UK: Stress And New Legislation

Work-related stress may have seemed a distant memory during the summer holidays but with most people now firmly back at work, we report this month on two Court of Appeal cases on stress in the workplace. We also give an overview of employment law developments taking effect next month.

Stress claims in favour of employers

Two recent cases from the Court of Appeal on aspects of stress in the workplace have found in favour of the employer.

In the first, McAdie v Royal Bank of Scotland, the Court of Appeal held that the employer had not dismissed the employee unfairly on the grounds of ill-health, despite the fact that the employer had caused the stress-related illness, which formed the reason for the dismissal. In this case, the employer was held to be responsible for the employee's ill-health as a result of the manner in which it had dealt with her grievance. However, as there was no prospect of the employee returning to work (supported by medical evidence), and as the employee had made clear that she did not want to return to work, there was no alternative for the employer but to dismiss.

The Court of Appeal recognised, however, that in cases where the employer has caused the illness it may well be necessary to "go the extra mile" in finding alternative employment, or put up with a longer period of sickness absence. The fact that the employer is responsible for the employee's incapacity will therefore, in many cases, be relevant to the question of whether, and if so when, it is reasonable to dismiss. That is not to say that the employer is prevented from dismissing fairly and in a situation where there is no prospect of the employee returning to work, the current case confirms that such a course of action is permissible. In all cases, proper procedures (including obtaining medical advice and consulting with the employee) will still need to be followed before a dismissal, to avoid a successful claim for unfair dismissal. Of course, the employee may still have a claim for personal injury and the next case is an example of such a claim (albeit unsuccessful).

The case of Deadman v Bristol City Council concerns stress arising from the employer's manner of conducting an investigation into the employee's conduct. Employers have duties to safeguard their employees' health (mental and physical) both at common law and under the employment contract. Whereas there is established case law in relation to stress induced by workload, in this case the Court of Appeal considered the application of these duties in relation to stress induced by the employer's failure to properly follow its disciplinary procedures.

In Deadman, the employee claimed that his employer had caused him psychiatric harm through the wrongful and insensitive way in which it had handled an investigation against him – most particularly, notifying him that an investigation against him would be continuing, by leaving a letter on his desk early one morning. The Court of Appeal held that there had been a breach of the procedures but that even if this had caused psychiatric injury, it was not reasonably foreseeable that such harm would come from leaving the letter and so the employer was not liable. However, this is a useful reminder that employers may be held liable for stress caused by the way in which they operate internal employment procedures, such as disciplinary procedures. However, in all cases, such stress-related illness must be reasonably foreseeable (such as where an employee has previously suffered from stress or shows signs of not coping, or where the employer's handling of the procedure is particularly insensitive).

It is the time of year again when there is a surge of new employment legislation coming into force. With effect from 1 October 2007:

• The statutory minimum period of annual leave will increase from the current 20 days to 24 days (which can include public holidays) for a full-time employee. Also note that a further increase to 28 days is scheduled for 1 April 2009.
• The National Minimum Wage will increase from £5.35 to £5.52 for workers aged over 22. For workers aged between 18-21, the increase will be from £4.45 to £4.60 and from £3.30 to £3.40 for workers aged between 16-17.

• The Sex Discrimination Act will be amended to eliminate the requirement for a comparator in discrimination cases involving pregnancy and maternity leave and to clarify women's rights in bringing such cases. The definition of harassment will also be amended to facilitate claims which are not "on the grounds of sex" (but merely related to a person's sex) and claims relating to harassment by a third party. At the time of writing, the Regulations do not appear to have been laid before Parliament and it is therefore not clear whether they will in fact come into force by 1 October as intended.

• The Racial and Religious Hatred Act 2006 is coming into force, creating a new criminal offence of stirring up hatred against a person on the grounds of their religion. The offence will be punishable by a fine or a prison sentence of up to seven years and applies to the use of words or behaviour that are threatening and intended to stir up religious hatred. In the employment context, an act of "ordinary" religious discrimination in the workplace could (in appropriate circumstances) also amount to an offence under the Act. Where a body corporate is guilty of the offence and "it is shown that the offence was committed with the consent or connivance of a director, manager, secretary or other similar officer" then both that individual and the body corporate will be guilty of the offence.

• A new single body, the Commission for Equality and Human Rights (CEHR), will take over the functions of the Equal Opportunities Commission, Commission for Racial Equality and Disability Rights Commission. In addition to the above functions, CEHR will also assume responsibility for enforcing equality legislation in relation to sexual orientation, religion or belief and age.

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