PI and Employment Claims

David Marshall, Partner
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Traps for the Unwary: Part 2

In Part 1 of this Article, I set out a hypothetical case study in which a claimant was wrongfully and unfairly dismissed, was the victim of sex and race discrimination at work, and was suffering a serious and continuing psychiatric condition. I discussed the case of Sheriff v Klyne Tugs [1999 IRLR 481] which, in effect, forces the claimant to elect whether to pursue a remedy in the Employment Tribunal or in the Courts. Here I set out some of the pitfalls and some of the pros and cons of both courses of action and try to give some pointers as to how to advise a client in such circumstances.

Time Limits

The normal three year personal injury limitation period will apply in the courts. This can still sometimes prove a problem, because in many cases there will inevitably be a series of events stretching over a period of time. If the claimant is to recover compensation for the earliest incidents, "date of knowledge" and section 33 discretion arguments may need to be employed.

In the Employment Tribunal, the time limit for proceedings is usually three months. The time limit for unfair dismissal claims is usually easy to calculate. But, if you are late, it is virtually impossible to bring the claim out of time. For discrimination claims, time usually runs from three months from the act of discrimination. It is possible to argue a "series" of events ending with a last straw (such as a dismissal) which is within three months of the commencement of proceedings. However, you need to be reasonably happy that you have good prospects of establishing a connected series. (On the facts of the case study, this might not be too hard, but consider instead a case where the dismissal is purportedly on grounds of redundancy. If the Tribunal accepted that this were so, the last act of discrimination may be more than 3 months before commencement of proceedings).

The Tribunal can extend time where it is just and equitable to do so, but there is considerable case-law on the meaning of this phrase. There is also the trap of the Court of Appeal decision in Adekeye v Post Office (No 2) [1997 IRLR 105]. It is possible that the summary dismissal ended the employment, notwithstanding the claimant’s pursuit of an internal appeal against dismissal. If so, discrimination (other than "victimisation") after the ending of employment is not actionable in the Employment Tribunal.

Timescales

Assuming the client is still in time to litigate in the Tribunal, it is obvious that a decision will often have to be taken when the extent of the injury is unclear and the prognosis is unknown. Often it will be impossible to get hold of the records, let alone an expert’s report. Once started, Tribunal proceedings generally move quickly and you can anticipate a hearing being listed within 6 months. It is possible (indeed quite common) for the Tribunal to determine liability and then set a separate hearing to award compensation. In many psychiatric injury case, this should normally be agreed or a direction sought in advance. Otherwise you may find yourself trying to decide on an offer or argue compensation on the strength of a GP report.

Bear in mind that, although initial resolution in a Tribunal will normally be much faster than a Court, if the case goes to appeal the process can be time-consuming and labyrinthine. Appeals to the Employment Appeal Tribunal are common and take a year or more. Appeals to the Court of Appeal are also common and may take longer. In either case, it is not uncommon of the case to be remitted back to the Tribunal for rehearing or further determination of specific issues.

The manner of the dismissal

The House of Lords in Johnson v Unisys Limited [2001 IRLR 279] affirmed that it is not possible to recover compensation for the "manner of the dismissal". This can cause considerable causation problems in both Court and Tribunal proceedings if the manner of the dismissal (as in the case study) is particularly obnoxious. It might be argued by the employer that most of the injury flows from the manner of the dismissal rather than the preceding events. Perhaps somewhat oddly, it is, however, possible to recover compensation for the manner in which disciplinary or grievance procedures are handled during employment (Gogay v Herts County Council [2000 IRLR 703] ).

Burdens of proof

The burden of proof in a claim for psychiatric injury in the Courts based on common law negligence is squarely on the Claimant. This is not an easy burden to discharge. The Court of Appeal in its admirably clear judgement in Sutherland v Hatton [2002 EWCA Civ 76] set up no fewer than 16 hurdles for claimants to successfully jump!

By virtue of the Sex Discrimination (Indirect Discrimination and Burden of Proof) Regulations 2001, once facts giving rise to a potential finding of sex discrimination are proved, the burden of proof shifts to the employer respondent to prove that there was no discrimination. The same does not yet apply to race discrimination claims, although this is expected in due course.

Foreseeability

Whether it is foreseeable that the employer’s conduct will give rise to injury has often caused difficulty in Court actions for psychiatric injury. Whilst noting that in his excellent summary of the law in respect of stress at work cases prior to Sutherland v Hatton, [2001 JPIL 1/01] Andrew Buchan correctly suggests that this should be becoming easier to establish, in practice it may remain difficult to persuade some county court Judges. Again, this matter was reviewed by the Court of Appeal in Sutherland v Hatton – they concluded that because of the nature of mental disorder, it is harder to foresee than physical injury, but may be easier to foresee in a known individual than in the population at large. 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.

In the Tribunal, once the statutory tort of discrimination has been established, injury "caused" by the discrimination will be compensated. There is no requirement that damage is foreseeable.

Causation

In the Courts it is necessary to establish that the breach of duty caused the damage. This is often not straightforward as usually here are other stresses around (as in the divorce in the hypothetical case). However, provided it can be established that the stress caused by work has "materially contributed" to the psychiatric illness, it should be compensated. A court may well take into account that the claimant might have suffered a breakdown for a non-negligent reason in any event and discount future loss in the usual way. Again, the Court of Appeal in Sutherland v Hatton considered causation in detail and concluded that if the harm suffered has more than one cause, the employer should only pay for that proportion of the harm suffered which is attributable to his wrongdoing, unless the harm is truly indivisible.

In principle, the Tribunal should approach causation in the same way. However, in the case of HM Prison Service v Salmon [2001 IRLR 425] a 25% discount to the injury to feelings award was made because only 75% of the depressive illness was caused by the discrimination. This seems to be a bit of a simplistic approach, and was commented upon as such by the Employment Appeals Tribunal who nonetheless allowed the deduction to stand.

Damage

In Court proceedings, the client needs to show a recognised psychiatric condition. The award for injury to feelings in the Tribunal is much broader. If there is any doubt as to whether the client has suffered ‘psychiatric injury’ (as opposed to ‘injured feelings’) the Tribunal will probably be a better bet.

Caps

There is, of course, no cap on damages awarded in court. The compensatory award for unfair dismissal claims is capped at £52,600 in the Tribunal. There is no cap on compensatory awards or on awards for injuries to feelings in discrimination claims in the Tribunal.

Costs orders

Normal costs rules apply to Court proceedings. Costs orders are still rare in the Tribunal. The client is not facing the risk of paying the other side’s costs if the case is lost. However, unless the case is Trade Union or legal expense insurer backed, the client faces paying own costs out of the compensation awarded in the Tribunal. This includes expert fees and can, of course, be substantial in such claims.

Funding

There is no legal aid for personal injury claims in the Courts. Conditional Fee Agreements can be used. There is no legal aid available for the Employment Tribunal (although it might be available for appeals). Contingency Fee agreements (a percentage of the damages) are almost certainly lawful in the Employment Tribunal.

Judge v Tribunal

The County Court Judge is more likely to be used to determining complex issues arising out of personal injury claims. The Employment Tribunal will have less experience of this. However, there is reasonable leeway in the awards for injury to feelings. This could work for or against the client..

Conclusions

The first rule is "don’t dabble". If you are not competent to handle employment claims (personally or elsewhere within your firm) do not accept instructions. Decline instructions immediately (and give no advice as to limitation except that the client might have to act very, very quickly and to take immediate advice elsewhere).

If you are minded to take on the client, don’t sit in a box marked ‘personal injury’ without looking outside of it. Be very aware of potential employment law rights. If you are not competent to deal with both aspects of the claim, liaise very closely with the employment lawyer in your firm and be sure that he/she is aware of the complexities of a personal injury claim.

Be aware of the problems raised by the Sheriff case. You and your client need to make a positive decision as to whether or not to pursue an Employment Tribunal claim. If employment claims are compromised, ensure that personal injury rights are expressly excluded from any settlement.

There are no right or wrong answers. Often only hindsight will tell you whether the claim should have been pursued in the Employment Tribunal or in the Court. Clients may use that hindsight to bring negligence claims unless there is evidence that an informed choice was made on advice and agreed by the client (whether or not hindsight proved it to be wrong).

However, the following may be of assistance as guidance to your decision-making (note that most cases will fall into more than one of these categories and you will need to weigh up the relative pros and cons accordingly): 

The problem which is impossible to resolve, except to do the best one can on a case by case basis is the problem of establishing the likely prognosis before the expiry of a time limit for an Employment Tribunal clam.

This area of law is complex and subject to frequent change as the result of new Court and Tribunal decisions. Whilst I have tried to give some pointers, the facts of each case and the applicability of the law to each case will differ and it is essential to consider each case individually.

For further information email David Marshall or call 020 7940 4000.