A recent Court of Appeal decision analyses the liability of employers where employees claim that the actions of their employers caused them psychiatric injury.

In Yapp v FCO, the Court of Appeal held that the FCO was not liable for damages for Mr Yapp’s depression and psychiatric injury due to the damage being too remote. Mr Yapp was appointed British High Commissioner in Belize in 2007 and was suspended a year later pending investigations into allegations of misconduct. A written warning was given to Mr Yapp in relation to the allegations and his suspension was lifted but he developed a depressive illness and had to undergo heart surgery. He did not receive any other appointment in the FCO and retired soon thereafter.

Mr Yapp commenced proceedings against the FCO complaining about the disciplinary procedure. He claimed that the resulting stress had caused his depressive illness which both constituted damage in itself and led, on account of his inability to return to work, to pecuniary loss. The High Court found that the withdrawal from his post did amount to both a breach of contract and a breach of a duty of care that was owed by the FCO at common law. Further, it held that his withdrawal from his post caused his depressive illness and that the resulting loss was not too remote to be recoverable. Mr Yapp’s claims relating to the disciplinary process were however, dismissed. 

The FCO appealed this decision stating that Mr Yapp’s withdrawal from his post did not amount to a breach and further, even if it did amount to a breach Mr Yapp would not be able to claim damages for his depression and the consequential psychiatric injury on the grounds of remoteness and/or causation.

The Court of Appeal allowed the appeal on the issue of remoteness. It held that there was nothing about the circumstances that would have made it foreseeable that Mr Yapp’s withdrawal from his post would cause him psychiatric injury. Underhill LJ stated that it would be exceptional that an apparently robust employee with no history of any psychiatric ill-health, would develop a depressive illness as a result of even a very serious setback at work.

The judgment acknowledged that although the withdrawal from his post was a major setback for Mr Yapp’s career it was not tantamount to dismissal. Ultimately, the FCO was not expected to have foreseen, in the absence of any sign of special vulnerability, that Mr Yapp might develop a psychiatric illness as a result of its decision. As the losses attributable to Mr Yapp’s psychiatric injury were not reasonably foreseeable there could not be a finding of breach of the common law duty of care. The losses were thus also too remote to be recoverable in a claim for breach of contract.

Although fact sensitive, the Court of Appeal has given some comfort to employers where employees experience a set back at work which results in illness. Provided employers act reasonably and give proper regard to any health issues that they are made aware of in relation to employees, the test for damages is whether the employer’s actions result in a reasonably foreseeable outcome.