Litigation culture and new legislation on work status: workplace and brand protection

Workplace equality and governance are increasingly prevalent board agenda issues. We see this from a compliance perspective (read our comments on gender and ethnicity pay reporting requirements), and broader brand-sensitive issues such as #MeToo, equal pay cases and evolving protections for precarious workers.

Regulatory requirements, case law and work by organisations like the Royal Society of the Arts are sharpening focus on the need for clear governance to drive workplace equality, maintain consumer trust and, ultimately, protect a business' brand.

#MeToo

As #MeToo continues to expose unlawful conduct the role of non-disclosure agreements (NDAs) features highly.

Sexual harassment and NDAs in the workplace

Campaigners have been trying to limit the use of NDAs in the context of sexual harassment. There are already rules on what can be included in a settlement agreement. For example, individuals cannot be prevented from reporting a crime or from making a protected disclosure (ie "whistle blowing").

However for campaigners like Zelda Perkins (Harvey Weinstein's former assistant, who chose to breach her NDA), these restrictions do not go far enough to protect victims of sexual harassment.

In the UK last year, the Women and Equalities Select Committee's report on sexual harassment in the workplace called on stakeholders to take a more proactive approach. The government later responded to say that it would introduce various proposals, including a statutory code of practice on sexual harassment.

In July this year, the same Committee published a report on the use of NDAs in discrimination cases. This contained a raft of recommendations, including legislation to ensure NDAs cannot be used to prevent legitimate discussion of unlawful discrimination or harassment allegations.

The government also recently responded to its consultation on the use of NDAs. It made a number of proposals, including introducing legislation to ensure that no provision in a confidentiality clause can prevent disclosures to the police, regulated health and care professionals and legal professionals.

Given recent commentary – for example, the main body governing lawyers in the UK, the Law Society, was criticised for its guidance on the use of NDAs amid suggestions that City firms had pressured the organisation into relaxing its policy – more clarity on NDAs will be welcomed by many.

The government's most recent consultation on sexual harassment in the workplace, which includes proposals on a mandatory duty to protect workers from sexual harassment and how to better regulate the use of NDAs, demonstrates that this is an issue which will continue to feature on its agenda.

Practical steps

Public goodwill and trust in a brand can be eroded quickly, so dealing with allegations as efficiently as possible is essential. It is also important to consider how to minimise the reputational and financial risks that can arise from accusations of inappropriate conduct in the long term, for example by establishing and maintaining healthy internal governance.

So what governance steps can employers take to minimise the risks of allegations arising? A few ideas:

• Conduct equality and anti-harassment training for employees; also, train managers separately, so they are well-equipped to deal with any allegations of harassment that may arise.
• Draft and maintain detailed policies on sexual harassment which are clearly available to all employees; this will ensure they know how to raise concerns, and understand how such concerns will be addressed by the business.
• Proactively encourage a culture of "calling out" any inappropriate conduct.

Taking active steps to minimise the risks associated with inappropriate conduct at work is key to creating a sustainable business model (see our Business 360° framework, which helps employers establish a market leading governance structure).

Preventing sexual harassment and ensuring any allegations are dealt with robustly protects workers and goes a long way towards future-proofing a business' brand.

Equal pay

The emergence of recent equal pay cases against leading UK supermarkets (Asda, Tesco, Sainsbury's and Morrisons) has also focused HR and business leaders on a different facet of diversity and equality at work. No longer confined to the traditional realm of the public sector, equal pay claims indicate a new campaigning culture and wave of similar claims across the private sphere.

The claims against Asda highlight their potential scale: over 7,000 predominantly female shop floor workers are claiming that their work is of equal value to the primarily male staff based in the distribution centres. They say there is no reason other than sex discrimination for store staff to be paid less.

We recently commented on the outcome of the first stage of the Asda case, in which the Court of Appeal ruled that even though the two groups of Asda staff worked at entirely separate establishments, it is possible to compare them.

In its judgment, the Court noted that Asda applied "broadly" common terms of employment for the relevant groups across its sites and there was a "single source" of pay decisions within Asda (the Wal-Mart board). The second stage was heard in May and June 2019.

Now the Court of Appeal has given the go-ahead for workers to be compared across separate establishments, the possibility of similar claims emerging in different industries is increasingly real. We may start to see retail shop assistants looking to compare themselves to distribution workers in the fashion industry.

Likewise, perhaps "dark kitchen" chefs will draw comparisons with those in high end or high street locations. Given that liabilities in the claims against Asda, Tesco, Sainsbury's and Morrisons are estimated to reach £8bn, other employers looking over their shoulder at the prospect similar claims are now taking steps to proactively assess and minimise their exposure.

Digitising complaints

There are clear financial risks of getting these issues wrong. But the reputational risks that arise from poor workplace governance are equally concerning. This risk has been compounded in recent years by the rise of social media and other digital tools which can be used to lodge complaints. For example, the impact of a petition on change.org, or a tweet going viral, can be huge.

Some companies have developed digital tools in an effort to mitigate these potential employer losses. For example, Vault provides a platform for employees to anonymously lodge complaints and for employers to receive these privately.

There can be problems with privacy rights, defamation issues and evidential value with these systems. But for many employers, these can be technical issues which are secondary to the impact of a "lightning strike" media story or social media campaign.

Precarious work

Innovative solutions?

Aside from regulatory changes, companies have looked to deal with these issues internally. Recently, the delivery company Hermes adopted an innovative 'self-employed plus' model. Hermes and GMB, a union, agreed a deal under which its couriers would continue to be self-employed, but may choose to have the status of 'self-employed plus'.

Under this model, workers receive a guaranteed rate of pay higher than the National Minimum Wage and a set number of paid holiday days per year. In return, they do not have the opportunity to receive the higher pay available to self-employed staff and have to take specific routes identified by Hermes.

Responses to this announcement have largely focused on the tax position – if a self-employed person can receive similar benefits to a worker, but not pay income tax or the higher rate of National Insurance Contributions, how long will it take for the tax authorities to get involved?

Good work

The importance of good governance extends beyond sexual harassment and equal pay – as the precarious nature of jobs in the gig economy means that the headline high employment figures cloud the reality beneath the surface for many workers.

As an illustration, Uber lost an appeal in France against one of its former drivers over their employment status. The Paris court specified that the contract between Uber and its former driver was "an employment contract" on the basis that the driver was dependent on the app for work.

Furthermore, the Court also noted that the plaintiff had signed a "registration partnership" with the company which did not give him the freedom to choose his clients or charge his own rates. Therefore, the Court ruled that Uber had "control" over the driver. In July, a Madrid Court found that Deliveroo operatives had been misclassified and were in fact employees with social security contributions due.

The last days of the Theresa May administration saw a number of UK initiatives to address perceived injustices. In July 2019, the May government launched multiple consultations. These included a consultation on proposals to better support parents to balance work and family life and promote gender equality in the workplace, another on forming a single labour market enforcement body for employment rights, and a third on one sided-flexibility in the workplace.

This last consultation seeks to tackle a problem identified in the Taylor Review: workers having unpredictable hours and insecure income. The proposed changes include a right for workers to switch to a more predictable contract and a right to reasonable notice of their working patterns.

July also saw the response to a consultation on pregnancy and maternity discrimination, including a commitment to extend the redundancy protection period by 6 months once a mother returns to work. This marked a clear path for May's vision of the future workplace. Whether this trajectory continues with Boris Johnson's new government remains to be seen. We will report further on these developments.

Since 2016, the French employment code has provided that technology platforms have a social responsibility towards independent workers. Minimum guarantees must be offered to such workers including work insurance coverage, vocational training and the right to strike.

A new bill has recently been discussed in France, which aims to impose the adoption of social responsibility charters by collaborative platforms, in order to better define workers' rights and guarantees.

The question that remains is whether consumers will be prepared to accept higher prices as a result of this change and if this will have an impact on exciting companies innovating with new technology.

Conclusion

The financial and reputational impact of getting workplace structures and/or pay wrong means the need for businesses to improve internal governance is sure to heighten moving forward. This could become even more pronounced if the government forms the single labour market enforcement body for employment rights.

Assessing the impact on a business of any new rules in this context needs speed and a good sense of the trajectory of litigation and policy.

This is why we have developed Business 360° in the UK, and have similar frameworks for compliance management internationally. It allows companies to maintain a sustainable business model, taking into account the new world of work. Business 360°'s initial business health check can help to identify any issues with current rules, allowing us to provide ongoing support in light of any changes to workplace status rules.