What are the legal implications of poor workplace culture?

Failing to tackle systemic issues in your organisation can lead to expensive and damaging claims from employees, says Kirsty Rogers

What are the legal implications of poor workplace culture?

Positive workplace culture is crucial to the success of any business. With social and cultural norms changing at an unprecedented level, leaders need to create an inclusive and prosperous environment to retain and attract the best talent. 

From #MeToo and managing behaviour to mental health and stress in the workplace, it is essential for leaders to act as role models and create a platform of security. Failing to do so not only has negative economic ramifications but is invariably coupled with legal difficulties.

Negative workplace culture can lead to several legal issues, from claims for unfair or constructive dismissal to discrimination under the Equality Act 2010. Not all workplace culture issues are actionable; however, a number are. For example: 

Discrimination

Employees with a protected characteristic are protected against direct and indirect discrimination, harassment and victimisation under the Equality Act. There are nine protected characteristics in total, including age, race, sex and sexual orientation. Employers with a poor workplace culture are inevitably at higher risk of these types of claims, especially those with a culture of 'banter'. Under the Equality Act, businesses can be held vicariously liable for any discriminatory actions by their employees that are carried out ‘in the course of employment’. 

Whether it is intended or not, it is still actionable and employers need to ensure their employees are fully informed on what is and isn't acceptable. Businesses do have a defence if they can show they took all reasonable steps to prevent the employee from carrying out the act that was complained about. Following the #MeToo movement and the removal of employment tribunal fees, there has been a reported 69 per cent increase in sex discrimination claims. 

Mental health and stress 

The increased pace of communication and globalisation is in part responsible for a vast rise in stress conditions. Poor workplace culture also puts a strain on mental health and increases stress. Awareness of the pressures on employees is imperative for leaders if they are to avoid serious work breakdowns among their workforce. 

Employers should understand the importance of promoting a healthy working environment and the risks of not doing so. According to the World Health Organization, one in four people will be affected by mental health disorders at some point in their lives. Employees who have a stress condition are often covered under the Equality Act as having a disability and are protected against discrimination. Companies are under a duty to make reasonable adjustments to assist disabled employees. 

A failure to make changes when an individual has noticeable signs or absences because of stress can lead to personal injury claims. There is the further possibility of health and safety at work investigations.

Bullying and harassment 

Employers should be mindful of the potential claims even if there is no protected characteristic linked to the bullying behaviour. There is no legal concept of bullying; however, employees can still raise grievances and bring claims for unfair or constructive dismissal. In extreme cases, there may also be a risk of a personal injury claim. Employees may also consider bringing a claim under the Protection from Harassment Act 1997. 

Action points for HR  

Policies and procedures 

Having clear policies on equality, harassment and bullying is a priority for HR, as is promoting a culture of inclusion and appropriate conduct. Policies should be properly circulated, available centrally and regularly updated. 

Training 

Regular training sessions should be run throughout the wider workforce, including HR, line managers and in-house legal departments. Employees should have a clear understanding of the potential consequences of their behaviour and of any breach of the rules. 

Tackling issues around leadership culture can be difficult but is crucial to the success of maintaining a positive culture. Leadership training, including at board level, should be rolled out through group and one-to-one sessions to ensure those at the top are sending the right message to the wider workforce. 

Dealing with complaints

Employee complaints should be investigated fairly, consistently and transparently and dealt with through the company grievance procedures. HR should be alive to patterns of behaviour, such as repeated reports concerning a particular manager or problems in a specific team. Any trends spotted should be addressed as soon as possible to avoid issues escalating. 

Non-disclosure agreements

HR should be cautious when using confidentiality clauses when settling claims. Following the Harvey Weinstein scandal, the government has launched a consultation to consider whether non-disclosure agreements (NDAs) should be watered down further. In the meantime, the Law Society and Solicitors Regulation Authority have set out guidance stating that NDAs should highlight permissible disclosures (such as disclosing the matter to regulators). 

Creating a safe environment does not just avoid expensive litigation. Poor workplace culture can lead to several issues including reduced performance, increased sick leave, high turnover of staff, grievances and a tarnished reputation. 

Company culture filters down from the top to the rest of the workforce. It is of paramount importance for leadership to take responsibility for setting a positive culture, built on trust and authenticity. 

Kirsty Rogers is an executive partner and employment specialist at DWF