Summer 2005, by David Green Ten Ways to Keep Your Company Out of the Press No employer wants to see their company “named and shamed” in the press. Whilst there is no foolproof way of avoiding this, there are some steps you can take to limit your potential exposure to adverse publicity. In this article I have selected 10 areas the press like to write about and give some guidance on how to avoid it being your company in the spotlight! 1. Harassment The press are always interested in potentially salacious stories involving harassment in the workplace. Whilst currently under English law there is no free-standing claim of sexual harassment, it has long been “shoe-horned” into the definition of direct discrimination so sexual harassment has been in the public eye for a number of years. As a result of European led legislation, the term harassment has been defined in all other areas of discrimination and sexual harassment will follow in October this year. Harassment (as defined) takes place when there is unwanted conduct with the purpose or effect of violating the dignity of a person and of creating an intimidating, hostile, degrading, humiliating or offensive environment. Clearly this creates a fairly broad basis for a claim – from issues in the workplace, to office parties organised by the company. It covers harassment in all of the protected areas – race, religion, disability and sexual orientation, any of which could result in adverse publicity. How to minimise the potential problems? It is not sufficient to merely have a harassment policy (although this is a start!) – it is also key that the policy is known throughout the company and that workers have been trained in relation to it. A company will need to be able to show that it has taken all reasonable steps to ensure workers are aware of what is acceptable and unacceptable behaviour in order to protect itself against reputation-damaging and costly claims. It is also important not to do nothing. If a complaint is made or conduct is observed, act on it. 2. Dress Codes Anything that suggests there is a lack of religious tolerance within a company will attract press attention as well as Tribunal claims. Regulations outlawing discrimination on grounds of religion or religious belief were introduced in 2003 and whilst there have been few reported tribunal cases in this area yet, any alleged breaches have attracted press coverage. In relation to dress codes, employers may find that these result in indirect discrimination claims. For example, if a company refuses to allow employees to wear turbans or burkas they must have a good reason for doing so. If it is merely because, as an employer you want everyone in a suit, that will not be sufficient. If, however, it is because health and safety laws require a helmet to be worn and that is not possible with certain headwear, then that may be sufficient justification. As well as claims of religious discrimination, employers may face claims of sex discrimination in relation to dress codes. For example, the Department for Work and Pensions found itself in the press, and the Tribunal, when requiring men to wear a “suit and tie”. The Employment Appeal Tribunal (EAT) found that employers could ask men, and not women, to wear a suit and tie, provided this did not impose an overall higher standard on men than women. Clearly, employers can have dress codes, but they must look at their purpose and allow flexibility where appropriate. It may be that the dress code could reasonably be adapted without losing what the employer is trying to achieve. 3. Working Codes Another area where there may be a perception of religious intolerance is in relation to working hours. What if an individual wants to leave early on a Friday in order to observe his religious practices? Any employer facing this issue must look carefully at how this could be managed within the business. For example, it may be that if that individual starts early on a Friday then that is sufficient. If, how-ever, Friday afternoon is when a large percentage of his transactions traditionally complete an employer may have reasonable grounds for rejecting a request to change working hours, although it would be inadvisable to reject such a request without a trial period to assess whether it is workable. What is important is that an employer considers all requests properly and gives a reasoned response. 4. Race Discrimination Recruiting and immigration laws can be a tricky issue. An employer may find itself falling foul of both immigration laws and race discrimination when recruiting. One way of avoiding this is to adopt best immigration practice. It is a criminal offence to employ a person who is not entitled to work in the UK. However an employer will have a statutory defence if it has checked that the potential employee has specified documents. Employers must examine and retain copies of passports or other required documents for all employees. In order to avoid a claim of race discrimination however, an employer must ensure that it asks for these documents from all potential employees not just those the employer thinks “look” like he/she may have immigration issues. Any policies that are applied across the board to all potential employees should reduce the risk of any race claims relating to immigration issues. McDonald's recently received adverse publicity in relation to a race issue when it was alleged they had required all employees to speak English in the staff areas. Interestingly this did not result in a race discrimination claim as far as we are aware, but still attracted press coverage. Whilst it may be appropriate in certain industries to require your “front of house” staff to speak a particular language, it is unlikely that it could be justified in a staff area. 5. Sex in the City – Bonuses There are regular headlines relating to women either not receiving the same bonuses as their male counterparts, or finding themselves with inferior promotion prospects – the infamous “glass ceiling”. On the bonus issue, in 2003 Louise Barton received a huge amount of press coverage when she brought a claim against Investec Henderson Crosthwaite complaining of a disparity between her remuneration package and those of male colleagues. Her claims related to salary, a Long Term Incentive Programme (LTIP) and share options as well as disparity of bonus. She was awarded £300,000 in bonuses whilst her male comparator received £1,000,000. The criticism Investec received from the EAT was one of a lack of transparency as to how the bonuses were calculated. The EAT stated that “no Tribunal should be seen to condone a city bonus scheme culture involving secrecy and/or lack of transparency because of the potentially large amounts involved, as a reason for avoiding equal pay obligations”. The EAT also pointed to the failure of Investec to produce any documents relating to the process of determining bonuses, salary and LTIPs. This serves as a clear warning to employers operating discretionary pay and award schemes to ensure they are in a position to demonstrate that rules governing the awards are objective and proportionate. Transparency is key. Without ease of reference, individuals may think that the reason for a difference in payment is due to discrimination as opposed to genuine objective factors. The more transparent the system, the better the opportunity for an employer to justify their actions and avoid claims and adverse publicity. 6. Glass Ceilings Dealing with issues of perceived glass ceilings also attracts press interest. In 2004 two female solicitors brought claims against Sinclair Roche and Temperley in relation to their lack of promotion opportunities. They alleged that their male colleagues were given more referrals and therefore had a faster route to promotion to full equity partner. How best to address such issues is, again, to have a clearly defined policy that is understood and adhered to. This will assist companies in defending such actions. 7. Fat Cats The concept of “Fat Cat” directors has a very negative impact in companies and is a target for the press, which often highlights the situation where a current or recently departed Director of a failing company receives a large payment whilst the shareholders suffer. The difficulty companies face is that they are seeking to recruit people with a proven track record to run the business. Such individuals obviously expect high remuneration. Difficulties arise if a director or chief executive who is not performing has a long notice period which the company will need to compensate him for if he is dismissed. He may also have been offered various bonuses and share options on joining which may still be payable on departure. This area is in part regulated. For example, the Companies Act prohibits a director having a notice period of more than 5 years unless it has been approved by the shareholders. For listed companies this requirement has been superseded by the Combined Code which provides that:
Clearly these are issues all companies could consider to reduce potential allegations of poor performing “fat cats”. Companies must consider remuneration packages carefully to ensure poor performers are not over-compensated. Interestingly, as with many areas of employment law, Europe is going to have an impact on directors’ remuneration. The European Commission has published a draft recommendation on directors’ remuneration in EU listed companies. The recommendation provides, amongst other things, that each company should disclose its remuneration policy for the next financial year, either as a self-standing report or in the annual report and accounts, as well as on the website. The remuneration statement should include details of the company’s policy on the duration of contracts with the notice periods and termination payments granted to its executive directors. This should be implemented by June 2006. 8. The Ageing Workforce Statistics show that over the coming years, the ageing worker is going to become a larger proportion of the workforce. No longer will individuals be able to rely on retiring on good pensions early, but may well find themselves forced to work longer. There is currently no statutory protection against discrimination on grounds of age, but that has not stopped people from trying to bring claims or the press from picking up on the issues. The current attempts to present employment tribunal claims on the issue centre on the sex discrimination legislation. The argument in Rutherford v Harvest Town Circle was that the upper age limit of 65 in the unfair dismissal legislation is discriminatory against men. The argument is that as there are more men wanting to work past 65 than women, they are therefore adversely affected by this statutory limitation on unfair dismissal protection. The current position is that Mr Rutherford’s claim has failed in the Court of Appeal, but the decision is being appealed further and may well only be resolved in the European Court of Justice. As such, as an employer, why should you worry about age? In 2006 legislation will be introduced protecting individuals against discrimination on grounds of age. Cultural changes need to be made before that to ensure your company is ready. Consideration needs to be given to your existing retirement age – is it necessary? If so, could you justify it to a Tribunal? Best practice is to look at your policies now and ensure they are “age proof” to prevent claims being made and adverse publicity when the legislation comes into force. 9. Disabilities Companies, often inadvertently, find themselves facing claims of disability discrimination. The press will always look to publicise stories of this nature, as they are emotive. In order to avoid press attention on these issues, companies must look carefully at their Equal Opportunities Policy. From recruitment, through the employment relationship and, in some cases, beyond, individuals are protected. Under the Disability Discrimination Act 1995 a disabled individual is protected against direct discrimination, disability-related discrimination, failure to make reasonable adjustments, harassment and victimisation. The protection is therefore very broad and covers those who apply for jobs and, in certain circumstances, those who have left.
It may also be reasonable, for example, for an employer to enlist a sign language interpreter and to provide additional time for a deaf candidate. Interestingly, the EAT has held that job advertisements do not form part of the “arrangements” for the purposes of determining who to offer employment to in a race discrimination case. Since the Disability Discrimination Act adopts a structure similar to that in the Race Relations Act in this area, it seems likely that this decision would apply equally to disability discrimination. Disabled persons are therefore unlikely to be able to challenge discriminatory advertisements directly. However, if a disabled candidate is not offered a position, a discriminatory advertisement will be strong evidence that the reason for this was always related to his disability. The DDA does however expressly make it unlawful for the employer to publish an advertisement which indicates that the success of a person’s application for a job may depend to any extent on their not having any disability or any particular disability, or that the employer is reluctant to make reasonable adjustments. Breaches of this section however are only actionable by the Disability Rights Commission, rather than the disabled individual himself. Any action by the DRC will inevitably lead to press attention. To ensure that, as an employer, you are meeting your disability obligations, a disability audit of your current practices may be a useful guide. The following action points for a disability audit could be considered:-
By approaching these issues sensibly, claims and publicity should be kept to a minimum. 10. Stress In the last few years, there has been an increase in press reports on stress related claims. The obligation on employers is to assess the risk of stress related ill health arising from work activities and to take measures to control those risks. As the recent case of Harding –v– The Pub Estate Company Limited demonstrates, however, the hurdles over which an employee has to get are not insignificant. In that particular case, Mr Harding worked as a pub manager in a rough area of Manchester. He suffered a heart attack in September 1998 and claimed it was as a result of his employer’s negligence in “expecting him to work long hours under stress in managing licensed premises that were rife with criminal activity and that they failed to accede to his requests for help or take other appropriate steps”. The Court of Appeal found that his employers had been given no indication that his health was suffering. As a result, he had failed to establish a breach of duty on his employer’s part and his claim failed. The Health and Safety Executive has published guidelines for employers to help combat work related stress. This is a helpful starting point for companies looking to improve their approach to stress issues. The guidelines look at key aspects of working life, that, if not properly managed, can give rise to stress and suggest minimum standards for working conditions, for example: Demands – Employers should provide employees with adequate and achievable demands in relation to the agreed hours of work. Employees’ skills and capabilities should be matched to their job. Control – Employees should if possible have control over the pace of their work and should be encouraged to develop new skills to help them undertake new challenges at work. Support – Employers should have support systems and policies in place and employees should know what support is available and how and when to access it. Relationships – Employers should have agreed policies and procedures to prevent or resolve unacceptable behaviour. Systems should be in place to allow employees to report unacceptable behaviour. Roles – Employers should ensure that there is an adequate information flow so that employees can clearly understand their role and responsibilities. Change – Employers should ensure that employees are given timely information in order to enable them to understand the reasons for proposed changes. Employees should have access to relevant support during changes. Given the increasing number of claims, and the increasing press interest in stress, employers would be well advised to take the HSE Standards seriously. Whilst the HSE standards are not law, a Court may well consider the practical advice given. Conclusion The message that comes across clearly from all of these issues is that employers need to have well-drafted policies that are well-publicised and adhered to so that all members of staff understand their obligations. Training is key in many areas and transparency assists understanding. Employees who feel valued and understand the company’s approach will be less likely to present a claim, or speak to the press.
About the Author David Green qualified as a solicitor in 1978. He moved to McKenna and Co. in London in 1983 to specialise in employment law. After two years at McKenna he worked for Clifford Chance for five years, heading their Employment Group. He joined Charles Russell as a partner in November 1991 to set up an Employment Unit. David’s expertise covers all areas of employment law and immigration. He has a particular interest in issues arising from the Transfer of Undertakings (Protection of Employment) Regulations 1981. David has acted in a number of high profile cases reported in the legal press and writes regularly for Tolley's and Croner's employment law publications. In addition, he lectures on a regular basis, is an accredited CIPD trainer and runs training programmes for clients. David frequently appears in the national press and was named as an employment lawyer highly rated by HR professionals in a survey carried out by Employers’ Law.
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