December Blog - 02/12/2019

Workplace wellbeing: do recurring mental health issues equal disability?


As an employer, you have a duty to take reasonable care of the health and safety of your workforce. Increasingly, this applies to mental health as well as physical health. The festive period is approaching and it's possible that some staff won't be looking forward to it. They may experience low moods or feelings of anxiety or loneliness that can cause stress and/or depression. This may lead to a disability.

The Equality Act 2010 considers a person to be disabled if they have a physical or mental impairment that has a substantial and long-term effect on their ability to carry out normal day-to-day activities. An impairment is considered long-term if it's likely to last – or has already lasted – 12 months or more.

Normal day-to-day activities means regular or daily occurrences, e.g. eating, washing, walking, reading, writing or conversing. Only serious visual impairments are covered and not visual issues corrected by prescription lenses.

How does the definition of long term work for recurring mental health issues? A recent case has shed some light on this.

A caretaker took sick leave due to work-related stress from April to September 2016. He recovered and returned to work, but was off again for the same reason in January 2017. He was dismissed due to incapability in July 2017. He claimed his dismissal was due to a disability and therefore discriminatory. The issue in dispute was whether the disability was long term.

The Employment Tribunal ruled there was no long-term effect as the second period of stress hadn't lasted 12 months and seemingly improved after the dismissal (based on his lack of communication with his GP between July 2017 and April 2018).

The Employment Appeal Tribunal (EAT) disagreed. It said the tribunal hadn't properly considered how likely it was for the stress to recur. A previous Supreme Court case said 'likely' means 'could well' and not 'probably will'. As this was his second stress-related absence, the EAT felt that the stress was 'likely' to recur. It also said that the point in time to consider if a condition was likely to last 12 months wasn't when (or after) an employee is dismissed, but when an employer makes the decision.

What this means for you

Addressing mental wellbeing is as important as discussing physical health. Recently surveys by different organisations have highlighted some of the issues involved:

  • Mental ill health is the most common cause of long-term absences in the private sector with over 53% affected in their current roles.
  • The top 3 causes of stress and mental illness were workload (62%), management style (43%) and relationships at work (30%). Other causes included impending redundancies, bullying/harassment and working alone.
  • Only 32% of private sector employers have a separate wellbeing strategy that's not mixed-in with other policies.
  • Addressing wellbeing at work is shown to increase workforce productivity, retention and morale.

The government has published Thriving at Work - a review of mental health and employers. It has 6 core recommendations for all employers, regardless of their size, sector or type of workplace:

  • Produce, implement and communicate a mental health at work plan;
  • Develop mental health awareness among employees;
  • Encourage open conversations about mental health and the support available to employees who are struggling;
  • Provide employees with good working conditions;
  • Promote effective people management; and
  • Routinely monitor employee mental health and wellbeing.

Acas also has a guide to promoting positive mental health in the workplace.

If you have an employee who experiences a mental health issue, don't assume it won't return. It could be worse where the original cause happens again.

Always try to get a medical report from a health professional before making key decisions about the employee. GP records alone may not be enough, as often they log what the employee has told them without making an assessment of their condition. If you're unsure if the employee is disabled, take legal advice before making any decisions.

If the employee is disabled, you have a duty to make reasonable adjustments to help them work. For employees suffering from depression or anxiety caused by depression, you could, for example, temporarily reallocate some of their duties, or adjust their working times to help avoid anxiety.

If a disabled employee starts a tribunal claim against you, don't challenge whether or not they are disabled as the tribunal could take a dim view of it. Focus instead on whether you knew, or ought to have known, of their disability.


December Blog - 09/12/2019

High Court clarifies when directors' duties extend to shareholders

All company directors have various duties that involve acting in the company's best interest. These are laid out in the Companies Act and include:

  • Acting within the powers granted by the company's articles of association and using them for the good of the company and not for personal gain.
  • Promoting the long-term success of the company; e.g. by maintaining good relationships with customers, suppliers and staff.
  • Avoiding any direct or indirect conflicts of interest between the director's role and their personal interests; this includes actual or potential conflicts.
  • Declaring any personal interest before entering into a transaction or arrangement for the company.

A High Court case has looked at whether these duties can extend to a company's shareholders, where the directors have defrauded them.

The case involved the directors buying the company's shares from its shareholders. The directors made false statements, leading the shareholders to believe it was performing less successfully than it was. This resulted in the shares being sold below their market value.

Though the judge ruled in favour of the shareholders, he didn't accept their claim that the directors' legal duty of trust and honesty (i.e. a 'fiduciary duty') extended to them. He held that this would only apply in special circumstances or when there is something unusual about the nature of the relationship between the director and the shareholders, such as small companies where the directors and shareholders are members of the same family.

What this means for you

Understand your duties as a director. If you're both a director and shareholder in a family-run company, be careful about the capacity in which you're making decisions. Otherwise you may end up being accountable to any family shareholders who don't sit on the board.

How we can help

We have a Shareholders agreement that sets out the duties and responsibilities of the shareholders to the company and regulates their relationship with each other.


December Blog - 16/12/2019

Company penalised for not following resolution communication rules

When directors of a company make decisions or reach agreements, these are known as 'resolutions'. Shareholders in private companies who have at least 5% of voting shares (or lower if allowed by the articles of association), have a right to request the company to distribute a proposed written resolution. The resolution must be signed by the requesting shareholders and sent to the board of directors, with any accompanying statement about it.

The board must send or submit copies of the resolution and any statement, to all the other shareholders who have 5% or more of voting shares, within 21 days of receiving the request.

These are strict requirements, as one company recently found out to its cost.

The company had 3 shareholders, A, B and C. A and B were also directors but their relationship had broken down as A wanted to put the company into administration, but B did not. This left the board in deadlock.

A and C held the majority of the voting shares and they drafted and signed a proposed written resolution, appointing C as a director. A couple of days later A emailed B informing him of the resolution, asking the company to distribute it and requesting the directors to attend a conference call less than 2 hours after the receiving the email, to authorise the resolution. Crucially, the email didn't attach a copy of the resolution and B refused to attend the call.

Despite this, A signed the resolution (as a director) to appoint C, and then A and C (as directors), passed a resolution to appoint administrators. The court held that the appointments of C and the administrators were invalid as the company had failed to distribute the proposed resolution to all eligible shareholders, namely to B.

What this means for you

Ensure you comply with company law rules on resolutions to avoid costly mistakes.

How we can help

We have a Shareholders agreement that sets out the duties and responsibilities of the shareholders to the company and regulates their relationship with each other, including deadlock situations.