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Breaking point

Last month, the Court of Appeal overruled three occupational stress cases in a landmark decision set to stem the growing number of stress claims brought by employees each year.

This ruling will have an impact on any IFA advising employers on PHI needs. This watershed in a series of events which began six years ago – when John Walker won the UK&#39s first stress in the workplace case – has, according to experts, ended with this ruling which will make it much more difficult for employees to bring stress-related suits against their employers.

One of the central arguments given by the Appeal Court against the plaintiffs was the employees had not voiced their concerns about work-related stress before it was too late.

This indicates that in the future any employee seeking redress through the courts must have first raised the issue with their employer, giving them a chance to remedy the situation. In the spirit of prevention being better than the cure, the Court of Appeal&#39s judgment also seems to give a virtual exemption to employers which have a confidential counselling service in place for their employees.

Underpinning this decision is a return to the traditional legal test of “foreseeability” – could and should the employer have foreseen the stressful effect of the workplace on the employee?

The court said employers should not be automatically held responsible where a work environment adversely affected only one employee if the person did not take steps to alert the employer to the problem.

In the past, it was generally easier in out of court settlements to find for a plaintiff, such as a teacher, whose occupation was perceived as stressful. This is no longer the case.

The rulings should also reduce the size of payout amounts as courts will be able to apportion the degree to which the workplace played a role in the development of the mental illness.

The judgement also made it clear that pre-existing vulnerability to mental illnesses can be taken into account when awarding individual payments.

Obviously, insurers and employers are pleased with the ruling, which is predicted to reduce litigation dramatically. At this stage, it remains to be seen whether all or any of the points of the judgment will be appealed but most observers feel it is unlikely the decision will be completely overturned.

This major shift in judgment transfers the onus to employees, who must now adapt to ensure their own protection in an increasingly stressful working environment.

Stress is a leading occupational health problem in the UK, responsible for the loss of 6.5 million working days a year at an estimated cost of £7bn. One in five employees admits to having sick days due to work-related stress and, during the past 12 months, 53 per cent of us have suffered stress in the workplace.

According to our records at Unum, there has been a staggering 51 per cent increase since 1995 in the number of UK employees claiming PHI benefits for illnesses caused by work-related stress.

It seems that the pressures of today&#39s workplace – new technologies, tighter budgets, tighter deadlines – are taking their toll on employees who are struggling to cope with longer hours in the office. The rise in stress-related claims on our PHI policies suggests that British employees are finding it more difficult to cope with stress at work – and often in their private lives.

This trend of increasing stress at work, together with the new Court of Appeal rulings, means that it is more important than ever for employees to make sure they have adequate protection in the unfortunate event that stress leading to mental illness leads to long periods of sick leave.

In the case of chronic stress, it is usual for sufferers to be absent from work for an extended period. Most employers will continue to pay staff up to six months&#39 absence but from then on sufferers are on their own unless they have PHI cover.

We believe that the Appeal Court&#39s ruling on work-related stress claims will ultimately increase demand by employees for PHI cover as the likelihood of succeeding in the courts is now greatly reduced. So long as employers provide a confidential counselling service and listen to the concerns of stressed employees, it is likely to prove a good defence against a plaintiff employee.

With the courts largely restricted as a means of recourse, it is in the best interests of all employees to ensure their and their family&#39s protection in the unfortunate event that a stress-related illness necessitates time away from the office.

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