Mental Health at Work: The Legal Mistakes Employers Keep Making (And How to Avoid Them)

Mental health issues in the workplace are now one of the most common causes of long-term absence, grievances and disputes between employers and employees. They are also increasingly central to Employment Tribunal claims, particularly where an employee alleges their employer failed to take appropriate steps once concerns were raised.

For employers, the legal position is straightforward: mental health is not treated as a separate category of wellbeing. In law, it forms part of the same duty of care owed to employees in relation to health and safety.

The difficulty is not usually that businesses do not care. The real issue is that warning signs are often missed, concerns are not escalated quickly enough or employers respond too formally and too late. When that happens, the Tribunal will look closely at what the employer knew, what they did with that information and whether reasonable steps could have prevented the harm.

This article considers three key cases which continue to shape how courts approach workplace stress, psychiatric injury and mental health-related misconduct.

The Legal Duty: What Are Employers Actually Required to Do?

Employers have legal responsibilities under several overlapping areas of law.

First, the Health and Safety at Work etc. Act 1974 requires employers to safeguard the health, safety and welfare of employees. This duty is not limited to physical hazards. If workplace conditions are causing stress-related illness, employers are expected to take steps to address it.

Secondly, the Management of Health and Safety at Work Regulations 1999 place a requirement on employers to carry out appropriate risk assessments. That includes considering stress-related risks where they are foreseeable, such as excessive workload, lack of support, poor management practices or workplace conflict.

Thirdly, the Equality Act 2010 becomes relevant where an employee’s mental health condition amounts to a disability. Where that applies, employers must consider whether reasonable adjustments are required and must avoid unfavourable treatment linked to the condition.

These legal obligations are not theoretical. They are regularly tested in Tribunal claims and in some cases, in the civil courts.

Case Law Guidance: Where Employers Have Fallen Short Walker v Northumberland County Council [1995] – The Starting Point

Walker remains one of the earliest and most influential decisions confirming that employers can be legally responsible for psychiatric injury caused by work-related stress.

Mr Walker worked as a social services manager and repeatedly raised concerns about an unmanageable workload. Despite those concerns, his employer failed to reduce the pressure. He suffered a breakdown and was absent from work.

When he returned, he was given assurances that additional support would be put in place. Those assurances were not followed through. His workload increased and he suffered a further breakdown, after which he was dismissed on ill-health grounds.

The court found the employer liable, emphasising that the crucial issue was foreseeability. After the first breakdown, the employer could not reasonably argue that they were unaware of the risk.

Practical takeaway: employers are most exposed when an employee has already shown signs of stress-related illness, returned to work and the employer makes no meaningful adjustments.

Hatton v Sutherland [2002] – Foreseeability Is Everything

Hatton is still one of the leading authorities in workplace stress litigation. The Court of Appeal considered multiple claims together and clarified when an employer will (and will not) be liable for psychiatric harm.

A key message from the judgment is that an employer is not automatically liable simply because work is demanding or because an employee becomes unwell. The question is whether a reasonable employer would have foreseen psychiatric injury based on what they knew at the time.

The Court confirmed that:

• employers are usually entitled to assume employees can cope with the pressures of the role unless told otherwise;

• employers are not expected to be mind readers;

• there must be clear warning signs which would prompt a reasonable employer to intervene;

• support mechanisms such as counselling services can assist, but they do not remove the duty to respond properly where concerns are raised.

In one of the cases, the employee’s claim failed because there was insufficient evidence that the employer had been put on notice of a genuine risk of psychiatric harm.

Practical takeaway: employers do not need to predict illness. However, where concerns have been expressed clearly, inaction becomes difficult to defend.

Muir v AstraZeneca UK Ltd [2024] – Mental Health Cannot Be Ignored in Disciplinary Matters

Muir is particularly important for modern employers because it deals with the intersection between mental health and workplace conduct.

Dr Muir had longstanding depression and anxiety, and the employer was aware of his condition. During a high-pressure period, concerns were raised regarding his behaviour towards colleagues. AstraZeneca treated the matter as serious misconduct, concluded that his behaviour amounted to bullying, and dismissed him without notice.

The Employment Tribunal ruled that the dismissal was unfair and that disability discrimination had occurred. The Tribunal criticised the employer for progressing through a disciplinary process without properly assessing whether his health condition had contributed to the behaviour, and without taking medical advice.

A key failing was the absence of an occupational health referral, which would have assisted the employer in understanding whether the employee’s mental health was a factor and what adjustments could have been considered.

The Tribunal also found the appeal stage to be inadequate, particularly as it was a chance to correct earlier errors but failed to do so.

Practical takeaway: employers should treat mental health as a live issue throughout investigations and disciplinary proceedings. If a condition is known, it should be explored, not sidelined.

What Tribunals Expect from Employers in Real Terms

The cases above highlight that liability is often caused by process failures rather than malice. Employers who take a structured and evidence-based approach are far less likely to face successful claims.

In practical terms, employers should focus on the following.

1. Stress and Mental Health Risk Assessments Should Be Routine

If your business has not reviewed stress risks in the workplace, you may already be exposed. A risk assessment should not simply exist as a document in a folder. It should identify genuine workplace triggers, highlight where pressures are excessive and record steps taken to address them.

It should also be reviewed regularly, particularly following restructures, redundancies or operational change.

2. Managers Must Be Trained to Spot the Early Indicators

Line managers are usually the first people to hear that someone is struggling. If managers are not confident dealing with mental health concerns, issues are likely to be ignored, mishandled or escalated too late.

Manager training should include how to:

• recognise early warning signs

• respond appropriately without making assumptions

• document concerns professionally

• involve HR and occupational health where needed

3. Employers Must Act Once Concerns Are Known

A common mistake is waiting until an employee is signed off sick or reaches breaking point. Once a concern is raised, employers should consider whether temporary adjustments are needed, such as workload reductions, additional supervision, flexible hours or phased return planning.

A failure to act promptly is one of the most consistent features of successful claims.

4. Occupational Health Input Is Often Crucial

Occupational health referrals are not just for absence management. They are also a practical tool for employers dealing with performance issues, behavioural concerns or return-to-work planning.

Medical input can also provide valuable protection, particularly where an employer needs to justify why certain steps were or were not taken.

5. Disciplinary Action Must Be Handled Carefully

Where an employee has a known mental health condition, disciplinary action must be approached with care. Employers should consider:

• whether the behaviour may be linked to the condition

• whether reasonable adjustments are needed to the process

• whether support should be offered alongside any formal procedure

• whether dismissal would be proportionate in the circumstances

Moving straight to dismissal without addressing these issues is a high-risk approach.

6. Keep Clear Written Records

In Tribunal proceedings, employers rarely lose because they did nothing at all. They lose because they cannot prove what they did.

Records should be kept of meetings, agreed adjustments, occupational health recommendations, correspondence and the reasoning behind decisions. If an employer’s actions were reasonable, a clear paper trail will often be decisive.

Final Thoughts

Mental health is now one of the most significant legal and operational risks facing employers. The courts have made it clear that where psychiatric harm is reasonably foreseeable, employers are expected to take it seriously. Warning signs cannot be ignored. Mental health must be treated as a genuine factor in workplace decision-making, including performance and disciplinary matters.

When managed correctly, mental health concerns can often be addressed sensitively and constructively, allowing employees to remain supported and productive. However, when mishandled, they can quickly lead to claims for disability discrimination, unfair dismissal and substantial financial and reputational damage.

If your organisation has not recently reviewed how it manages stress, mental health-related absence, or disability adjustments, now is the time to do so. Case law consistently shows that liability often arises where action is delayed, support is inadequate or employers fail to take medical guidance and reasonable adjustments into account.

If you would like advice on a specific situation or would like support reviewing your policies and procedures, please contact me.

Marriam Sohail
Hilltop Solicitors