Is an Employer Liable for an Employee’s Mental Health Problems?

An employer can be liable for an employee’s mental health problems in two main ways: if the condition counts as a disability and the employer fails to make reasonable adjustments or treats the employee unfavourably because of it, or if work itself has caused or worsened the condition through a breach of the employer’s duty of care. Both routes can lead to a tribunal or civil claim, and both are more common, and more often litigated, than most employers expect.

The two legal routes to liability

Disability discrimination. Under the Equality Act 2010, a mental health condition counts as a disability if it has a substantial and long-term (12 months or more, or likely to last that long) adverse effect on the person’s ability to carry out normal day-to-day activities. Depression, anxiety, PTSD and bipolar disorder are all capable of meeting this test, depending on severity and duration. Once a condition qualifies, the employer has a legal duty to make reasonable adjustments, and can face a claim for discrimination arising from disability if it treats the employee unfavourably because of something connected to the condition, such as absence.

Crucially, disability discrimination protection has no minimum length of service. It applies from an employee’s first day, which surprises employers used to thinking in terms of the two-year qualifying period for unfair dismissal.

Breach of the duty of care. Separately, every employer owes employees a duty to take reasonable care for their health and safety, including their mental health. Where an employer knew, or ought to have known, that an employee was at risk of psychiatric harm from workload, bullying, harassment or an unmanaged return to work, and did nothing, that can found a personal injury claim for work-related stress or a constructive dismissal claim if the employee resigns in response.

What “reasonable adjustments” means in practice

The duty is to take reasonable steps to remove the disadvantage the disability creates. For mental health, that typically looks less dramatic than a physical workplace change. It’s more often about how absence is managed and measured, whether performance targets flex around a diagnosis, and whether return-to-work is phased rather than immediate. Examples include:

• Adjusting or extending absence triggers so disability-related sickness is not counted the same as unrelated absence
• A phased return to work, reduced hours, or temporary changes to duties
• Flexibility on start times or working from home where that reduces stress triggers
• Additional supervision, more frequent check-ins, or a change of line manager where the relationship itself is the problem

There’s no fixed list. What’s reasonable depends on the size of the business, the cost and disruption of the adjustment, and how much it would actually help, which is why acting on occupational health advice rather than guessing matters so much.

What employers should actually do

Get medical evidence early. An occupational health referral is not a formality. It tells you whether the condition is likely to meet the Equality Act definition, what adjustments might help, and a realistic timeframe, all of which shape whether you’re protected if the situation later escalates.

Keep a proper paper trail. Document the adjustments considered, why some were adopted and others weren’t, and every conversation with the employee about their condition and what would help. In a tribunal, “we did think about it” only carries weight if you can show it.

Don’t wait for a grievance to take it seriously. Comments about workload, throwaway remarks in a return-to-work meeting, or a manager mentioning they’re “worried about” someone are all things a tribunal can treat as putting the employer on notice, even without a formal complaint.

Train managers to spot the difference between poor performance and a health issue. A performance conversation that ignores an obvious mental health context is where a lot of otherwise defensible cases go wrong.

What this doesn’t mean

None of this means an employer can never manage performance or attendance where mental health is a factor, and it doesn’t mean every period of stress or low mood is a disability. The Equality Act threshold (substantial, long-term, affecting normal day-to-day activities) filters out short-term or mild difficulties, and an employer that has made genuine reasonable adjustments and taken proper advice is in a materially stronger position than one that hasn’t, even if the outcome eventually is dismissal.

Frequently asked questions

Does an employee have to tell us they have a mental health condition for us to be liable?

Not necessarily. If a reasonable employer, given what it knew or could have found out, ought to have realised the employee was disabled, that can be enough. This is one reason acting on early warning signs, rather than waiting for a formal disclosure, matters.

Can we performance manage someone with a diagnosed mental health condition?

Generally yes, but the process should account for the condition: consider whether the targets themselves need adjusting, get medical input before starting formal steps, and be able to show the process was fair given what you knew.

Is stress at work always the employer’s fault?

No. Liability depends on foreseeability, what the employer knew or should have known, and what it did in response. A one-off busy period is different from months of an unmanaged, flagged workload issue.

How quickly should we act once we’re aware of a mental health issue?

As soon as reasonably possible. Delay is one of the most common aggravating factors tribunals point to when deciding whether an employer’s response was reasonable.

This is general information, not legal advice on your specific situation. If you’re dealing with a live mental health issue in your business, get in touch with Liz Burley before deciding how to handle it.