Employers must not become complacent about stress at work, write Jane Byford and Smita Jamdar

Some 21 months ago, the Court of Appeal's decision in Sutherland v Hatton [2002] 2 All ER 1 and three other co-joined appeals was heralded by some commentators as decisively resolving the issue of workplace stress in favour of employers.

However, subsequent developments have shown that levels of stress in British workplaces continue to expose businesses to a variety of legal risks - and employers would be well advised to guard against complacency.

The guidelines formulated by the Court of Appeal in Hatton appeared to make it clear that an employer only needs to take steps in respect of particular employees if there are 'plain' signs of impending harm to their health as a result of workplace stress.

And if the action the employer is being asked to take is 'reasonable' in all the circumstances.

Broadly speaking this has made it more difficult for employees to prove that their employer should be held liable for their psychiatric illness caused or contributed to by workplace stress.

Many employers have taken comfort from the Court of Appeal's decision, particularly the fact that in the absence of knowledge of a particular problem they are entitled to assume that their employees can cope with the normal pressures of the job.

And while they need to look out for tell-tale signs of possible injury to health through workplace stress, they are not expected to make searching enquiries of their employees and are generally entitled to take what they are told by employees at face value.

From the point of view of liability in negligence, this stance has been a reasonably safe one to adopt, and application of the Hatton guidelines in subsequent cases has led to a tide of decisions in employers' favour in all but the clearest of cases.

However, the largely reactive stance advocated by the Court of Appeal is under threat and employers may be better advised to take a more proactive approach to the management of workplace stress if they want to avoid the risks this may pose to their businesses.

The first prong of attack is the pending appeal to the House of Lords of one of the cases dealt with in the Hatton decision.

Barber v Somerset County Council is scheduled to be heard in February 2004 and will focus on the issue of whether the risk of harm to the mental health of an individual employee was reasonably foreseeable.

This appeal will give the House of Lords the opportunity to approve the Court of Appeal's guidelines or alternatively to redress the balance in employees' favour, thus potentially opening the floodgates to claims.

The second reason for employers to adopt a more proactive approach to workplace stress is that since Hatton employees and former employees have had to become more imaginative in types of claims they bring in relation to stress-related illnesses, exploiting alternative routes to recover compensation.

Whereas claims in negligence may have abated for the time being, stress now raises its head more often in claims involving bullying and harassment, disability discrimination and constructive dismissal.

Failure to recognise and address stress issues in the context of these types of claims could result in significant liability for an employer.

For instance, take the example of an employee who establishes that he falls within the definition of a disabled person under the Disability Discrimination Act 1995.

A head-in-the-sand approach adopted by the employer, resulting in a failure to make reasonable adjustments, could land it with an award of potentially unlimited compensation - whether the stress-related illness is caused by work or has some completely unrelated cause.

However, the most significant challenge to the Court of Appeal's guidelines is founded not in civil liability but in potential criminal liability.

For some time the Health and Safety Executive (HSE) has been advocating a proactive approach to workplace stress and the management and reduction of workplace stress is one of its priority programmes until 2007.

The HSE has in recent years increasingly expounded its view that the duties imposed on employers under the health and safety legislation apply as much to an employee's psychological health as they do to physical health.

Against that backdrop, the HSE has urged employers to carry out risk assessments and implement measures to eliminate or control workplace stress, or risk criminal prosecution.

In June this year the HSE announced the launch of a pilot project in respect of its draft management standards on workplace stress, which are to be used as a yardstick against which organisations can measure their progress in tackling work-related stress and target action where it is needed most.

Employers are being encouraged to pilot the draft standards in their organisations and provide feedback.

The results will then be evaluated with a view to the HSE producing management standards for the control of workplace stress that will be applicable to all employers.

Of more concern to employers though will be the fact that in August 2003 the HSE put its threats into action and issued its first improvement notice under the Health & Safety at Work etc Act 1974 in respect of workplace stress.

West Dorset Hospitals NHS Trust now has until 15 December 2003 to assess and reduce the stress levels of its doctors or other employees or face court action and a potentially unlimited fine.

This may prove to be the first action in which the HSE adopts a more aggressive approach to the management of workplace stress.

This development has emphasised the HSE's active approach to workplace stress and is in direct contrast to the reactive approach adopted by the Court of Appeal in Hatton.

The HSE's stance has been criticised as imposing an extra financial burden, particularly on small employers.

But with stress fast becoming the single biggest cause of absence from work - causing an estimated 13.4 million lost days a year - the HSE sees this as an important occupational health issue.

The dichotomy between the stances taken by the Court of Appeal and the HSE only complicates further what has become an area of law that is not only often conflicting, but which crosses a number of legal disciplines.

When advising either an employer or employee on a work-related stress issue the importance of looking at the issue from all legal angles cannot be overemphasised.

Jane Byford is a partner and Smita Jamdar a senior associate at Brimingham-based firm Martineau Johnson.

They are co-authors of a new publication entitled Workplace Stress: Law and Practice published by the Law Society and in stock now priced 29.95.

Tel: 020 7320 5640 for more information.