The Scenario

In recent years, redundancies, mergers and corporate insolvencies have resulted in job losses for many employees.

This can be devastating. It may cause the individual to suffer not only the stress of losing the job, but also long term effects, such as depression, psychiatric illness and marital strain. In this case, there is the potential for employers to be held responsible for psychiatric injury caused by dismissal or disciplinary action. How likely is such a case in Hong Kong? The answer depends on the foreseeability of psychiatric injury and whether the employee is vulnerable to such stress.

The Case Law

Some years ago, a British court case investigated the level of an employer's responsibility for its employee's psychiatric injury. The employee claimed that the injury was a result of unfairness in the individual's dismissal. Essentially, he claimed that he was dismissed without being given the proper opportunity to be heard. However, his claim was struck out by the court on the basis that it was inconsistent with the legislative regime on unfair dismissal in Britain. His claim was also thought to be too remote.

In a similar court case in Hong Kong, an individual was seeking compensation for vexation, frustration and mental stress caused by his employer during the events leading to his dismissal. His case was initially struck out by the court. On appeal, however, the court did not consider his claim to be entirely unarguable. The court stated that success in recovering any compensation would depend on whether his employer should reasonably have foreseen his psychiatric injury.

An Imperfect Process

In a typical professional environment, it is expected that employees are open to criticism from employers at times, and that at other times they may face disciplinary sanctions for misconduct. Likewise, in an imperfect world, such criticisms or disciplinary processes are often flawed. A spectrum of flaws — ranging from minor errors to gross unfairness — may occur in the process.

However, it is not always foreseeable that disciplinary action, even if grossly unfair, will cause an employee to develop psychiatric illness, unless there are signs they are vulnerable to injury.

This means that, even if an employer's disciplinary action or decision to terminate employment may have caused an employee to develop depression or other psychiatric illnesses, an employee cannot usually seek compensation if the consequence of psychiatric injury is not foreseeable.

However, if there are indications that the stress caused by disciplinary action or termination would lead to a mental health injury, and these indications are plain enough for any reasonable employer to realise that it should take action to prevent such injury, then that could potentially form the basis of a claim!

Tips for Employers

Watch out for signs that suggest that the employee has particular mental health problems or is vulnerable to psychiatric injury.

When dealing with disciplinary issues:

● do not use emotive language
- use neutral terms to describe the situation and the issues

● ensure there is a fair process observed during disciplinary action

● give the employee the opportunity to respond and explain his or her actions

● allow the employee ample time to give his or her views on the matter and

● do not rush through the process -
do not make any decision before the process has been completed.

When dealing with a case in which employment will be terminated:

● ensure the motivations for termination are conveyed accurately and that the employee knows the next steps in the termination process

● avoid platitudes and emotive statements, such as "I know how you feel"

● allow some time to listen to the employee's response and reply to his or her reaction if need be and

● do not argue with the employee.

This article appeared in the Classified Post print edition as Causing stress to staff may land you in court.