EMPLOYMENT LAW NEWS

March 2006 Issue No: 6

Employee Stress – What does it mean for Employers?
Stress is a word that often conjures up the thought of a flood of claims and prosecutions as a result of the new laws relating to workplace stress and employer liability. However to date this has not eventuated.
The Health and Safety in Employment Act was amended to recognise that stress and fatigue had the potential to attract liability.
It is fair to say that since the amendments, employers have heard the word stress used more frequently, by media and by employees. We have seen a higher proportion of aggrieved employees alleging at least some workplace stress as part of their employment dispute with their employer. However, the reality is that the courts and authority have not dealt with stress any differently since the amendments. All that the amendments appear to have done is codify what the common law already said.
The majority of workplace stress claims appear to be brought by employees under the Employment Relations Act rather than by the Department of Labour under the Health and Safety in Employment Act. This may be because any penalty under the Health and
Safety legislation is payable to the state (although the Court has discretion to order reparation directly to a victim under the Sentencing Act 2000), whereas compensation for a grievance under the Employment Relations Act, or damages for a breach of an employment agreement are paid directly to an employee. To date there has only been one prosecution under the Health and Safety in Employment Act for stress related harm. In this case, being Department of Labour v Nalder Biddle (Nelson) Ltd, the employer pleaded guilty. We discussed this case in one of our earlier newsletters. The Court gave credit for the employer’s co-operation and early guilty plea, and imposed a fine of $8,000.00, and ordered the employer to pay $1,294.00 in medical expenses, $130.00 in court fees and $5,000.00 towards the employee’s costs. Please contact us if you require the newsletter that deals with this case in further detail.
In another recent case, Kingston v Gen- i Ltd, the employee alleged breach of the employment agreement, and took a claim under the Employment Relations Act. Specifically the employee claimed that the breach was a result of the employer’s failure to monitor and regulate his workload to ensure that he did not suffer undue stress and psychological harm, as well as a failure to reduce his workload, when the employer knew or ought to have known that he was suffering from a mental illness and was therefore vulnerable to further harm from stress.
The employee started working for the employer in 1990 and started having difficulty sleeping in 1997. The employee was diagnosed with a depressive illness and alleged that he told his employer of his illness on several occasions. The employee had a breakdown in 2002 and when he returned to work after the breakdown he was presented with higher targets, and then raised a personal grievance. The Authority concluded that there was nothing to indicate that the employee’s sales work posed an inherent risk to his psychological wellbeing. The Authority also rejected medical evidence, stating that purported causation was insufficient and said that the employer had never been put on formal notice that the employee was suffering from depression or had any vulnerability to stress. Thus it appears, following the amendments, there is still a common sense approach being taken when considering stress cases. One factor is clear though, if an employee informs an employer they are under stress, then an employer must take some action. We suggest you seek legal advice forthwith.
There are some practical tips that an employer can take with regard to reducing stress claims, these include:
• Managers should be trained to recognise potential workplace stress situations, and be told how to deal with them.
• Employers should seek legal advice if they receive notification that one of their employees is under stress. Stressed employees can become increasingly difficult to manage.
• It is suggested employers keep a written record of how they deal with stress complaints, following legal assistance.
• Employers should ensure annual leave is taken on a regular basis and that a reasonable proportion of annual leave is taken in one uninterrupted period.
• Ensure there are good systems for recording information relevant to an employee’s vulnerability to stress. For example if an employee had a nervous breakdown 3 years ago, and had to take sick leave, the employee’s current manager needs to be aware of this information, so he or she can take this into account when dealing with the employee.
• Information relating to an employee’s mental health should be kept confidential, apart from those few people in the organisation that need to know, such as the employee’s current manager. Any person being told information about an employee’s health also needs to be told the reason they are being given the information, the requirement to keep the information confidential and the consequences for disclosing such information to an unauthorised person.
• Employees taking sick leave for stress need to be supported when they return to work.
A change in the minimum pay rates takes effect on 27 March 2006. The new rates are:
Adult Rate:
Per hour $10.25 (was 9.50)
Per 8 hour day $82.00 (was 76.00)
Per 40 hour week $410.00 (was 380.00)
Per annum $21,320.00 (was 19,760.00)
Youth Rate:
Per hour $8.20 (was 7.60)
Per 8 hour day $65.60 (was 60.80)
Per 40 hour week $328.00 (was 304.00)
Per annum $17,056.00 (was 15,808.00)
The adult rate applies to those employees aged 18 years or more. The youth rate applies to those employees 16 or 17 years of age. The training rate (same of youth rate) applies to those people doing recognised industry training undertaking at least 60 credits a year.
The statutory minimum wage applies to all types of jobs and employees.
Labour Inspectors are able to grant an exemption to the minimum wage rates to an employee with a recognised disability that significantly slows his or her work and makes him or her incapable of earning the minimum wage.
Thus the statutory minimum wage does not apply to:
• Employees who hold an exemption; and/or
• People doing recognised industry training.