Harrassment claims are bad for business and could damage a company’s reputation, quite apart from the moral aspect.

ANY EMPLOYER WHO has ever had to deal with a harassment complaint, grievance or employment tribunal claim will know that they can be unsettling and a major (costly) headache for all involved. The bottom line is that they are bad for business - bringing in their wake potential reputational damage, legal expense, management time, issues with stakeholders and with the wider workforce.

Since the #Metoo campaign, there has been real shift in what is seen to be acceptable and unacceptable both in society in general and the workplace. Gone are the days when incidents might have been ‘brushed under the carpet’ or a ‘quiet word’ had with offenders. The spotlight is focused firmly on the issue and it now requires employers to take a pro- active stance. Companies that turn a blind eye to suspected problems or fail to deal with toxic workplace cultures could end up embroiled in costly litigation as well as facing adverse morale and PR issues. New, detailed technical

guidance in this area was issued in January 2020 by the Equality and Human Rights Commission.

The media spotlight It goes without saying that a damaging media story can have a disastrous impact upon an organisation’s reputation, workplace morale, credibility with stakeholders and ability to attract and retain talent.

To illustrate the problem, consider the 2019 case of a City employee - Nathalie Abildgaard who worked for FM Investors - who claimed that one of her employer’s directors sexually harassed her when he repeatedly invited her back to his hotel room after a work event in Spain. The story is memorable as she received a settlement of £270,000 - the settlement agreement did not


contain a confidentiality clause enabling the press to report on the payment made.

The employee alleged that her employer failed to take reasonable steps to prevent the director from carrying out acts of harassment and therefore failed to protect her from workplace harassment. She also alleged that the employer failed to respond appropriately after she raised her complaint. The employer decided not to suspend or dismiss the director. Instead it reduced his bonus for the year and banned him from drinking at work events for twelve months. Ordinarily, if a claim is settled, you would expect a condition of any settlement to be a full confidentiality clause (or ‘gagging’ clause). But the employee in this case may not have been willing to agree to one.

Harassment claims continue to spring to light. No workplace is immune, and employers must stay vigilant and proactive. The #Metoo campaign means that individuals are much more empowered to identify and call out unacceptable behaviour.

Changes to the law The government has announced that it intends to introduce tougher legislation on workplace harassment. There were a number of reviews culminating in a public consultation during 2019 on proposed new measures including introducing a mandatory duty on employers to prevent harassment at work and increasing the time limit to bring a harassment Employment Tribunal claim from three to six months.

As part of this drive, the Equality and Human Rights Commission (EHRC) is expected to publish a statutory Code of Practice on harassment during 2020. This code will have similar ‘teeth’ to the ACAS Code of Practice on disciplinary and grievance

procedures in that Employment Tribunals will be obliged to take an employer’s non-observance of the code into account when ruling on a claim.

The rules on statutory Codes of Practice are very clear. Breach of the provisions in a statutory Code of Practice is a matter that an Employment Tribunal must, by law, take into consideration. Effectively, this means that a breach or non-observance could, at worst, put a serious hole in an employer’s Employment Tribunal defence. At the very least, it could have a negative impact on the employer’s credibility in the eyes of the tribunal and lead to bad publicity bearing in mind that reporters often attend and report on tribunal hearings.

New guidance

Meanwhile, the EHRC published at the end of January new technical guidance on sexual and other harassment at work which is described as, “the authoritative and comprehensive guide to the law and best practice in tackling harassment”. Employers ignore it at their peril as whilst the guidance does not have the statutory status referred to above, it can still be used as evidence in tribunal proceedings. In practice, Employment Tribunals are likely to expect employers (especially those with sizeable workforces/ an HR function) to demonstrate a sound working awareness of the guidance and compliance with its recommendations where practicable. Conversely, non- compliant employers are likely to find that it is used as a stick to beat them with during tribunal proceedings.

The guidance is comprehensive, leaving no stone unturned in terms of what employers should be doing (and it includes many examples) to understand their legal obligations and adopt best

practice to unearth, prevent and respond appropriately to harassment complaints. The government has also signalled that it intends to tighten up the rules around confidentiality requirements in settlement agreements and non- disclosure agreements. This is all part of the wider focus on tackling harassment both in the workplace and wider society. As we saw from the case study above, individuals are likely to be less willing to agree to onerous ‘gagging’ clauses where they have been subjected to unacceptable harassment. The question that will be asked by a victim of harassment is likely to be, ‘why should I agree to stay quiet when I am not in the wrong?’ Companies may be surprised by the high degree of pro- activity that is now expected of employers. HR teams may want to consider flagging this as a point to be included in ‘business risk’ discussions. The key take-away is that it is no longer good enough to simply have a policy on anti- harassment that gets dusted off every once in a while. Employers are expected to consider and address the issue at a strategic level. The bottom line is that there is now an expectation that employers put the legwork in to actively root out harassment throughout the organisation, from shop floor to board room. BMJ

Peter Windatt is an accountant and licensed insolvency practitioner at BRI Business Recovery and Insolvency. November 2020

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