Mental Health: mind matters

Trucks


The mental health of employees is as important in the workplace as their physical wellbeing. It includes an individual’s emotional, psychological and social wellbeing and influences how they handle stress.

Poor mental health can vary from feeling “down” to suffering from anxiety and depression. Usually, an individual’s mental health will fluctuate depending on the pressures they are experiencing.

The UK Department of Health advises that one in four people will at some point experience mental health issues. And almost six in 10 employees (59%) experience workplace stress.

A survey by the Chartered Institute of Personnel and Development (CIPD) revealed stress and mental ill-health were among the most common causes of long-term workplace absence. An employer’s failure to recognise mental health can be costly.

Research shows that mental ill-health costs employers in the UK £30bn each year through lost production, recruitment and absence. Employers should take steps to tackle the causes of workplace stress and actively promote positive mental health among employees.

This can be done in a variety of ways, from raising awareness, training and seminars to proactive wellbeing initiatives such as yoga classes and gym memberships. Promoting a culture of good mental health will help to minimise the risks of employment-related mental ill health and the risk of claims against the employer.

In order to combat workplace stress, employers should:

. carry out a stress audit. This could involve asking employees to list any stress-related concerns; and

. carry out an assessment of the health and safety risks employees are exposed to at work, including an assessment of work-related stress.

To show that they are committed to taking work-related stress seriously employers should implement an anti stress policy. The policy should set out, for example:

. the role and expectations of managers and supervisors to ensure the successful implementation of the policy;

. guidance on resolving cases of stress at work for both the employer and the employee; and

. any internal and external sources of support available for employees who might be suffering from stress, for example, a confidential helpline and/or an occupational health service.

Employers need to ensure the policy is properly implemented in practice by:

. training managers to recognise situations likely to cause stress, to identify symptoms of stress, and how they should manage stress and promote an appropriate culture; and

. conduct return-to-work interviews following a period of sickness absence and performance appraisals. This will help to identify any underlying stress-related work absences or performance issues.

A CIPD survey found that “less than half of respondents report that their organisation supports employees who experience mental-health problems very well or fairly well, while one in five (20%) say that their organisation supports such employees not very well or not at all. Almost three respondents in 10 (28%) don’t know how well their employer supports people who experience mental-health problems”.

Employers need to do more to ensure that employees feel supported with their mental health and should encourage open channels of communication. The arbitration service Acas suggests employers could develop action plans to help promote positive mental health.

This could include:

. the employer’s objectives in relation to mental health and why it is committed to promoting good mental health; arranging training to educate employees and managers to help remove any stigma surrounding mental ill-health;

. putting in place support mechanisms for employees experiencing mental ill-health. For example, having nominated mental health first aiders in the workplace; and
. drafting a mental health policy and reviewing existing policies to ensure employees and managers know where they can obtain support.

Managers should be trained to spot the signs of mental ill-health, including changes in an employee’s usual behaviour, changes in their standard of work, being withdrawn and showing less enthusiasm/interest in tasks and increased sickness absence. Managers should not make assumptions and should regularly ask employees about their wellbeing, and create an open and approachable environment.

Employers should identify areas of the workforce which might be a cause of mental ill-health. For example, employers should hold return-to-work interviews to identify the reason(s) for an employee’s absence.

Employers also need to consider whether or not reasonable adjustments should be provided to employees to support them during periods of mental ill-health. They should consult employees before making any adjustments to establish what support and/or changes they need.

Any adjustments should be documented and regularly reviewed. Although support mechanisms might come at a cost to the employer, in the long term they can help to reduce sickness levels, which will ultimately save on sickness pay, increase workplace productivity, and reduce the possibility of costly claims.

If an employee feels they are suffering from mental ill-health or workplace stress, they should raise this with their line manager, HR manager or somebody else within the workplace. This will give the employer a better understanding of the employee’s position, allowing any necessary adjustments to be made to support those experiencing mental ill-health or workplace stress.

What claims can an employee bring?

. Breach of contract - an employee suffering from work-related stress might argue that their employer has breached an express or implied term of their contract of employment. Additionally, the employee could have a statutory claim for constructive unfair dismissal.
. Unfair dismissal - if an employee is signed off sick from work due to stress or mental health and is subsequently dismissed, they might have a claim for unfair dismissal.

. Disability discrimination - an employee might be protected from disability discrimination if they suffer from mental ill-health issues that have a substantial adverse effect on their ability to carry out normal day-to-day activities. Anxiety and depression could fall within this definition. Whether or not an individual’s work-related stress can be regarded as a disability will be a matter for an employment tribunal to decide.

What are the signs of workplace stress?

Stress is the adverse reaction experienced in response to excessive pressures or demands. Although a certain degree of pressure can help to motivate employees and give them a sense of ambition, which in turn improves job performance and satisfaction, employers should ensure that employees do not become inundated with work.

Stress can affect an employee’s health, reduce their productivity and lead to performance issues. Although stress is not an illness, if it is sustained over a period of time it can lead to, or exacerbate, existing mental-health problems.

By Claire Brook

  • Claire Brook is an employment law partner at Aaron & Partners and can be contacted on 01244 405575 or claire.brook@aaronandpartners.com

Company assets: know your worth

Money


Every business has assets. Everything from land and buildings, to equipment, tractors and trailers, goodwill, brands and intellectual property has value. The question is: how to understand the true value of those assets?

Chief executive at Close Brothers Asset Finance (Transport Division) John Fawcett says the Companies Act 2006 demands that a business’s accounts must show a fair and reasonable value of the cost of an asset at the outset and throughout its life. But showing this isn’t simple. “Assets are used in different ways,” he says.

“A truck, for example, which is run lightly will be worth more over time than a unit run 24/7, and accounting principles allow for a business to reflect this in its accounts.” Procedurally, directors must detail fixed tangible assets at cost, less depreciation at rates calculated to write off the cost, less the estimated residual value of the asset over its expected useful life.

In terms of the legal responsibility for the valuation process, Mark Nelson, director, Compass Business Finance, says this rests with the company and its directors. “Accountants will never be involved unless the depreciation policy of the business is consistently out of kilter with the market,” he says.

On top of this Nelson says values should be recorded on a worst-case scenario basis with the only exception being freehold property. Why would a business want to revalue its assets? One major reason, according to Nelson, is the need to understand the equity and risk position it has against the debt owed on those assets.

“It may be the company is looking to restructure its debts in order to manage monthly cashflow, release equity so it can better utilise that cash for another purpose, or understand where its personal risk would be.” He also says that it is common for any equity within the assets of a business to be used during a merger or acquisition.

Fawcett’s experience has taught him that property is the main asset that gets revalued. “In the main, leasehold land and buildings are depreciated over time at 2%, but if property has gone up in value the directors will need, and indeed may want, to reflect the increase to the correct figure, he says.

As for the spur to start the process, it could be just a gut reaction, he reckons. However, another push might come from the need to strengthen the balance sheet to demonstrate that the business is worth more in shareholders’ funds than is currently shown.

There are, in fact, rarely good reasons for revaluing assets, but it can be justified where depreciation rates have been aggressive or overtly prudent. That said, accounting standard IAS 36 - Impairment of Assets requires a business to review its assets for impairment at least annually.

Some firms, such as listed companies that produce quarterly statements or those ceasing business, might revalue more frequently. Running a business carries numerous duties, especially ensuring legal compliance.

By extension, failing to keep assets properly valued - whether over or under - is a breach of the law and, says Fawcett, the company and directors could find themselves in serious difficulties. There are other risks associated with failing to keep values accurate, not least of which is access to borrowing.

If assets are not valued properly it can lead to errors of judgement on credit ratings and the perception of the business in the eyes of its suppliers. The key to a good valuation is to see what auditors agree to.


Where assets are over-valued, directors will rarely reduce the balance sheet and auditors will rarely insist that this is done. This means that the acid test is whether or not the auditor will sign off the accounts with a ‘true and fair view’ opinion.

There are countless causes of fluctuations in asset values, including events such as a change in the value of an investment asset linked to the performance of an underlying investment. For example, an investment in a crossborder haulier could be impaired if its costs of operation rise because of Brexit, say through increased fuel consumption or waiting times.

Small things, says Nelson, can also affect values. He cites the condition of equipment, access to premises, and changes in market perception of the make and model of the equipment in question.

General business housekeeping is a good indicator of this. New technology can rapidly and radically affect the value of equipment making it more difficult to sell - information technology is a case in point.

Businesses depreciate this type of equipment over a long period of time when actually the useful life could be much less. The list also includes asbestos that needs remediation, a lack of spares, or a change in an intangible such as intellectual property.

In fact, it’s the intangibles that can increase when large firms value their brand on the balance sheet. It’s all well and good having assets that increase in value, but what if the asset is impaired and its worth is less than the book value?

From an accounting viewpoint, if an asset is impaired it will affect the profit and loss and the balance sheet. An impairment will reduce the profit recorded for that period, which will affect the distributable reserves of a firm and could restrict its ability to pay any dividends, which could influence investors’ decisions and might result in the breach of any applicable covenants.

In practical terms, Fawcett thinks that most of those who value assets will have an inkling of the problem from watching market values, market demands, technological changes, economic drivers and accepted obsolescence or damage. The valuation of assets is not a science, it is more of an art.

One thing, though, is clear, businesses that ignore the statutory requirements are heading for trouble - especially if they hit the buffers. Directors have duties and the authorities will investigate those who give incorrect information to stakeholders.

By Adam Bernstein