As licensing reform is put into practice and more pubs and bars are given the right to stay open longer, employers should be aware of the potential for more claims for compensation in the county courts from overworked and overstressed staff. How can such claims be avoided?

Most businesses, given the opportunity to provide extra working hours to meet new, longer opening hours, would prefer their existing staff to cover rather than employ new, potentially inexperienced staff. Against this background, the recently decided case of Mark Hone v Six Continents needs to be considered.

In that case, the Court of Appeal found in favour of Hone, a pub landlord who was working between 82 and 90 hours a week when he collapsed at work. He had told his employer he felt tired but had not made an official complaint. In previous cases this would not have been enough to win the verdict, but the judge said the hours Hone was working represented, in themselves, a "cry for help" and his employer was culpable.

In this way, the Court of Appeal altered the previously established law and moved the responsibility for dealing with long working hours further towards the employer than it had previously been.

The Working Time Directive establishes a 48-hour limit for most employees. This case emphasises again the need to ensure employees who are working in excess of 48 hours sign the "opt-out". Remember that with staff who also have a second job, both employers are in breach of the directive if the opt-out is not signed.

To avoid costly compensation claims by employees alleging they are overworked and overstressed, there are a number of basic steps to take.

First, all employees, both full- and part-time, should have properly drafted contracts of employment. In this context, the contract should include an obligation on employees to inform the employer if they are working more than 48 hours. This would help to avoid the situation in which an employee has two jobs which, combined, exceed the 48-hour limit.

The clause should make it clear that failing to inform the employer would have sanctions, including dismissal. It would also be sensible to deal with working hours and sanctions within the disciplinary procedure rules.

Once the contract has been dealt with, the working time opt-out should be signed and stored safely.

Then there should be a documented policy in place for dealing with stress. This should be in easily understandable language and should be given to all employees, not just managers. Employers should be able to prove this has been provided.

The HSE Management Standards, which came into force on 3 November 2004, in effect impose a duty on employers to seek out and assess jobs with an exposure to stress. This must be dealt with.

The hours being worked by employees should be recorded and those records kept. It should be the responsibility of the immediate manager and/or personnel or HR department to monitor the hours worked and, where necessary, make an inquiry if an exceptional working hours pattern is detected. In the Hone case, the court considered 82 hours a week plus was sufficient warning to an employer.

Discussions should take place between employees and their managers, as would be normal in any event, but it would be prudent to cover unusually long working hours in those discussions. To be in the best position to defend any subsequent claims, such discussions should be recorded in a meeting/review note.

If an employee has gone off work with stress, it's important the absence is managed and contact kept between employee and employer. Depending on the size of the employer, this may best be done by the personnel or HR department.

To avoid a compensation payout, any return to work should be supervised. Ideally, it should be phased and discussions should take place to confirm the return is going well before a normal workload is resumed. For larger employers, the involvement of the occupational health department is also crucial. Remember, though, that their records will be disclosable and if, for example, they recommend a course of action that is not followed, that will assist the employee in any compensation claim.

Smaller employers should seek guidance from the claimant's GP. But remember, a GP is much more likely to tell you a claimant should return to work on a reduced-hours basis if he lacks detail as to the precise work the employee does.

So when asking questions of a GP, give some details of how you see the claimant's job and do not simply leave it to the GP to rely on what he might have been told by the employee.

Another key medical aspect is where resources allow the availability of a medical contact for an employee, for example an occupational health nurse or a confidential counselling line.

Such facilities should not only assist the stressed employee and potentially avoid absence from work, but also help to avoid successful compensation claims.

The reality is that the licensing changes will result in more employees working longer hours. To ensure their wellbeing and avoid sickness absence and compensation claims, the measures discussed above must be put in place.

Case study: mark hone versus six continents (2005)
Mark Hone, a pub landlord who collapsed due to overwork, successfully sued his former employers for breach of duty of care. The court said Hone should receive £21,000 in damages.

Hone began working for Six Continents (then Bass) as a pub manager in 1995. In 1999, at the Old Moat House, Luton, he found himself working 13-hour days, seven days a week. He kept records of his hours and repeatedly told his employers that he was overworked, but they took no action. He had no assistant manager and other staff who left were not replaced.

Hone, who had refused to sign a Working Time Directive 48-hour opt-out, began suffering from headaches and insomnia. In May 2000 he collapsed at work suffering from an anxiety disorder.

Six Continents argued:

• There was no prior history of mental illness or suffering adversely from stress at work.
• There was no evidence that, in general, licensed house managers were prone to such complaints.
• The claimant had been named Six Continents' Pub Manager of the Year in 1998 and was well used to working long hours.
• He had had no absences from work before going off with stress
• At no time did the claimant inform anyone, including his immediate supervisors, that his health was being affected by work.
• Indeed, he always gave the impression he was well, self-confident and in control.
• At a meeting shortly before he went off work, he made no mention of any adverse effects on his health.

The Court of Appeal upheld the initial trial judge's decision that Six Continents had breached its duty of care. It knew Hone was working long hours, had been asking for help and had complained of tiredness.

The Court of Appeal implied this was a borderline case, but allowed the judgment to remain, thus making it easier for other employees to bring claims.

How to avoid compensation claims for over-work and stress

• Have a properly drafted contract of employment and disciplinary procedure dealing with issues such as working hours.
• Ensure you have the Working Time Directive signed and keep the document.
• Comply with the HSE Management Standards that came into force on 3 November 2004.
• Have a documented policy relating to stress and ensure all employees have access to it and you can prove it.
• If you have a confidential counselling facility, make sure it's known to employees and you can show they're aware of it.
• Ensure all meetings are documented.
• When you first suspect circumstances might lead to a compensation claim, notify your employer liability insurer.

Roddy Macleod is a partner at solicitors Weightmans. Tel: 0161-817 3513. E-mail: roddy.macleod@weightmans.com