Employee downturn anxiety could increase claims

The gloomy economic climate has caused a heightened sense of anxiety among some employees as they worry about the possibility of losing their job. And employers are now facing the prospect of increased cases claiming psychological damage and mental illnesses such as depression in their workforces, says Greg Robertson, general counsel for Harmers Workplace Lawyers.

“While some employment sectors naturally have a higher number of cases of stress and depression, such as emergency services operators, we are seeing a significant increase in mental illness cases among employees in many other sectors as the economic situation deteriorates and redundancies and rumours of redundancies take hold.”

He says the high-anxiety situation may have serious legal and productivity related ramifications for businesses.

Employers who ignore the situation open themselves to significant legal risks, including breach of anti discrimination and occupational health and safety laws or breach of contract claims, for action based on the employer’s negligence.

This could lead to an increase in their workers compensation premiums on top of falling morale and higher employee absenteeism.

Robertson says part of an employer’s common law duty of care to their employees is to take reasonable care of the safety of employees, including their mental health. On top of this obligation is the statutory duty under occupational health and safety legislation to “ensure the health, safety and welfare at work of all the employees”, an obligation that extends to the “mental” safety and welfare of all employees.

He says the duty to “ensure” such health requires employers to take all possible steps to prevent the development or aggravation of mental illness due to work-related pressures.

Failure to take reasonable care of an employee can give rise to legal action based on negligence of the employer. Breach of safety legislation can lead to significant fines.

Robertson says it is also becoming more widely accepted that an employment contract contains an implied term that obliges the employer not to undermine the trust and confidence that the employee places in the employment relationship.

“If an employer is found to have breached its contractual duty of care, or the term of trust and confidence, the employer may be liable in damages to the employee, for economic loss and the injury suffered as a result of the breach, including a psychiatric injury,” he says.


Practical advice for business on how to avoid mental illness

Prevention strategies that employers can put in place to minimise the risk of mental illness in the workplace include:

  • Have a clear anti-bullying policy to combat interpersonal conflict in the workplace.
  • Change the organisational structure of the workplace by conducting an organisational risk assessment.
  • Change the content or type of work employees are expected to carry out.
  • Encourage an improved level of physical fitness in the workplace, for example gym membership incentives or providing access to healthy snack food.
  • Take measures to improve employees’ work management skills.

The warning signs that employers should look out for include:

  • Increased numbers of unplanned absences.
  • Increased irritability or conflict in the workplace.
  • Indecisiveness of staff.
  • Loss of sense of humour.
  • Changes to work patterns (such as staying late, or taking work home).
  • Increase in customer complaints.
  • Poor quality of work.
  • Greater use or abuse of drugs and/or alcohol.
  • Increased use of staff support services.


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