Historic allegations are by their very nature difficult to investigate. Often, witnesses will no longer be employed by the business, be untraceable or, in some circumstances, have died.
The recent publication of historic allegations of sexual harassment and rape by ex-employees of Harrods against Mohamed Al- Fayed have come at a significant cost to the new owners of that business. There is an obligation on employers to take such matters seriously, particularly where an allegation is raised by one current employee against another.
As with the position adopted by Harrods, an employer is unlikely to be able to rely on limitation periods to avoid liability. Instead, they are likely to find themselves in an indefensible position, requiring careful management and financial cost.
Read more: Harrods allegations: How should HR hold power to account?
Employers who find themselves facing historic allegations might wish to limit the damage by incorporating non-disclosure (gagging) clauses into any settlement. But even those have their limitations. A non-disclosure agreement cannot prevent the individual from reporting potential criminal conduct such as sexual harassment or rape to the police or, where relevant, to an appropriate regulator.
While the individual may be restrained from reporting allegations of sexual harassment to the press, any police investigation is likely to become public knowledge, and the value of the gagging provision will therefore be limited.
Additionally, an extension to the Equality Act 2010 will come into force on 26 October 2024 which will place further obligations on employers to ensure that employees are protected from suffering a repeat of any sexual harassment. If they fail to do meet these obligations, additional penalties may arise.
The Worker Protection (Amendment of Equality Act 2010) Act 2024 is also due to impose an obligation on employers to take reasonable steps to prevent sexual harassment occurring against its employees in the first place. Should an employer be deemed to have failed in this duty, any compensation awarded in connection to sexual harassment can be uplifted by as much as 25%.
Read more: How prepared are you for the legal changes coming on sexual harassment in the workplace?
Employers are expected to take active steps to prevent sexual harassment from arising. It is likely that those steps will include the creation or revision of existing policies and training in connection to those policies. The step change that this legislation should generate however is the ongoing and active monitoring and updating of policy, and the behaviour of colleagues. It will no longer be acceptable for a policy to be created and then to be left without further consideration until a review takes place some years later; positive action will be key.
Guidance has been issued by the ECHR. Employers should understand that the ECHR has enforcement powers of its own, which can be triggered without an employee complaining to an employment tribunal.
As if there is not enough going on in the HR world at the present time, the government is committed to extending the new legislation further, to ensure that employers adopt all reasonable steps to prevent harassment (i.e. not just sexual harassment) by third parties. This was removed from the draft legislation at the insistence of the House of Lords in 2023.
With a new government in power and investors looking to the UK as a stable economy, many businesses are considering the acquisition of a complementary business or a merger with a competitor as opportunities for growth. Such transactions are always a busy time for HR professionals with significant time spent dealing with the inevitable due diligence process.
No matter how robust that diligence process might be, discovering skeletons that have been well buried is no easy task, and will cause employers difficulties, both legally and reputationally.
Simon Fennell is partner at law firm Shoosmiths