Helen Hatchek discussed the growing problem of stress and how employers can deal with it

One in five Britons is currently on antidepressants, and a staggering 13m working days are lost each year to stress-related problems. This equates to a loss of £3.7bn to the national economy (source: CBI). A recent Samaritans' survey found that one in three cite work as the main cause of stress in their lives.

The prevalence of workplace stress has doubled in the last decade, with an estimated 500,000 workers suffering stress in 2002. Stress can be defined as excessive pressure, which, if allowed to build up over time, can manifest itself in variety of psychiatric, physiological, behavioural and mental problems. A recent TUC survey found that stress has become the number one concern in terms of workplace hazards.

Whilst stress currently accounts for only 2.5% of employers' liability disease claims, there has been a threefold rise between 1998 and 2002, a figure that businesses need to take very seriously. They must adopt a hands-on approach to stress risk management or face seeing this figure, and associated costs escalate even higher.

Understanding stress

Workplace stress can result from a range of factors such as an unsupportive corporate culture, excessive or conflicting work demands, poorly managed organisational change and insufficient consultation and communication by management.

When considering the risk of stress, underwriters are primarily concerned to understand whether:

- stress has been recognised by senior management as a significant health and safety issue
- specific policies have been formulated and implemented covering stress, bullying and harassment
- there have been cases or alleged cases of stress
- rates of absenteeism and staff turnover have changed recently
- a stress risk assessment has been carried out, and if so what were its findings and how they have been communicated to employees
- training has been provided to employees and managers on the recognition and management of stress
- there is a confidential employee assistance programme in place.

The phenomenon of stress as an occupational illness has grown from small beginnings in the mid-1990s into a major cause for concern. From a legal point of view there are real challenges in dealing with a condition which often has no clear point of onset. This underlines the importance of keeping detailed records to be used in evidence.

Legal issues

General practitioners play a key role in driving stress claims, and there is widespread concern that GPs' over-readiness to diagnose stress could lead to an avalanche of claims. There are, however, a number of legal barriers holding back the tide of potential claims. The first of these is a three-year time limit during which a claim must be brought. There is also a requirement for the affected individual to be diagnosed with a specific psychiatric disorder. The employer must also be shown to have failed in their duty of care, and the condition must be specifically attributable to factors at work. Finally, injury to health (rather than simply stress) must have been reasonably foreseeable by the employer.

The employer's legal responsibilities are reflected in the minimum standards and expectations established by the Court of Appeal in its guidance on the key case of Hatton v Sutherland. These include the general common law duty of care, the duty to prevent bullying, harassment, assault or stalking by other members of staff (which can result in a claim based on vicarious liability, currently a growing problem in this area), and the duty to prevent unfair discrimination or dismissal.

The Court of Appeal's guidance on Hatton makes clear that, in the eyes of the law, no job is inherently stressful. The onus is therefore on the employer to look at the individual in context, rather than their role in the abstract. To one person a certain level of pressure can be exciting and motivating, to another the same level could be deemed stressful.

The employer must take action if and when signs of an impending breakdown are plain - a stipulation that is inevitably open to interpretation. An employer is entitled to take what an employee says in relation to any stress they are suffering, or their state of health following illness or absence, at face value - though, again discretion and careful monitoring should always be applied.

Employers must also balance the risk of harm against measures to be undertaken in ameliorating the stress - considering for example how reassigning work might affect other employees. The courts would also be looking for employers to provide some form of confidential counselling.

The average total cost of workplace stress claims is currently around £245,000 (with compensation for loss of future income typically around £125,000). The number of claims brought is expected to continue to rise. Damages are also likely to rise above the rate of inflation.

From the employer's and risk manager's point of view the key imperatives are to keep detailed records and to make full and proactive use of rehabilitation as a means of demonstrating responsible management practice and reducing the overall cost.

Analysis, assessment and action

By conducting detailed and timely stress risk analysis and assessment exercises, risk managers can do a great deal to contain the problem associated with stress. The key reference points here are the Health & Safety at Work Act 1974, the Management of Health & Safety at Work Regulations 1999 (MHSWR) and the HSE's Management Standards for Stress. Risk assessment strategies should cover stress auditing, risk prevention assessment and an analysis of the company's rehabilitation provisions.

There are seven key factors to consider in determining which employees might be at risk of harm and how great the risk might be. Employers should look at:

- the culture of the organisation
- the demands placed on individuals or teams
- the extent to which employees believe they have control over their workload
- how teams work together and any potential for bullying or harassment
- how organisational change is managed and communicated
- how well employees understand their roles and what is required of them
- whether employees receive the assistance they need in terms of support and training.

Such reviews should be carried out whenever the material situation of employees changes in any significant way. The findings should be recorded in detail and circulated wherever appropriate, and form the basis for action plans and specific goal setting, making clear the employer's commitment to addressing employee concerns.

There are strong arguments for taking action on workplace stress, not only on ethical grounds, but also from a legal standpoint, given the potential implications of a wide range of regulations including the Employment Rights Act, Public Order Act, Protection from Harassment Act, Working Time Directive and Disability Discrimination Act - as well as the more obvious Health & Safety laws.

The economic case is equally compelling in terms of reduced costs from absenteeism, higher staff turnover, increased accident rates, reduced morale, damage to reputation, increased customer complaints, insurance claims and premiums.

There is a range of specific measures managers can undertake to alleviate the problem of workplace stress, including raising awareness of the issues, and role restructuring to minimise stress. The latter could take the form of increased employee involvement in work planning, additional training, reviewing performance targets, job enrichment and job rotation initiatives, enhanced teamwork and goal sharing, and conflict resolution measures (evidence of which can be critical in defending bullying and harassment claims).

Educating employees in coping strategies can also prove highly effective.

These might include talking through the issues, taking regular exercise, improving diet, increasing social contact, making a plan of action and promoting the use of a confidential employee assistance programme.

By tackling the issues at source employers can help to defuse what can potentially be an expensive and damaging problem in the workplace. Awareness of the issues, sound record keeping, good communication and prompt preventative and rehabilitative action can effectively contain the hazard of workplace stress.


Royal & SunAlliance recently hosted a seminar entitled 'Understanding and Managing Stress in the Workplace', attended by 100 UK risk managers and brokers. The expert panel, made up of R&SA liability underwriting and risk management specialists, the charity Samaritans and law firm Plexus, all warned that workplace stress and the associated problems are on the increase. They covered the many aspects involved, from the state of the UK's emotional health, insurance and claims, the legal considerations and finally risk analysis and management.


Senior managers must lead from the front when it comes to dealing with stress at work, according to Marsh. According to a recent Marsh study of 950 companies in Western Europe (Survey of Risk 2004), 52% of respondents believe that staff absenteeism and turnover are significant risks to their business, but are not confident in knowing how to deal with them.

Between 50% and 60% of absenteeism is related to work-related stress, according to a study by the EU (source: John Humphrey, human capital risk specialist at Marsh, comments: "Employees typically experience stress in three key areas: the increasing demands and pressures companies put on them, the growing pace of change, and the lack of control employees feel they have over their work.

"Most companies fail to analyse and understand the issues behind workplace stress before devising responses. As a result, the solutions simply patch over the symptoms. Alternative therapies and consulting services may seem beneficial, but the real solution lies in rigorous analysis of the underlying causes. Marsh has developed an on-line assessment tool to help companies identify the root of any problems and provide a benchmark to track progress in this area.

"We have to accept that for many of us the way we do business has dramatically changed. The rise in stress levels may be partly attributable, for example, to changes in the working environment over the last 50 years with the growth of service-based industry. Advances in communications technology, particularly e-mail, and cost cutting programmes and recruitment freezes have resulted in increased workloads and added pressure for those remaining in employment.

"The risks associated with these changes are manageable, but those companies who successfully address them will do so from the point of view of both employer and employee. They will not only address employee symptoms, but also measure and incentivise senior managers in terms of their effectiveness in dealing with the causes of workplace stress."

- Helen Hatchek is underwriting manager, liability, Royal & SunAlliance, Tel: 020 7283 9000, E-mail: helen.hatchek@uk.royalsun.com