New laws force UK employers to stop harassment before it starts

Preventing bad behaviour in the workplace before it happens may sound like a conundrum for employers.

But from this week, all UK companies will have to take “preventive action” to stop sexual harassment before it starts. The new rules require employers to spot risks of a potential incident — and shut them down — rather than act appropriately afterwards, and are already reshaping the code of conduct at top City firms.

The bill, part of the new Labour government’s wider package of employment reforms, takes effect on October 26. It means that if an employee brings a claim of sexual harassment to a tribunal, and that claim is upheld, the tribunal must consider whether “reasonable steps” were taken to prevent the misconduct. If the company fails to prove it had taken sufficient preventive action, the tribunal will be able to increase the compensation due by up to 25 per cent. The Equality and Human Rights Commission (EHRC) would also be able to take enforcement action against the employer.

“This is significant for employers,” said Kate Pumfrey, partner at law firm A&O Shearman, “because discrimination awards are uncapped, unlike some awards such as unfair dismissal — particularly in some industries where pay tends to be higher”.

The issue of workplace harassment has shot back into focus after a BBC investigation last month unleashed multiple claims of sexual assault or rape against the late owner of Harrods, Mohamed Al Fayed. The department store was accused of a “systematic failure of corporate responsibility” towards the women involved, by a lawyer representing some of the alleged victims.

Changing the focus to pre-empting wrongdoing is aimed at forcing a fundamental shift in workplace culture. Employers will be expected to anticipate scenarios in which staff could be subject to sexual harassment — and take action to remove that risk.

Amy Bird, a director in the employment team at law firm Clifford Chance, said the anticipatory duty was intended to be an “avenue of real cultural change at organisations”.

“The big difference here is that there has historically been a duty when you are defending a claim to take ‘reasonable steps’ — but that was used as a shield. There is now a requirement to be on the front foot by taking those steps and not just in defending an action.”

In practise, this will bring significant challenges for companies. Spotting the threats will be the key obstacle, according to lawyers. “Speaking to clients, there is a lot of concern around [being] preventive. How do you necessarily know what it is you are preventing? How can you identify the issues? Where are these coming from?” said Philippa O’Malley, a partner at law firm Slaughter and May.

One focus for employers is expected to be social situations that could carry greater risks of a potential harassment incident, such as those involving overnight stays and larger gatherings with senior and junior workers, where alcohol is served.

This is “an area where employers may need to reframe how [workers] interact with each other — and with third parties — because these give rise to particular risks if you look at the data”, said Pumfrey. “There are more complaints of sexual harassment after a Christmas party, year on year, for example.”

One top City accountancy firm said it had already banned alcohol in the office, apart from at official events. The use of drinks tokens at social events — where the number given to each attendee is limited — has also been trialled as a way to curb excessive drinking.

The firm has a designated “responsible person” at off-site events, whose job it is to be alert to the volume of alcohol being drunk and to make an intervention if necessary, said one person at the company.

The new rules will also make employers liable for harassment of staff that occurs within a work context but by people outside of the company.

For employers that have regular contact with clients, customers and suppliers in a quasi-social context, there may be particular risks around the “power imbalance” among attendees, according to lawyers.

Some companies are taking a closer look at what happens at client events and broader social gatherings, and are putting in place a code of conduct not just for employees but for external guests where there is a potential risk of harassment.

KPMG has strengthened its reporting channels, so people can “speak up to someone independent”, including through its whistleblowing hotline, according to people close to the company.

O’Malley at Slaughter and May suggests employers could encourage staff to log concerns through their “speak up policy [and] in appraisals”. She added that some companies were bringing in a “triage system” to draw together risks as they were raised.

A Treasury committee report into sexism in the City this year found evidence of a higher prevalence of sexual harassment in financial services than in other industries. About 45 per cent of workers in the sector who were surveyed reported having experienced it at some point. Last month, Lloyd’s of London said it was consulting on changing its byelaws to crack down on misconduct in the centuries-old insurance market, as it seeks to shed its reputation for bad behaviour.

For companies in some other sectors, one particular challenge will be applying the new rules where there is contact with the public.

For example, 8.6 per cent of sexual misconduct against NHS workers was carried out by users of the health service — patients, their relatives or other members of the public — according to a report last year. Transport and hospitality were also highly exposed to such risks, said Alison Spencer-Scragg, national officer for equalities at Unite.

Unite, one of the UK’s largest unions whose members represent at least 20 sectors, many of them male dominated, is in favour of companies having a “standalone policy” on sexual harassment, which is “too often” put in the same box as bullying, according to Spencer-Scragg. She pointed to “not too onerous” ways to help prevent harassment, such as clearer signage reminding people not to abuse staff.

O’Malley said the #MeToo movement had “accelerated [sexual harassment] as an issue and moved it up companies’ registers pretty quickly”. The UK’s financial regulators have also been targeting non-financial misconduct.

But the Fawcett Society, a women’s advocacy group, said it was vital to shift the culture that “individualises” tackling sexual harassment and makes it the responsibility of victims to come forward, to creating environments that stop it from happening in the first place.

Data shows that at least 40 per cent of women experience sexual harassment at some point in their careers, according to the group.

“We know the current system doesn’t work,” said Jemima Olchawski, chief executive of the Fawcett Society. “Seventy per cent of women do not report their experience of harassment; those that do report being dismissed, minimised, disbelieved or made to manage the perpetrators behaviour.”

Not all staff are happy about the shift towards more monitoring and moderation. Some employees have pushed back, saying attempts to control alcohol consumption undermine trust between them and their bosses, for example.

“No one is saying that you can’t socialise at work,” said Olchawski, adding that if employers “can’t trust [staff] to go out and have a Christmas party and not harass a colleague then that is a serious organisational issue”.

However, she warned that organisations “are carrying huge risks if they do not act” on potential harassment, citing low morale, productivity, difficulties with staff retention and huge reputational risk as symptoms of “bad work culture”.

“The conversation can fixate on the thing that might be difficult or feel burdensome but . . . rather than crossing your fingers, and saying no one told us, this is an important way to get up steam.”