaviour at work. He cannot be expected to know about his employee's life outside of work. Moreover, many employees would not wish employers to know about their private lives and will take steps to conceal the true nature of their affairs.
Psychological risk
He added that, while an employer controls the physical workplace, an employer who employs (particularly) professionals is not necessarily in charge of the way in which they carry out their work, prioritise their tasks or balance the demands of their work and home. The responsibility for minimising physical risk is the employers, but the responsibility for minimising psychological risk has to be a shared one between employer, employee, family and friends.
These distinctions were accepted by Lord Justice Hale in her judgment establishing the foundation for the remainder of the court's conclusions.
Generally, the Court of Appeal took an intelligent course of action between turning a judicial blind eye to a serious problem affecting UK society, and encouraging a compensation culture. To quote from the judgment of Lord Justice Hale
"When imposing duties and setting standards, the law tries to strike a balance which is reasonable to both sides. Here there are weighty considerations on each side.
"It is in everyone's interests that managements should be encouraged to recognise the existence and causes of occupational stress and take sensible steps to minimise it.
"It is in the interest of the individual employees who may suffer harm if their employers do not. It is in the interest of the particular enterprise which may lose efficiency and workers if it does not. It is in the public interest that public services should not suffer or public money be wasted.
"Concern about this issue arose during a period of great upheaval in the workforce, and in many large organisations, bringing changes in management ethos, instability and insecurity.
"The documents we have seen all aim to encourage management to take the issue of occupational stress seriously... but if the standard of care expected of employers is set too high, or the threshold of liability too low, there may also be unforeseen and unwelcome effects on the employment market".
Now, with an acute sense of judicial timing, one of the four cases, Barber v Somerset County Council, is set to go to the House of Lords, early next year. The timing is acute, because no one reading this is likely to be unaware of the current crisis in the EL market. ABI head of general insurance John Parker recently said it is for society to decide who deserves compensation and how much they should receive.
"However, larger compensation for a wider range of people has to be funded by businesses - and ultimately consumers - through higher EL premiums," he said.
He added that these are not just questions relating to insurance, but more widely about how society can fund the compensation it chooses to provide for those who are injured or contract diseases at work.
Risk assessment
In the case of Barber v Somerset County Council the Lords is being asked to consider two matters in particular:
Under the heading of breach of duty, counsel for Barber will argue that the Court of Appeal failed to give proper weight to the statutory duty of the county council to carry out risk assessments and that that failure should have been central to the Court of Appeal's decision.
They will rely particularly on the Working Time Directive and the Framework Directive. Risk assessments, they will argue, would have put the county council on notice as to Barber's condition and led it to have taken greater steps to prevent overwork.
Second, counsel will say that breach of duty to carry out risk assessments should be actionable in itself.
At the moment, the requirement arises under the management of Health and Safety at Work Regulations [1999] which excludes civil liability. It will be argued that Barber should be entitled to rely on the Directive, where the requirement is to carry out a risk assessment and consultation.
The effect of an adverse ruling by the Lords, weakening the defences erected by the Court of Appeal, may have a significant effect on that already weakened EL market. This is currently experiencing premium rises of up to 700%, and an increased number of businesses are simply unable to obtain cover.
It is against that wider social background and the dangers to the future of EL insurance, that the Lords will be asked to make its finding and perhaps to reinforce the words of Lord Justice Hale in Hatton, "some things are no one's fault".
For employers, all they can do is to carry on performing and encouraging good practice in the area of personnel management. Insurers should be looking for firms alive to the importance of sensitive and rational personnel management, in particular insurers might care to look for firms which:
Insurers should continue as they do now, to educate their insureds and offer their own risk assessment processes.
In short, if stress cannot be kept out of the workplace, let's try to keep it out of the courts.
