Small businesses have been warned of the increased threat of legal action if they do not deal with the growing issue of stress in the workplace.

Insurer Norwich Union said businesses could become legally vulnerable as well as loss-making due to excessive amounts of employee strain.

It said there was increasing pressure on the Health and Safety Executive to take legal action against companies that did not properly tackle work-related stress.

The warning follows research by the Trades Union Congress (TUC), which found stress and fatigue were widespread in small firms and cost the economy about £370 million a year.

Stress was a major health and safety problem in 61 per cent of the South East's workplaces, more than in any other region.

TUC regional secretary Mick Connolly said: "Workers in the South East are being stressed and strained in every way.

"We need to work smarter and slower, not harder, longer and faster."