(Bloomberg) -- Alcohol-fueled company events could become a thing of the past, as UK employers consider new rules that place an onus on firms to protect workers from sexual harassment or risk hefty damages claims.
Under a new law, companies will have a legal obligation to anticipate where workers face risks of sexual harassment and take “reasonable steps” to prevent it. Failure to show actions were taken to protect their workers could cost companies an additional 25% on top of any compensation awarded by an employment tribunal.
Until now, employers had to respond appropriately to sexual harassment, but there was no obligation to prevent it.
The change comes as the City of London’s financial services watchdog reports a 72% jump in non-financial misconduct incidents over the last three years following a string of high-profile scandals including sexual harassment allegations leveled at hedge fund chief Crispin Odey. It’s a broader problem too; since September, dozens of women have alleged they were sexually harassed by the late Harrods owner Mohamed Al Fayed.
“Simply having a policy on sexual harassment and providing training will no longer suffice,” said Robbie Sinclair, employment partner at Allen Overy Shearman Sterling LLP. “Is there a culture of inappropriate banter? Have there been previous complaints of sexual harassment?” Sinclair said.
Businesses are already changing their guidance, lawyers say, with events that include alcohol and overnight trips that might involve a manager and junior staff staying at a hotel examples of some social settings considered to be of high risk.
Some companies have taken to using drinks tokens to limit the amount of alcohol employees consume, according to Philippa O’Malley, employment and incentives partner at Slaughter and May.
“It’s the events involving third parties that are harder for employers to manage,” said O’Malley. “That’s where we’re seeing things like codes of conduct for events, and having a zero tolerance approach if anybody is worse for wear and behaving inappropriately towards employees.”
The new Worker Protection Act mandating preventive action arose from a recommendation in a 2018 parliamentary report, which said sexual harassment in the workplace was “widespread and commonplace.” The bill was approved last year under the previous government.
The reports’ authors singled out the example of the 2018 London’s Presidents Club Charity Dinner, a men-only fundraiser where prominent figures from British business, politics and finance were served by hostesses who had been told to wear skimpy outfits, and were reportedly groped, sexually harassed and propositioned, a Financial Times investigation found.
The parliamentary report said that sexual harassment of hostesses by third parties at that event was “at least foreseeable, and possibly encouraged”.
One measure not included in the new law was the banning of non disclosure agreements, recommended by a separate parliamentary inquiry this year. “NDAs have the effect of silencing the victim of harassment when they are forced out of an organization, while protecting the perpetrator and leaving them free to continue their career,” the report published by the Treasury Committee said.
The Financial Conduct Authority revealed Friday that 3% of sexual harassment complaints concluded with a settlement.
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