Damaged or just distressed?

Disciplinary procedures are becoming dangerous territory.
Employers must now try to predict how their actions, even if contractually
justified, are likely to affect the mental health of those on the receiving
end. By Christina Morton

When does emotional distress become psychiatric illness? It is a question
likely to provoke fierce argument among medical experts. But it is precisely
the question employers are increasingly having to ask themselves in relation to
the way they treat their employees, particularly in cases of disciplinary
action. Though in some cases a near impossible call, the courts nevertheless
seem to expect employers to make it, as recent decisions have shown.

In last year’s case of Gogay v Hertfordshire County Council, 2000, IRLR 703,
the Court of Appeal made a vital distinction between psychiatric illness and
"mere" hurt and upset, thereby getting round the established rule
that damages for injury to feelings cannot be awarded in breach of contract
cases. Indeed, Gogay received £26,000 in damages, partly for the mental illness
brought on by her suspension from work.

Another important case, Fraser v the State Hospital Board of Scotland, 2000,
TLR 12.09.200, established that employees can claim damages for psychiatric injury
relying on the duty of care owed by the employer to the employee, even where
the employer has exercised a contractual power.

If the employer should have foreseen that its action was likely to result in
mental illness, it will be liable.

It means employers will now have to consider how particular individuals
might react to their actions: will they cause the employee psychiatric injury
or "mere" emotional distress? In practice this will be very
difficult. There is no certainty as every case will turn on its own facts.

Even where there is no psychiatric illness proved, an ill-thought out
disciplinary policy could result in claims for financial loss arising from a
breach of the duty of trust and confidence, or claims of unfair or constructive

To suspend or not to suspend?

In the case of Gogay v Hertfordshire County Council, the Court of Appeal
awarded damages for the psychiatric injury suffered by Gogay after the council
suspended her. Gogay worked in a Hertfordshire Council children’s home as a
care assistant. She worked with a child with learning difficulties, who had
been severely abused by her parents and tended to act in a sexually provocative
way. Gogay requested she was not left alone with the child and was commended by
the area manager for handling the situation professionally.

Subsequently, however, the child made comments which could have been
construed as allegations of abuse by Gogay. The council suspended her, telling
her she was suspected of abuse. An inquiry found no case to answer and
reinstated Gogay but she was, by then, unable to work due to clinical
depression, caused substantially by the suspension. She brought a claim against
the council for damages and loss of earnings resulting from a breach of her
contract of employment. The court found the council had, in suspending Gogay,
breached the implied duty of trust and confidence between employer and

The council appealed on two counts. First, that the suspension was not, in
and of itself, a breach of the implied duty of trust and confidence. Second,
that even if there was a breach, there could not be an award of damages for
injury, since this was a breach of contract claim, and damages for injury to
feelings and/or mental distress cannot be awarded in those circumstances (the
case of Addis v Gramophone Co Limited established this in 1909).

The Court of Appeal dismissed the council’s argument, holding there had been
a breach of the implied duty of trust. Furthermore, it said, there is "all
the difference in the world between hurt, upset and injury to feelings"
and a "recognised psychiatric illness". Consequently, there was
nothing to prevent the trial judge awarding damages for clinical depression and
the losses arising from it; this case was distinguishable from the earlier
cases on hurt feelings.

The facts of Gogay were unusual. The decision to suspend Ms Gogay was taken
against the background of the statutory duties of local authorities in cases
where a child is perceived to be at risk of significant harm. Gogay’s employer
concluded it had no choice but to suspend her. It was this "no
choice" decision that the Court of Appeal criticised as a knee-jerk
reaction, one which failed to strike the right balance between the needs of the
child and the council’s duty to preserve the trust and confidence of its

The case was also unusual for the extreme reaction suffered by the employee
as a result of the suspension. Nevertheless, some of the comments made by the
Appeal Court judges suggest that the case could still be of far-reaching
effect. If a "psychiatric illness" can be established, then the case
establishes that damages can, and should, be awarded.

Even in highly sensitive situations, an employer who assumes they can
exercise a contractual right to suspend without reflecting on the possible
consequences for the employee is at risk of acting in breach of contract. The
Court of Appeal suggested other options such as a temporary transfer or a
period of leave should be considered first. This invites all employers to think
twice before suspending any employee, regardless of the circumstances.

Was psychiatric harm "foreseeable"?

An interesting case to consider alongside Gogay is Fraser v The State
Hospital Board for Scotland, decided by the Court of Session in July last year.

Managers of the State Hospital in Carstairs brought disciplinary proceedings
against Fraser, a charge nurse and team leader who cared for people convicted
of criminal offences, many of whom were violent. It was alleged Fraser had
assisted in supplying a violent psychopath with alcohol and had encouraged, or
failed to prevent, a relationship developing between a patient and a member of
the hospital education staff.

Even though the allegations were not proved, he was demoted and placed on a
restrictive regime. He subsequently developed a depressive disorder, and sought
to recover damages for personal injury, arguing not as Gogay had, that his
employers were in breach of contract, but that they were negligent in that they
had breached their duty of care to him, which resulted in personal injury in
the form of psychiatric damage.

To establish the breach of duty, Fraser had to prove:

– That his employer had caused his psychiatric illness.

– That they were liable for psychiatric injury even though he suffered no
physical harm.

– That they should have foreseen his psychiatric illness.

The court held it was the events leading up to Fraser’s illness that
resulted in him developing a depressive psychiatric disorder. The imposition of
the regime by the hospital was a material, but not a major, contributory
factor. However, it was still a cause of the illness for the purposes of the
case. It also held the employer’s duty to take reasonable care for the safety
of their employees was not limited to preventing physical injuries – it
extended to mental health.

However, Fraser’s case failed on the question of foreseeability. The court
said that while the employer might well have foreseen that the events would
cause him emotional upset, they would not have foreseen that they would caused
psychiatric harm. For this reason, there was no basis for finding that Mr
Fraser’s managers, either collectively or individually, ought to have known the
effects their actions would have on his health.

This is not particularly helpful to employers, as foreseeability is a
subjective and notoriously nebulous concept in personal injury law. Employers
will therefore have to consider how particular employees might react to their

In a case like Gogay, in which the employee claims breach of contract, the
test is whether the employer should have foreseen the psychiatric illness not
when the contract was breached, but when it was made. Most people would say
psychiatric illness is not a foreseeable consequence of suspending someone at
work, any more than it was foreseeable in Fraser that illness would have
resulted from disciplinary action. Unfortunately, however, the Court of Appeal
in Gogay accepted without any detailed consideration what the trial judge
decided on this issue, namely that the loss and damage were foreseeable.

More lessons to be learned

There are likely to be further cases hinging on whether an employer should
have foreseen that illness rather than "mere" distress would result
from a particular course of action. In Gogay there were warning signs – but
mid-way through the employee’s employment, not when it began. In Fraser there
were no warning signs. Contrast this with the well-known stress-related damages
case of Walker v Northumberland County Council, 1995, IRLR 35where the employer
had ample notice that the employee was mentally ill, and failed to act.
Employers will need more and better guidance from the courts on this difficult

Gogay also sits uneasily with the 1999 case of Johnson v Unisys, IRLR 90,
where the employee failed to recover any damages for a mental breakdown caused
by the manner of his dismissal. It means the council might have been better off
financially if it had dismissed rather than suspended Gogay. The courts will
need to resolve this paradox, too. Johnson was due to be heard by the House of
Lords on 5 and 6 February.

The lessons of these two cases are not easy ones for employers. It is
possible to see Gogay in particular as a fetter on the exercise of a well tried
management tool, increasing the burden on employers to make difficult
judgements about the fitness of their staff. But bear in mind that the facts of
Gogay were unusual; and Fraser indicates the courts will not interfere with the
right to manage disciplinary processes unless there are good reasons to do so.

Action employers need to take

Give thought to possible consequences before commencing disciplinary action.
In particular:

– Check for a contractual right to suspend before suspending an employee.

– Even where there is a contractual right, it should not be regarded as a
carte blanche to suspend regardless of the circumstances. It should be
exercised responsibly and with due regard for the possible impact on the

– Do not suspend unless really necessary. Does the employee really need to
be removed from the workplace? If so, consider whether there are alternatives
to suspension such as a period of leave or temporary assignment elsewhere. If
there is strong evidence of misconduct suspension may still be the appropriate

– Review the suspension clause in contracts of employment and disciplinary
policies and include the issue in the management training of anyone involved in
the operation disciplinary procedures.

– Take particular care when commencing or continuing disciplinary
proceedings against employees who are sick, showing signs of stress or giving
any indication they might cross the border between emotional upset and mental
illness. Seek a medical opinion where there are warning signs. Just as
employers are required by the case law on disability discrimination to make
enquiries if they have noticed anything that suggests a disability, employers
who are on notice that there is mental vulnerability should stop to consider
before they act.     

Christina Morton is a solicitor and know-how manager in the employment
department of Beachcroft Wansbroughs. Contributions were also made by associate
Ron Simms and solicitor Donna Sharp

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