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The stress of the credit crunch

10 July 2009
The stress of the credit crunch

Employers need to be aware of their responsibilities when considering the mental wellbeing of their staff by ensuring that company policies cover all the aspects of the law that apply to stress at work


I am worried my staff are getting stressed at work because of the recession and the pressures that has put the business under. Where do I stand?


There is no one area of law which covers stress-related issues in the workplace. Employees are protected in several ways. These include:

  • Health and safety legislation which places duties on employers to ensure the health, safety and welfare at work for their employees and obliges employers to carry out a risk assessment of all risks.
  • The Working Time Regulations 1998 which limits working hours and imposes set daily and weekly rest breaks, paid annual leave and requirements for night workers to undergo health assessments.
  • The common law tort of negligence which places duties on employers to take reasonable care for the health and safety of their employees. The key issue here seems to be whether or not the stress-related illness was reasonably foreseeable and, if so, whether adequate steps were taken to remedy the situation.
  • Disability discrimination. If an employee can establish that their stress-related condition amounts to a disability in accordance with the Disability Discrimination Act 1995, an employer could also be liable. This obligation may extend to payment for sickness absence, reduced hours, reallocation of work, training, supervision and counselling.
  • The implied duties in every contract of employment that employers will take reasonable steps to ensure the health and safety of employees and the duty of mutual trust and confidence. If an employer breaches these duties, employees can resign and claim constructive dismissal.
  • Protection for employees against being unfairly dismissed as a result of poor performance or misconduct caused by work-related stress.


Employers must have health and safety policies in place. This should cover stress at work where employees suffer from stress during their employment, whether or not it is as a result of their work. By having a good policy in place, and following it, employers should reduce their risk of being liable under any of the above categories. Failure can result in criminal sanctions and the risk of employment claims under any of the other areas of law affected by stress at work.


Carry out a full risk assessment of stress factors at work and get your stress at work policy in shape. The Health and Safety Executive suggests the risk assessment should:

  • Identify the demands placed on employees, including workload and physical hazards; levels of control exerted over an individual's work; relationships; organisational change and communication; and support.
  • Assess who may be harmed by the hazards identified.
  • Evaluate the hazard risks and put solutions in place.
  • Be monitored, reviewed and assessed on a regular basis.

A stress at work policy should:

  • State that the employer is committed to alleviating the effects of stress on employees and to taking action to protect the mental wellbeing of its staff.
  • Detail methods to be used to assess risks, investigate and resolve cases of stress at work.
  • Encourage employees to raise issues of stress at work with their line managers or HR.
  • List sources of support available to staff, for example occupational health, support groups, advice and training.
  • Refer to other policies such as sickness absence, appraisal, capability procedure, harassment, flexible working, and grievance and disciplinary policies, which are relevant.
  • Be reviewed regularly.


If an individual can prove stress as a result of workplace pressures or bullying which has been ignored, an employer may face an unlimited award in the Employment Tribunal or High Court. Employees should not be placed under unnecessary pressures and, if indicators of stress arise, employees should be offered appropriate support. Non-compliance with health and safety legislation carries the risk of criminal penalties.


Nicola McMahon, solicitor, Charles Russell LLP
E-mail: nicola.mcmahon@charlesrussell.co.uk

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Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

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