Truth be told

Many employees have time off work because of a stress-related illness but
if, at interview, they failed to declare a similar problem in a previous
employment, they could risk losing their job. Sensitive handling for all
parties will help achieve a fair resolution, by Jonathan Maude

Peter applies for a position as manager at Logg & Co, a freight
logistics company. Logg & Co anticipates winning a contract that is likely
to increase the work coming into its depot by 50 per cent and has decided to
recruit someone to perform the managerial function at a local level.

Peter’s application form and CV show he has a fair amount of experience. The
answers he gives on the medical questionnaire do not disclose any significant
medical condition. But he has, in fact, suffered from stress-related illness in
the past. Following interview it is decided to offer him the position as it
appears he will need minimal guidance in undertaking the role. Is Logg & Co
wise to offer him the job without further medical investigation or discussion?

Non-disclosure

Logg & Co has considered Peter’s application on the basis of his
experience and his interview. In addition, Peter has completed a medical
questionnaire that does not highlight any pre-existing issues that should
concern the company.

On 5 February 2002 the Court of Appeal, in the decision of Hatton v
Sutherland and others, considered four cases on appeal from four separate
county courts. Each concerned awards of damages against employers after the
litigants concerned had stopped working due to stress-induced psychiatric
illness.

In essence, for the employer to be liable for negligence, the employee needs
to show that the employer has breached a duty of care that it owes to employees
by allowing a practice to continue when it was reasonably foreseeable it would
cause injury. The employer is obliged to provide a safe system of work; this
amounts to an obligation to provide reasonable support to the employee to
perform his or her duties in a way that will avoid causing psychological
injury.

This recent decision follows a number of cases in which employers have been
held liable for psychiatric injury since the landmark case of Walker v
Northumberland County Council, 1995, 1 All ER 737. The Court of Appeal used the
Hatton decision to give useful "practical propositions" that are
intended to enable courts to consider claims in the future. One such
"practical proposition" is that an employer is entitled to take the
information before it at face value and is not required to investigate any
medical issues further unless it is put on notice that there is an issue that
warrants further investigation. Logg & Co is therefore entitled to rely on
the information given by Peter.

Medical history

If Peter had disclosed he had suffered from a stress-related illness, it
would have been necessary for Logg & Co to consider obtaining further
details about the circumstances that caused it. It would also have needed to
ascertain whether there were steps it should take to reduce the possibility
that Peter would suffer a recurrence. This would also go some way to
discharging any duty to make reasonable adjustments that Logg & Co may owe
to Peter under the Disability Discrimination Act 1995.

Peter has been in his job for six months. He has not complained to Logg
& Co about any work-related stress, but there has been a noticeable
increase in his intermittent sickness absences during the past two months.
Peter has now informed Logg & Co that he will be absent for two weeks
having been certified as suffering from stress-related depression by his
doctor. What action should be taken?

There will need to be a meeting with Peter to discuss the absence and the
reasons for it. It would also be advantageous to obtain independent medical
evidence as to his condition and to consider steps the company might take to
alleviate factors that may be attributing to the condition when he returns to
his position.

The important point to bear in mind is that Logg & Co will only be
liable for breaching the duty to provide a safe system of work if the company
can be shown to have caused or materially contributed to any harm suffered by
Peter.

The Court of Appeal in Hatton suggested that if Logg & Co can show it
has taken steps to avoid breaching its duty it is unlikely to be found to have
breached it.

If independent medical advice about Peter’s problems is obtained and
counselling or other assistance offered, the company is unlikely to be found to
be acting in breach of its duty. It must ensure that its contractual
documentation provides Logg & Co with the right to request independent
medical advice on a specific employee. Clearly, if Peter refused to co-operate
with any such examination it would not assist him in any subsequent claim brought
against Logg & Co.

Redistribution of duties

Other issues that may need to be discussed with Peter include the
redistribution of duties or demotion. Logg & Co will not be in breach of
its duty if Peter wants to stay in the job rather than face demotion even if he
subsequently suffers from illness through the pressures of the job. This is one
of the major issues to have come out of the Hatton decision: both employer and
employee bear the risk, so the employee needs to decide whether to risk any
psychological breakdown by staying in the job or consider dismissal or
demotion.

If Logg & Co took the view that a redistribution of duties or demotion
was not appropriate, it might be in a position to consider dismissal as the
court would consider the size and scope of Logg & Co’s operation, together
with the demands faced by the company, to decide what is reasonable.

Again, this is an interesting point to come out of the Hatton decision, as
the court considered practical issues that may benefit smaller employers.

Previously, the courts have not been particularly sympathetic to any
arguments that costs or a lack of resources prohibited making certain
adjustments.

Employment history

The medical examination and discussions with Peter reveal that in his
previous job he suffered from occupational stress and that he eventually left
his former employer as a result of it. Logg & Co decides that as the volume
of work from the new contract is not as great as it originally anticipated,
some of the managerial responsibilities will be run centrally and Peter will
return to a non-managerial position. What are the issues that now need to be
considered?

It is for Logg & Co and Peter to agree his return to a non-managerial
position. The employer needs to be aware that it cannot simply impose changes
unless it has the contractual right to do so. As a result, it would be sensible
to ensure all discussions about Peter’s return are noted and any change in
status is agreed, in writing, with Peter.

This will amount to a variation to Peter’s contract of employment and Logg
& Co will not simply be able to allege, in defending a constructive
dismissal claim for example, that it was acting in Peter’s best interests and
in a way so as not to breach the duty of care it owed him.

Logg & Co is now aware of the previous condition and that Peter did not
disclose it. Despite the fact it may be in a position to take action as a
result of this non-disclosure, it is aware of the condition and, accordingly,
will need to ensure regular discussions take place with Peter to monitor his
progress.

If it becomes apparent that Peter is unable to undertake even the reduced
role, then Logg & Co will need to consider alternatives with him and this
may include terminating his employment.

If it does take the step of terminating the contract of employment, subject
to obligations that it may owe in connection with unfair dismissal rights and
possibly claims under the Disability Discrimination Act 1995, it is unlikely to
be found to be in breach of the duty of care.

If Peter was successful in any claim against Logg & Co, the Court of
Appeal has indicated that any damages would take account of the pre-existing
disorder or vulnerability and of the possibility that Peter would have
succumbed to a stress-related disorder in any event.

In addition, Logg & Co would only pay for the proportion of harm
suffered as a direct result of its wrongdoing. In this event, the level of
compensation should be reduced fairly dramatically.

Jonathan Maude is a partner in Manches Employment Practice

This article first appeared in the April issue of Employers’ Law. For
subscription sales and enquiries telephone: 01444 445566.

Key points

– The employer is obliged to provide
a safe system of work; this amounts to an obligation to provide reasonable
support to the employee to perform his or her duties in a way that will avoid
psychological injury

– If an employee wishes to stay in a stressful job, both
employer and employee bear the risk, so the employee needs to decide whether to
risk any psychological breakdown by staying in the job or consider dismissal or
demotion

– If a person is unable to undertake even a reduced role and
the company takes the step of terminating the contract of employment – subject
to obligations that it may owe in connection with unfair dismissal rights and
possibly claims under the Disability Discrimination Act 1995 – it is unlikely
to be found to be in breach of its duty of care

– In the event of a claim for constructive dismissal, damages
would take account of the pre-existing disorder or vulnerability and of the
possibility a person would have succumbed to a stress-related disorder in any
event

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