Employer liability and EAPs: the changing legal position

A landmark legal ruling in 2002 provided a significant boost to the provision of employee assistance programmes (EAPs) in the UK. However, this precedent has been undermined by a February 2007 Court of Appeal ruling.

In the 2002 case of Sutherland v Hatton7, the Court of Appeal set a precedent whereby employers that provide an EAP were more or less fully protected against compensation claims for work-related stress or other psychiatric injury.

The XpertHR Employment Law Reference Manual says of Sutherland v Hatton: "An employer that offers a confidential advice service, with referral to appropriate counselling and treatment, is unlikely to be found in breach of duty. The existence or establishment of such a service may itself amount to reasonable steps and so discharge the employer's duty of care."

EAP providers have made much of this ruling in their marketing campaigns ever since the court delivered its verdict in 2002.

Less well-known at present is the February 2007 decision of Intel Corporation (UK) Ltd v Daw8, that like Sutherland v Hatton has the force of being a legally binding precedent.

In Intel v Daw, the Court of Appeal substantially modified the precedent set by Sutherland v Hatton. It has ruled that the provision of an EAP or similar counselling service does not necessarily protect an employer from liability at law for compensation for psychiatric injury.

The most significant aspect of Lord Justice Pill's judgment in Intel v Daw - as far as EAPs are concerned - is as follows: "The reference to counselling services in Hatton does not make such services a panacea by which employers can discharge their duty of care in all cases. The respondent, a loyal and capable employee, pointed out the serious management failings which were causing her stress, and the failure to take action was that of management. The consequences of that failure are not avoided by the provision of counsellors who might have brought home to management that action was required. On the judge's findings, the managers knew it was required." (Ibid)

The effect of Intel v Daw is to undermine the argument that EAPs provide universal protection against stress-related legal claims. The Court of Appeal makes it clear that "whether the counselling service provided will be enough to discharge an employer's duty depends on the facts of each case".

The Court of Appeal confirmed a lower court's earlier compensation award to Ms Daw. With interest, the net compensation for injury and loss of future earnings was £134,548.