Workplace bullying - an increasingly expensive pastime

Tackling bullying and harassment is a substantial challenge for employers. Recent cases have highlighted the financial penalties employers face where they allow poor management practices, for example Helen Green -vs- Deutsche Bank. Unfortunately for employers, following the recent decision of Majrowski -vs- Guy's and St Thomas' NHS Trust in the House of Lords, it now appears harder for employers to eliminate the risk of claims.

High stakes: millions of working days lost

12.8 million working days were lost to stress, depression and anxiety in 2004/05. A large proportion of these were due to workplace bullying and harassment. Bullying results in low morale and productivity levels, high staff turnover and bad PR for employers as well as carrying heavy financial consequences.

Claims for personal injury

To say that bullying and harassment claims can be expensive is an understatement. This is illustrated by a recent personal injury claim brought by an employee against a bank (Helen Green -vs- DB Group Services (UK) Limited). Reports suggest that the bank may appeal against this decision, so the comments in this article (published 9 November) are provisional.

The employee, Ms Green, was awarded a reported £828,000, plus her legal costs, after the High Court found that she had suffered two nervous breakdowns as a result of a campaign of bullying and harassment from four female co-workers. According to the High Court, there had been a campaign of spiteful behaviour by these co-workers which included refusing to speak to Ms Green. In addition, one of Ms Green's male colleagues bullied her by seeking to advance himself at her expense and by acting in a disrespectful manner.

The High Court followed the principles laid down by the Court of Appeal in Sutherland -vs- Hatton. Amongst other issues, Sutherland confirmed that for an employer to be liable, the personal injury must be reasonably foreseeable. The High Court in Green found that the claimant's line managers knew or ought to have known what was going on, and that a responsible employer would have intervened as soon as he became aware of the problem.

The compensation awarded in this case was unusually high. The reason for this appears to have been that the court accepted that, as a result of the breakdowns she suffered, Ms Green would never again work in a job that paid as well as her position at the bank. She was therefore awarded a large sum for "lost" future earnings. By contrast, only £35,000 of the total compensation was awarded to compensate Ms Green for the suffering she endured.

Claims under the Protection from Harassment Act 1997

In a different decision (Majrowski -vs- Guy's and St Thomas' NHS Trust) that also has serious implications for employers, the House of Lords has confirmed that an employer can be vicariously liable for harassment by its employees in breach of the Protection from Harassment Act 1997 ("the Act"). This means that, where one employee harasses another, the victim can recover compensation from the employer, as well as from the employee who conducted the harassment. Whilst it can be argued that the Act was never intended to have this impact on the employment relationship, the judgment of the House of Lords is hard to fault.

The Act provides that a person must not:

• pursue a course of conduct (defined as conduct on at least two occasions)
• which amounts to harassment of another
• and which he knows or ought reasonably to know amounts to harassment of another.

In Majrowski, the employee claimed that he had been bullied and harassed by his manager acting in the course of her employment. The House of Lords held that an employer can be vicariously liable for such harassment where the guilty employee's actions are sufficiently connected with the employment. This means that an employer might not be liable where one employee harasses another outside working hours and away from the workplace. But any bullying or harassment taking place at work will almost certainly be sufficiently connected.

The Majrowski decision gives employees who are harassed at work a further basis on which to claim compensation from their employers. Some of the limitations and defences which apply to other claims will not be available to an employer under this claim. For example, an employer has a defence under existing discrimination legislation, such as the Sex Discrimination Act 1975, if it can show that it took all reasonably practicable steps to prevent harassment occurring. But this defence is not available to an employer facing a claim for vicarious liability under the Act.

In addition, when bringing a vicarious liability claim under the Act (and in contrast to a personal injury claim) an employee does not have to show that he suffered a recognisable injury from the behaviour or that the injury was reasonably foreseeable. In fact, the Act expressly provides for a damages claim where the employee merely suffers "anxiety" and for any financial loss resulting from the harassment. As such, it will generally be easier for an employee to bring a successful claim under the Act rather than a successful personal injury claim.

The limitation period for claims under the Act is 6 years. This differs from discrimination legislation, where the employee generally has only 3 months from the act of discrimination within which to bring their claim. This could be of further concern to employers, who face the possibility of claims from ex-employees.

These points were illustrated by Ms Green's second claim, which she brought under the Act. The High Court found that the behaviour of the four alleged bullies amounted to harassment under the Act, and that the bank was vicariously liable for their actions.

This case serves as a warning that claims by employees against employers under the Act may become more prevalent. Therefore, employers need to be more vigilant than ever in looking out for signs of bullying and harassment.

How employers can protect themselves

Employers need to be pro-active in preventing bullying and harassment. However even an employer which takes all possible precautionary measures will find that one of its employees bullies another. Where this happens, the employer needs to take fast, effective corrective action. Although this should be done for all employees, this is even more important where the victim is known to be vulnerable.

As a starting point, employers should put in place policies emphasising that bullying and harassment will not be tolerated. Such policies should detail the possible consequences of such behaviour, namely disciplinary action up to and including dismissal. Employers need to communicate and review these policies to their whole workforce.

A court or tribunal would expect to see that such policies are consistently enforced. Thus employers will need to investigate any complaint thoroughly and deal with the culprit(s) appropriately. Suitable remedial action will depend on the seriousness of the bullying but could involve disciplinary action, moving the culprit to a different department or location, or at least limiting their involvement with the victim.

Furthermore, employers would be well-advised to provide line managers and HR personnel with training on identifying, and then managing, cases of bullying and harassment. Ideally, all employees should receive training on what amounts to bullying and harassment and what is, and is not, acceptable within the workplace. Although the bank in Ms Green's case had arranged some harassment training, it appears that the alleged bullies did not take the training seriously, and the High Court felt that more ought to have been done to prevent the harassment. No disciplinary action was ever taken.

Employees who complain of bullying and harassment should be treated sensitively and supported by their employer. For instance, the victim may benefit from having a mentor within the workplace.

The bad news for employers is that, following the Majrowski case, these preventative and remedial measures may not be a defence to a vicarious liability claim under the Act – and there lies the rub!

Edward Goodwyn is a Partner in the London Employment Group at Pinsent Masons.