EAT and appeal court clarify rules for redundancy and stress

The Court of Appeal and Employment Appeal Tribunal (EAT) have clarified the position for employers dealing with workplace stress and collective redundancies.

The decisions do not alter current law, but provide guidance for employers dealing with these two difficult situations, according to law firm McDermott, Will and Emery.

Workplace stress

In the case of Hartman v South Essex Mental Health and Community Care NHS Trust the Court of Appeal considered a number of cases relating to stress at work. It confirmed some established principles:

  • If an employer does not act on information that an employee is depressed at work, then it may be liable for the psychiatric injury suffered

  • Employers can generally take information they are given by employees about their health at face value, unless there is cause to question the information provided

  • Employers are only required to do what is reasonable in the circumstances to avoid stress in the workplace, bearing in mind the gravity of the possible harm, the costs involved and the size and scope of the employers’ business

  • If an employer has an occupational health system or counselling service, this does not in itself indicate that the employer has foreseen psychiatric injury but, rather, makes it less likely that the employer will be in breach of its duty if such injury does occur

  • If an employer wants to argue that an employee’s depressive illness has been caused by factors other than work and that, therefore, damages should be apportioned, the employer must provide evidence to show that the injury did, in fact, have other causes.

In addition, a key issue in one case was whether it was reasonable for the employer to have taken five days to respond to an employee’s memo detailing his concerns about stress at work.

The Court of Appeal decided that the delay in replying was reasonable because it heard evidence that the employer had taken the time to consider the best course of action. The employer was able to show that the delay had served a purpose.

The obligation to consult

Before an employer is obliged to collectively consult about redundancies, it must be proposing to dismiss as redundant 20 or more employees, at one establishment, within 90 days. In the case Hardy v Tourism South East, the EAT focused on whether the employer “proposes to dismiss” an employee it actually proposes to redeploy. The answer is that it depends on the nature of the redeployment.

There can be a dismissal even though an employee remains employed by the same employer if the employer brings one contract of employment to an end and re-engages on another. In some cases, the departure from the existing contract may be so substantial as to amount to the withdrawal of the whole contract.

If the changes are to be so substantial, then the employer “proposes to dismiss” the employee.

Implications for employers

If an employee raises an issue of workplace stress, do not delay in responding to them. An employer can take time to consider the best way to address the situation but it is dangerous to let the employee feel that his concerns have fallen on deaf ears.

If an employer is contemplating redundancies but planning to redeploy, it should carefully consider whether the employees to be redeployed should be counted to determine if the obligation to collectively consult arises. If the intention is that the employees will sign up to a new contract, undertake a significantly different role or reapply for their positions, then they should be included in the count.

Redeployed employees should only be excluded if they are to remain in a substantially similar position on their current terms and conditions.

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