Analyzing Occupational Stress and the Compensation Culture

Q1. Lowe et al. (2002, section 2.1) have defined the compensation culture as being an individual’s desire to sue another for their suffering caused by something that could have been avoided if the other person did their job properly. Harpwood (2007) claims that the compensation culture represents a general belief that there is an increasing number of claims and public awareness of entitlement to monetary compensation for harms caused at the hands of professionals. Given this general belief, it cannot be stated that a compensation culture is not prevalent in the UK irrespective the economic basis. In this regard, it is also argued that the media also contributes to the rise of the compensation culture. This view is supported by Lord Falconer, who called out the “have a go” attitude of the public to claim compensation in the UK in a Health and Safety Executive event held on 22 March 2005. This essay will analyse whether or not the existing law strikes a balance in the compensation structure in regard to occupational stress considering the compensation culture and media representation of the culture. If you are facing issues in navigating through this topic, seeking assistance from experts at UK Dissertation Help can provide the best guidance.

The law does not provide compensation for psychiatric injury. In King v Bristow Helicopters, it was held that the Warsaw Convention, Article 17 provides for only bodily injury and does not cover compensation for mental illness. However, recent years have seen that the post-traumatic stress disorder (PTSD), a form of psychiatric injury forms the basis for many of the claims. PTSD is not a temporary medical condition, but a serious long terms medical condition. In the employment sphere, citing Johnstone v Bloomsbury Health Authority, the duty falls upon the employers to take reasonable care as to not injure the employees’ mental and physical health regarding hours worked by hospital doctors. Similarly, in Brown v London Borough of Richmond upon Thames, the Court of Appeal case awarded compensation for moderately severe psychiatric harm and for loss of earnings. The harm was caused by the negligence of the employer of their duty to take care of the employees for a long period of time.

1. Lowe et al., ‘The Cost of Compensation Culture’ Report of a working party of the Faculty of Actuaries.
2. Vivienne Harpwood, Medicine, Malpractice and Misapprehensions (Routledge-Cavendish 2007) 84.
3. Ibid.
4. Ibid, 107.
5. King v Bristow Helicopters [2002] UKHL 7.
6. Vivienne Harpwood, Modern Tort Law (Cavendish 2005) 38.
7. Johnstone v Bloomsbury Health Authority [1992] QB 333.
8. Brown v London Borough of Richmond Upon Thames [2012] EWCA Civ 1384.

In regard to the measuring the extent of harm for the purposes of compensation, it is the general principle that the employers will be liable to pay compensation for any stress-induced illness only when the illness was reasonably foreseeable. The Court of Appeal laid down the condition that the impending harm must be clear enough for the employers to take necessary actions. If the employee chooses to take up a stressful job, the employer is not liable. If the employers have confidential counselling advice services and treatment, they may not be found in breach of the duty of care. Further, if there are pre-existing conditions or a chance that the employee would become ill, the amount of compensation will be reduced.

The question in relevance to the topic in discussion is whether the duty of care on the part of the employer is expanded to such an extent that employees and workers feel entitled, which leads to the emergence of the compensation culture. The judicial principles in the cases of Brown, Johnstone and Sutherland stated above are sufficient to guide the employers and employee in respect to maintaining a work life balance in employment. A lack of awareness of such guidelines regarding a work-life balance, employer’s duty of care and employee’s choices in employment may lead to more claims of compensation and the increase in the “have a go” attitude as Lord Falconer pointed out. In relevance to this view, Hand (2010) observes that the frequent use of the ‘compensation culture’ by the press must be subject to scrutiny by reviewing data from Queen's Bench, County Courts, and employment tribunals. After reviewing the data from 1995 to 2010, he found that the exponential increase in the use of the term ‘compensation culture’ as presented by the national printed media is a misconception. However, the only exception was the claims before the employment tribunals. This means the arguments of ‘compensation culture’ cannot be applied to the employment sphere as the problem of occupational stress and the harm it causes to employees really exists.

1. Sutherland v Hatton (2002) 68 BMLR 115.
2. Ibid.
3. James Hand, ‘The compensation culture: Cliché or cause for concern?’ (2010) 37(4) Journal of Law and Society 569-591.

To conclude, The right balance in enforcing employers’ duty of care and employee’s right to work-life balance is sufficiently provided by the judicial principles in place. Thus, arguments that project people’s rights to enforce their right to their well-being during employment as the problem of compensation culture would be baseless in that regard.

Q2. ACAS requires that before the employer states a disciplinary procedure, they should first see whether the problem could be resolved in an informal way. SEG did not follow ACAS disciplinary proceedings as SEG called FC to a disciplinary hearing after the matter was reported to SEG management.

SEG must have the disciplinary procedure in writing and must be easily available to the employees. The procedure must identify the performance and behaviour that may lead to disciplinary action and the action available to SEG.

The disciplinary procedure must include the step of sending a letter to FC setting out the issue. SEG only mentioned a ‘breach of the company’s disciplinary policy’. However, at various times in the process, the management mentioned a number of other potential disciplinary breaches. This breaches the disciplinary procedural rules.

At the hearing, SEG must explain the complaint against FC; review the evidence; and give a chance to FC to tell his side of the story. However, in this case, only the last requirement was met. SEG did not review the evidence as in the hearing, SEG management did not interview the ZXR colleague working with FC, customers, or representatives of any client.

1. ACAS, ‘Disciplinary procedure: step by step’ accessed 11 August 2021 .
2. GOV.UK, ‘Disciplinary procedures and action against you at work’ accessed 11 August 2021 .
3. Ibid.

SEG should always investigate the circumstances before dismissing an employee, even in possible gross misconduct issues. In this case, FC had apologised and explained why he wrote the comments. SEG should have investigated the circumstances, which it did not.

For a dismissal, there must be a valid justifiable reason. SEG should have acted reasonably in the circumstance. The decisions must also be consistent, where if it dismisses an employee for a conduct but no other employees who did the same then it is not consistent. In this case, the failure to investigate the circumstances, review the evidences, and citing a number of potential disciplinary breaches at the hearing do not fit a justifiable reason and SEG cannot be stated to have acted reasonably. Further, the fact that other colleagues also commented but were not called for a disciplinary hearing does not show a consistent act on the part of SEG.

In regard to the appeal outcome, an employer must inform the employee the outcome as soon as possible in writing. The outcome must state the reason for the decision and whether it is a final decision. In this case, SEG did not inform FC the outcome as soon as possible. The outcome was not in writing. It was conveyed to FC in a meeting one week after the appeal hearing.

A summary dismissal involves a ‘gross misconduct’ that does not need SEG to go through the normal disciplinary procedures. Such misconduct may be, for example, violent towards a colleague, customer or property, fraud, or theft. The disciplinary rules of SEG must give examples that are gross misconduct, which is so serious that it will likely lead to dismissal without following the notice requirement. In this case, firstly, SEG does not have a separate email, internet or social media policy. Its disciplinary policy "bringing the company into disrepute"; "misusing the internet" and "making offensive remarks about others”. This means SEG has not given any example of what constitutes gross misconduct that will lead to dismissal. This also means that FC’s dismissal cannot be a summary dismissal, which further means that FC did not commit any gross misconduct that he must be dismissed without notice.

1. Gov.UK, ‘Dismissal: your rights’ accessed 11 August 2021
2. Ibid.
3. ACAS, ‘Appealing a disciplinary or grievance outcome’ accessed 11 August 2021
4. GOV.UK, ‘Taking disciplinary action against an employee’ accessed 11 August 2021 .

SEG, in all the given circumstances, will be liable for unfairly dismissing FC as the reasons it adopted are not reasonable and that it did not follow a formal disciplinary or dismissal process. Since FC has worked with SEG form more than 2 years, he has a right to file a claim based on unfair dismissal. The most likely outcome is SEG will be liable for unfair dismissal. SEG did not follow the Acas code. And so if FC wins the case in an employment tribunal, SEG must pay a larger payout, which could be up to 25% more.

At the appeal hearing the presiding manager did not find FC’s conduct as “not too horrendous” and that the final decision would "more likely be demotion, subject to confirmation". However, the appeal outcome is summary dismissal. This also serves as a valid ground for FC to take next steps, which may lead to a conciliation between FC and SEG.

Considering the given circumstances, SEG has the option of offering a reasonable ‘settlement’. This will end the conciliation process and FC will not go to an employment tribunal. The facts show that SEG did not follow appropriate procedure. The concerned managers were not trained and not aware of the processes needed in a disciplinary proceeding. In future cases, SEG must ensure to follow the ACAS code to make informed decisions.

1. GOV.UK, ‘Dismissal: your rights’ accessed 11 August 2021
2. GOV.UK, ‘Disciplinary procedures and action against you at work’ accessed 11 August 2021 .
3. GOV.UK, ‘Taking disciplinary action against an employee” accessed 11 August 2021 .

Q3. The complexity associated with the employment status is recognised by the government. Employment status occupies the core element in employment rights and the tax system. It is determined not only by reviewing the written contract, but also the reality of the relationship between an employer and an individual.

For employment rights, an individual can be an employee or a worker. Section 230 of the Employment Rights Act (ERA) 1996 provides this. Section 230(3)(b) also identifies a Limb (b) worker, who has day 1 rights but is not entitled to the full employee rights. For the tax system, the status is binary as either employees or self-employed. Based on the existing legal framework, courts have developed tests to determine the employment status.

The case of Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance, developed the test of irreducible minimum requiring mutuality of obligation, control over an individual, and personal service that define an employment status. However, while determining a Limb (b) worker case, there is a less strict version of the test considering only the contract of personal service. The development and evolution of the labour market brings lesser clarity in determining the employment status. For instance, there is less clarity of who a worker is and who a self-employed person is.

The government recognises the complexity arising from several different case law precedents and legislations that may contribute to challenges for individuals to understand their employment status. Thus, an individual may know their employment status for rights, but may not know it for tax purposes. The courts and their case law principles are the major source to determine the employment status. In that regard, it is argued that such minimalistic approach must be addressed by a clear tests that set out the key principles in primary legislation supported by secondary legislation and guidelines for detail.

1. BEIS, HM Treasury and HM Revenues and Customs, ‘EMPLOYMENT STATUS CONSULTATION EMPLOYMENT’ (2018) accessed 11 August 2021 .
2. Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497.
3. BEIS, HM Treasury and HM Revenues and Customs, ‘EMPLOYMENT STATUS CONSULTATION EMPLOYMENT’ (2018) accessed 11 August 2021 .

There are cases that have recognised the complexities around the employment status. For example, in Bates van Winkelhof v Clyde & Co LLP, Baroness Hale stated that statutory protection is also given to a worker performing an integral part of a business operation. Baroness Hale thus called out for a revised statutory concept of ‘worker’ to that effect to distinguish such workers from genuine independent contractors. The issues regarding the current determination of employment status is also recognised by the Taylor Review of Working Practices (2017). The Taylor review report recognises the uncertainty regarding the application of the legal tests, particularly with regard to services related to new platform technologies.

The employers have a duty to not misrepresent the employment status of their staff. The Talyor review does not deal with the real issue. Even the test of ‘mutuality of obligation’ does not form a part of the binding UK Supreme Court jurisprudence since the case ruling of Autoclenz Ltd v Belcher. In this case, the Court of Appeal held that car valets are workers by considering the reality of the agreements between the workers and the employers. The gig economy has led to the emerging problem of misrepresentation of employment status. This problem came into the limelight in the October 2017 Supreme Court judgment in Aslam v Uber BV, where the Employment Tribunal found that Uber misrepresented the status of the drivers. The Supreme Court aligned the tests for civil and criminal fraud in this case.

1. BEIS, HM Treasury and HM Revenues and Customs, ‘EMPLOYMENT STATUS CONSULTATION EMPLOYMENT’ (2018) accessed 11 August 2021 .
2. Good Work, ‘The Taylor Review of Modern: Working Practices’ (2017) accessed 11 August 2021 .
3. Ewan McGaughey, ‘Uber, the Taylor review, mutuality and the duty not to misrepresent employment status’ (2019) 48(2) Industrial Law Journal 180-198; Autoclenz Ltd v Belcher [2011] UKSC 41
4. Ewan McGaughey, ‘Uber, the Taylor review, mutuality and the duty not to misrepresent employment status’ (2019) 48(2) Industrial Law Journal 180-198.
5. Aslam v Uber BV [2017] IRLR 4.

The different legal tests and sources of law to determine the employment status is problematic particularly in this time of employment driven by technological developments. There is a higher change of exploiting the current legal principle by technology-run businesses to misrepresent the employment status without responsibility for the purpose of profit.

To conclude, the problem lies with the multiple and different tests to determine employment status. This may create among employees and employers a lack of awareness and understanding to apply the tests. The priority on services without the responsibility to enforce legal duties and rights demands a single statutory test of employment status.

1. Ewan McGaughey, ‘Taylorooism: when network technology meets corporate power’ (2018) 49(5-6) Industrial Relations Journal 459-472.

Cases

Aslam v Uber BV [2017] IRLR 4.

Brown v London Borough of Richmond Upon Thames [2012] EWCA Civ 1384.

Johnstone v Bloomsbury Health Authority [1992] QB 333.

King v Bristow Helicopters 2002 UKHL 7.

Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497

Sutherland v Hatton (2002) 68 BMLR 115

Books

Harpwood V, Medicine, Malpractice and Misapprehensions (Routledge-Cavendish 2007)

Journals

Hand J, ‘The compensation culture: Cliché or cause for concern?’ (2010) 37(4) Journal of Law and Society 569-591.

McGaughey E, ‘Uber, the Taylor review, mutuality and the duty not to misrepresent employment status’ (2019) 48(2) Industrial Law Journal 180-198; Autoclenz Ltd v Belcher [2011] UKSC 41

Continue your exploration of Vicarious Liability in Employment with our related content.

Reports

BEIS, HM Treasury and HM Revenues and Customs, ‘EMPLOYMENT STATUS CONSULTATION EMPLOYMENT’ (2018) accessed 11 August 2021 .

Good Work, ‘The Taylor Review of Modern: Working Practices’ (2017) accessed 11 August 2021 .

Lowe et al., ‘The Cost of Compensation Culture’ Report of a working party of the Faculty of Actuaries.

Websites

ACAS, ‘Disciplinary procedure: step by step’ accessed 11 August 2021 .

ACAS, ‘Appealing a disciplinary or grievance outcome’ accessed 11 August 2021

GOV.UK, ‘Disciplinary procedures and action against you at work’ accessed 11 August 2021 .

GOV.UK, ‘Disciplinary procedures and action against you at work’ accessed 11 August 2021 .

Gov.UK, ‘Dismissal: your rights’ accessed 11 August 2021

GOV.UK, ‘Taking disciplinary action against an employee’ accessed 11 August 2021 .