The Presidents Club, sexual harassment and third party liability

The Presidents Club, sexual harassment and third party liability

In the wake of the Presidents Club scandal, where hostesses were allegedly groped and sexually harassed, we asked leading employment solicitors for their views.

Is the agency that hired the women liable for the acts of the guests? How might asking workers to wear revealing clothes, and sign non-disclosure agreements look to an Employment Tribunal?

And moving forward, what can employers learn from the ‘what-not-to-do’ example that we’ve seen this week. Here’s what they said…

Harassment isn’t always employer and employee. It could be an employer’s client (the third party) who is the accused party – in this case, it’s the guests attending the men-only event. And in some cases, the employer can be liable for the acts of third parties.

Arguably, employees used to be better protected (and according to this week’s report from the Fawcett Society, they should be again) when the Equality Act 2010 specifically prohibited third party harassment.

“However, in 2013, the coalition government deleted the part of the Equality Act that made employers liable if their staff are harassed by customers, clients or other third parties,” says Paul McAleavey, senior associate at Girlings.

Repealing that part of the Equality Act has made bringing a claim far more complicated. Therefore, it is not going to be a simple matter for any of the workers in the President club case to bring a claim against their employer, says Ben Power, senior partner of Springhouse Solicitors. “Assuming this was a one-off incident the legal options in the employment tribunal for the women in the President Club case are limited,” he says.

However, there may still be claims that can be made.

Reasonable steps

Despite the repeal, in 2013, of the sections of the Equality Act which made employers potentially liable for third party harassment, workers can still expect their employers to take reasonable steps to protect them from harassment by others, says James Rhodes, a Partner at DAC Beachcroft.

So, in this case, perhaps the employer (the agency) hasn’t done itself any favours?

The work by undercover FT journalists detailed the uniform requirements (“BLACK sexy shoes”, black underwear. Dresses and belts would be supplied on the day) and how the hostesses were offered a glass of wine before they began work and encouraged to drink with the guests.

“An instruction by their employer to wear revealing uniforms could itself amount to actionable discrimination,” says Rhodes. “It would certainly not be helpful to an argument by the employer that they took all reasonable steps to prevent the harassment from taking place.”

Reports say that the programme distributed to guests at the event specifically warned those attending not to harass the staff, points out Beverley Sunderland, managing director at Crossland Employment Solicitors

However, she says that balanced against this, is the fact that the women recruited were allegedly asked not only to wear short, black clothing but also matching underwear and were encouraged to drink with guests. An ‘enforcer’ allegedly roamed the event, not to prevent harassment but to prevent the ladies from spending too much time in the toilets.

“This potentially opens the employer up to vicarious liability under the Protection from Harassment Act 1997 where there needs to be more than one incident which the employer is aware of and fails to take reasonable steps to prevent,” says Sunderland.

“Putting a note into the programme is unlikely to be considered sufficient, when balanced with everything else. Given that the very person who recruited the ladies concerned has organised the event for many years and was allegedly actually there, then she could not claim to have no knowledge of it,” she says.

In fact, it could be argued that the actions of the agency created “a terrifying and degrading environment to work in” says Jodie Hill, consultant solicitor at Lionshead Law.

“Asking the women to wear sexy clothes, makeup and reportedly offering them alcohol, allowing them to be groped amongst other unacceptable and vulgar acts, in my view clearly amounts to unwanted conduct,” says Hill. “Actions like this are a complete disregard for the Equality Act 2010, further, it seems that the agency was seeking to conceal the discriminatory conduct by using non-disclosure agreements.”

What about worker status for one-off events?

Liability (under section 26) of the Equality Act would depend on whether these individuals are classed as “employees”, says Phil Allen, partner at Weightmans LLP.

If they’re agency staff, sent by the agency but not employed by either the agency or the hotel/club, they can’t claim against anyone because they’re not employed by anyone, says Allen, and can’t bring discrimination claims against either entity.

Allen says: “The most straightforward claim would have been one for constructive dismissal, but (as it is an unfair dismissal claim) that requires two years’ service which I assume these staff don’t have. So longer serving staff would have some come back if they resigned, but short servers don’t.”

What case law applies?

Employment solicitors point to the case of Burton v De Vere Hotels – the so-called Bernard Manning case – and how it applies to the current scandal.

And there are further cases to refer to – see here, for a summary of the relevant cases, put together by Paul McFarlane, a partner at Weightmans LLP.

Burton v De Vere Hotels

Explains Hill: “In Burton v De Vere Hotels, two black waitresses, clearing tables in the banqueting hall of a hotel, were made the butt of racist and sexist jibes by a guest speaker entertaining the assembled all-male company at a private dinner party.

“The employer of the waitresses was liable for race discrimination against the waitresses as they did nothing to prevent the women from the sexist and racist comments.  Their inaction amounted to ‘conduct’ under section 26(1) EQ 2010.”

Although this case decided that two black waitresses had been directly discriminated against on the grounds of race, the House of Lords in Pearce v Governing Body of Mayfield Secondary School said that Burton had been wrongly decided, adds Sunderland.

To render an employer liable for the direct discrimination claimed, there must be a failure of the employer which must itself be an act of discrimination, she says.

Sunderland says: “So, the failure of the employer must subject the employee to less favourable treatment for one of the protected reasons—in Burton this was race. To get over this, the government implemented the Equality Act 2010 making the employer vicariously liable if they did not take reasonable steps to prevent harassment by third parties if it happened on more than one occasion.”

However, as previously mentioned, this is what was repealed by the government in 2013, says Allen. “If they were engaged by the club or the hotel for a one-off night only contract, they might be able to claim harassment against the club/hotel but it is difficult legally to do so – which is where the repealed third party harassment provisions come in and the fact that Da Vere was over-ruled.”

Health and safety

Power says: “If it turns out the facts [in the Presidents Club case] are as extreme as the media is saying then one other potential avenue might be a breach of the employer’s duty relating to health and safety and failure to take reasonable steps to protect staff going in to what was obviously going to be a challenging environment.”

There may also be liability for negligence if it causes mental or physical harm and the employer/agency reasonably knew about it, says Sunderland. “Also, a drunk harasser can be liable for sexual assault on an agency host, which is of course a criminal offence.”

What can employers learn?

It is important that employers take reasonable steps to prevent harassment, act when an allegation of harassment is raised and take reasonable steps to prevent harassment from recurring.

“Employers should make it absolutely clear to their employees, ideally in writing, that they do not expect them to work in any environment where they are made to feel uncomfortable,” says Kevin Jones, head of Clarke Willmott LLP’s Employment and HR team. “If they are subjected to any treatment which makes them feel that way then they should immediately report it to their supervisor who will deal with it.”

“Employers should have in place anti-harassment policies and be able to demonstrate that they have taken steps to prevent harassment. If they can do so they are likely to have a defence to a claim that an employer is liable for the harassment of a third party which is done without their knowledge or approval” says Katherine Maxwell, partner and head of employment at Moore Blatch LLP Solicitors.

“Employers can include a clause in any contracts with third parties stating that the provider will be expected to comply with that harassment policy, says Katie Russell, a partner in the Employment Team at Shepherd and Wedderburn LLP.

“Employers can further help themselves by ensuring there is a code of conduct that all attendees are made aware of. Such a code might be at odds with what the organisers are putting on, but they increasingly need to understand that the duty of care they owe all of their employees overrides any other motivation they might have,” says Jones.

For more on what employers can do, see this latest piece, by Phil Allen, partner at Weightmans LLP.

Will the revelations about the Presidents Club change anything?

In the week that the Fawcett Society called for women to be better protected against sexual harassment at work, what do the appalling revelations about the Presidents Club add to the debate?

Christopher Braganza, partner in the Employment and Business Immigration Group, at Sheridans, says: “For me, it’s not a question of legal liability. Damages would, rightly or wrongly, be modest in any individual case, certainly when compared to the amount of money we’re told was being raised.

“What has changed – perhaps – is the wider context. The apparent behaviour of certain guests at this 30-year-old dinner had barely raised eyebrows up to this year. However, in the wake of Weinstein, #metoo and, of course, the backlash to the election of Donald Trump, this kind of behaviour can seem to spell the end of an organisation.”

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