Stress test: disciplinary action and stress

The Court of Appeal has summarised and clarified the correct approach to a psychological injury (namely, a depressive illness) caused by unfairly conducted suspension and disciplinary process.  The Court of Appeal has built on the developing body of case law on stress at work claims and confirmed that, usually, damages for such claims will not be available where the employer believed that the employee in question was mentally robust and could withstand a serious set-back at work.  

The background

Employers are under a common law duty (arising under the tort of negligence) to take reasonable care for the health and safety of employees in the workplace.

In addition, it is an implied term of every employment contract that an employer must not damage or destroy the relationship of trust and confidence between an employer and employee. 

In order to succeed in a stress claim, the employee must establish that the loss suffered was caused by the employer's breach and was not too "remote" – i.e. that the 'loss' (usually, and as in this scenario, a psychiatric illness) was reasonably foreseeable.

In the case reported below, the Court of Appeal considered whether it was reasonably foreseeable that an employee would suffer a depressive illness as a result of his summary withdrawal from his post as High Commissioner of Belize. 

The facts

Mr Yapp was British High Commissioner in Belize. In June 2008, allegations were made regarding Mr Yapp's sexual misconduct at public functions and his bullying and harassment of his staff. Mr Yapp's employer, the Foreign and Commonwealth Office (FCO) withdrew Mr Yapp from his post with immediate effect and suspended him pending the outcome of investigations. He was offered counselling and told that if he was exonerated by the investigation, the FCO would do its best to find him another posting.

A disciplinary hearing (heard by the same person who undertook the investigation) took place and cleared Mr Yapp of the sexual misconduct allegations but upheld the complaints of bullying.

Following the disciplinary process, Mr Yapp became depressed. Even after his suspension was lifted, he was unable to return to work. He finally left his employment due to retirement.

He claimed that the stress resulting from his withdrawal from office and the unfair conduct of the disciplinary proceedings had caused his depressive illness and financial loss.

The High Court found that the FCO had acted in breach of contract and in breach of its duty of care by unfairly withdrawing Mr Yapp from his post, and Mr Yapp was entitled to damages.

In particular, the High Court found the following.

• Fair treatment required the FCO to conduct some preliminary investigation into the allegations and to give Mr Yapp an opportunity to respond to the case against him.
• Confidentiality and the need to act quickly were insufficient reasons for dispensing with fairness.
• Had the FCO acted fairly, it would have soon transpired that the allegations of sexual misconduct were "suspect" and there would have been no basis for Mr Yapp's withdrawal.
• Allowing the same person to conduct both the investigation and the disciplinary hearing was unfair, but no compensation should be paid for this, as the outcome was "almost inevitable" given the facts found in the investigation.
• The damage caused to Mr Yapp was "reasonably foreseeable" because, although Mr Yapp was "ostenstibly robust", it could reasonably be contemplated that depression could result from a "knee-jerk withdrawal from post".
• In withdrawing Mr Yapp from his post without informing him of the case against him, the FCO was in breach of its common law duty of care and its implied duty of trust and confidence.

The FCO appealed.

The decision

In Yapp v Foreign and Commonwealth Office, the Court of Appeal (CA)

• upheld the High Court's decision on breach of contract and the FCO's responsibility for causing Mr Yapp's illness; but
• held that damages should not be payable to Mr Yapp for his depressive illness and the financial loss that flowed from it.

The CA's reasoning was as follows.

• Mr Yapp's immediate withdrawal from his post, without any chance to rebut the allegations and without conducting any preliminary investigations, was in breach of contract. It was irrelevant for these purposes that Mr Yapp was subsequently treated fairly in the disciplinary process and given access to independent counselling.
• In the particular circumstances, it was fair to appoint the same person to act as both fact-finder and disciplinary decision-taker. The Acas Code of Practice on Disciplinary and Grievance Procedures recommends that, in misconduct cases, it is good practice, where possible, for different people to carry out the investigation and disciplinary hearing. However, the CA said it was not a requirement of fairness in every case. In the present case, the FCO specifically decided that it was important that the same person who had interviewed the witnesses should take the disciplinary decision and the CA saw nothing wrong with this.
• The withdrawal from post directly caused Mr Yapp's depression.
• However, the loss caused by Mr Yapp due to the withdrawal was not reasonably foreseeable and therefore could not amount to a breach of the common law duty of care. Given that the remoteness test for breach of contract claims is less favourable to claimants, it followed that such loss was also too remote to be recoverable in respect of the breach of contract claim.

In making its decision the CA took the opportunity to review the case law on the foreseeability of work-related stress and found

• such an injury will not usually be foreseeable unless there were indications, of which the employer was or should have been aware, of some problem or psychological vulnerability on the part of the employee.  An employer is usually entitled to assume that the employee can withstand the normal pressures of the job unless he knows of some particular problem or vulnerability.
• That approach is not limited to cases concerning excessive workload but extends to cases where the employer has committed a one-off act of unfairness, such as the imposition of a disciplinary sanction.
• However, this is guidance only, and each case must turn on its own facts.  In exceptional cases, an employer's conduct might be so devastating that even a robust person might develop depression as a result. However, this was not such a case. There was nothing so 'shockingly bad' about the circumstances to render it foreseeable that Mr Yapp's withdrawal from his post would cause him psychiatric injury.

The CA noted that, in reaching its decision, it had not attached any weight to the counselling services provided by the FCO. It said that the provision of counselling services is only relevant in 'ordinary' stress at work cases relating to excess workload and not where stress results from a one-off event, as in this case.

What does this mean for me?

This decision is good news for employers in that it confirms that courts and tribunals will be reluctant to find that an employer is responsible for harm caused by a psychiatric injury unless there is evidence of a pre-existing vulnerability, or unless the employer's misconduct has been so atrocious that it could be anticipated that even a robust individual would be likely to suffer an illness as a result.

Although best practice would dictate that different people should undertake a disciplinary investigation and hearing, it is interesting to note here that the CA said that this does not always need to be the case.  However, it seems that there were specific reasons here why the FCO felt that the same person should be involved in both processes; the CA may have reached a different conclusion if that had not been the case.

Finally, note that any counselling services that you offer may well assist with defending a claim for stress at work related to work load, but it is unlikely to assist if stress is caused by a one-off event.