New rights, more cost

In October the scope of the Disability Discrimination Act (DDA) will be widened to protect employees in smaller businesses. The change will have a major impact on tens of thousands of businesses across the UK. Some view it as a "death by a thousand cuts" for the small business sector. Others see it is an impending risk management and liability claims nightmare. Over the coming months a significant number of businesses will have to review and possibly change their policies and procedures, not only to ensure they are protecting their employees but also to safeguard their business and insurer against unnecessary risks that could result in a claim. When it first came into force in 1995, the DDA applied to companies employing more than 15 people. From 1 October, businesses employing fewer than 15 employees will fall within the scope of the DDA.

Adequate safeguardsThe change will have a profound effect on smaller businesses. For companies without a dedicated human resources (HR) function, the responsibility for ensuring the company has adequate safeguards in place to prevent any discrimination will fall to the business owner. It is difficult to see how meeting the requirements of the DDA will get the priority it deserves when placed as the owner's responsibility, on top of priorities such as running the business. If an employer is unable to demonstrate the ability to manage risks in this area, will liability and legal costs insurers impose cover limitations or exclusions? The potential for battle lines to be drawn between small business and insurers seems to be high.The definition of disability could also give rise to problems. The DDA defines it as "a physical or mental impairment which has a substantial and long-term adverse effect on an individual's ability to carry out his normal day-to-day activities". For certain 'recognised' disabilities it will be relatively straightforward to understand the implications and what needs to be done. But what happens if there is no obvious manifestation of a disability, or an employee does not inform the company of one? The impact of work-related stress on a pre-existing condition, or the 'build up of pressure' as an employee struggles to cope with external, non-work problems that spill over in to the workplace could be both hard for an employer to easily identify and tackle without the right kind of support structure. At its most basic level, the DDA says that all employers had better watch out. Employees who have any difficulties arising outside of work that make it difficult for them to carry out their usual work responsibilities, have a cause of action against the employer. So the employer will have to 'mind the business' of their employees to protect them and the company against litigation. The employer can be at fault if he treats an employee less favourably than other employees because of their disability or by not making reasonable adjustments because of it.

Business impactThe DDA does not require an employer to offer a counselling service to staff, but it will mean that employers will have to suggest to an employee that he considers counselling or a relevant expert to provide appropriate support. There is clearly a question as to whether a small business would be in a position to respond to the DDA in such a way without there being an impact on the business. The small business owner may, as a result of the DDA, find himself extending pastoral care to encompass non-employment issues - for example making inquiries to find out if any staff have problems and if they would like assistance in dealing with them. The employer must use all reasonable measures to make sensible inquiries and use his best endeavours, within reasonable boundaries, to ensure that they have the relevant information to make it possible for them to manage the individual and the company's staff. There are likely to be numerous ways in which employers can use the DDA to nurture relationships with their staff, but a very careful line has to be drawn between assisting and being inquisitive or over-involved.From the insurer's perspective, the prospect or the spectre of litigation is unpleasant, but litigation rarely arises overnight. Clearly there is significant value in working with small businesses and their brokers to encourage a proactive approach to the DDA. Risk management by addressing the problems, even if they are recognised late in the day, is preferable to no action at all. In a similar way to commercial legal costs insurers, who are taking a more active role in their policyholders' HR policies, including reviewing handbooks and approving staff dismissals to ensure they comply with the law, other insurers can be taking steps to guide businesses. Whatever happens after October, small businesses and their insurers must not ignore complaints and issues arising in the work environment. Being seen to be doing something will count for a considerable amount in this particular sector of civil justice law.

Madeleine MacLachlan is a director of Medico-Legal Reporting

The Disability Discrimination Act (DDA)The DDA protects disabled people from discrimination in the workplace. As part of this protection employers may have to make "reasonable adjustments" if their employment arrangements or premises place disabled people at a substantial disadvantage compared with non-disabled people.From 1 October new duties under the DDA will affect all employers with fewer than 15 employees and anyone who provides a service to the public. The DDA defines a disabled person as "someone with a physical or mental impairment which has a substantial and long-term adverse effect on his ability to carry out normal day-to-day activities".An employer can unlawfully discriminate against a disabled employee or job applicant in two ways. First, by treating him or her less favourably than other employees or job applicants because of his or her disability. Or secondly, by not making reasonable adjustments to the workplace.