'Game-changer' law – what brokers need to know

Almost 300 women have now applied to the Harrods compensation scheme over claims they were sexually abused by former Harrods’ owner Mohamed al Fayed. It’s a case that has made headlines all over the world and sent a clear warning to employers – and the insurance brokers who advise them – sexual harassment at work is now more on the agenda than ever before.

Sharing some eye-opening statistics in a market briefing last week, Ray Silverstein, partner at Browne Jacobson LLP, noted that a recent government survey revealed that 29% of those in employment reported experiencing sexual harassment at work in the previous 12 months. For those in the business of risk, this should sound alarm bells, not least as the government has responded with the new Worker Protection (Amendment of Equality Act 2010) Act 2023.

“That came into force last month [October 2024] and it’s a bit of game-changer,” Silverstein said. “Because, for the first time, it imposes a positive duty on every employer, regardless of size, to take anticipatory steps to prevent sexual harassment at work. At work doesn’t just mean in the office, it means in the work environment – so, after-work drinks and parties, social events.

Anything that is connected to work, is work.”

What are the penalties for failing to comply?

The amendment’s focus is on the ‘reasonable steps’ an employer has to take to anticipate and prevent that sexual harassment from taking place. The incentive for employers to comply is that if they don’t, and sexual harassment is found to have taken place, compensation can be increased by up to 25%. Compensation for sexual harassment has no cap, Silverstein said, but tribunals can add an additional 25% to the compensation if the employer is found not to have taken those proactive steps.  

Important to note is that the burden of proof in such cases is all on the employer and the definition of reasonable steps is not defined but rather subjective as to what the tribunal considers reasonable on the day. “We know that certain factors will be taken into account, such as the size of the employer, its resources etc.,” he said. “But it’s very open-ended, it’s very vague.”

Ultimately, it is on the employer to prove they took the right preventative measures - and with 29% of employers reporting harassment, it’s a real operating risk for businesses today. From a lawyer’s perspective, audit trails are a key tool in the risk prevention toolbelt and clients must be able to document that they took the right measures to avoid a harassment claim.

Understanding the fallout of a misconduct claim

The impact of such a claim is not just its financial cost, Silverstein said, but also its reputational consequences as it takes years to build a trusted brand and very little to tarnish it in the event of a public sexual harassment claim. He advised on the need for brokers and the employers they advise to start thinking very seriously about this risk, highlighting the toolkits available to them to make sure they are protecting themselves and their staff.

“This isn’t just about protecting the organisation - though that is obviously absolutely important,” he said. “But we all want to protect our staff, as well as our own organisations, so there are many good reasons to try and deal with and reduce this risk. In addition to our toolkit, the EHRC has published new technical guidance, which is free online, and contains a lot of very useful material.”

What advice should brokers be sharing with their clients?

As for what brokers should be telling their clients to do in order to protect themselves and keep their employees safe, Silverstein has some clear points of action.

• Auditing your clients’ workplace and benchmarking where the organisation stands with regards to sexual harassment. Anonymous surveys are a particularly good means of providing sensitive feedback.
• Conduct risk assessments and review and refresh existing harassment policies. Even aside from the change in the law and the new anticipatory duty required of employers, most policies have not been updated in a long time and are no longer fit for purpose.
• Staff training is also required, and this too will need to be updated to fit with changes in the law. Silverstein advised employers to refresh and review their training and to make sure it is compliant.
• He also emphasised the need for employers to communicate their organisation’s stance on sexual harassment. “It comes from the top,” he said. “So, make it clear that misconduct is not acceptable.” That may include circulating messages ahead of after-work events that each employee is still at work, and so needs to behave in accordance with that.
• Accountability is key, and each organisation needs to clearly establish who is responsible for keeping an eye on what’s happening, and ensuring that staff training and misconduct policies are kept up-to-date and adhered to.

Finally, Silverstein championed the need to encourage an environment in which people can come forward and report misconduct. It’s better to know about it than not know, he said, because you will need to deal with it - and the longer it goes on behind the scenes, the higher the risk to the organisation. “So, make it clear to staff how they can complain and how it will be treated,” he said. “[Because] if these statistics are to be believed, it is going on in many organizations, so it's better not to ignore it.”