Dangerous liaisons

Spring is on its way and, for some employees, love is in the air. For
others, however, all that’s in the offing is a desire to pursue a claim of sex
harassment. Heather Falconer asks whether love contracts can cushion employers
from the rocky road of romance

In a country where we cling, against all the evidence, to the ideal of
lasting, trusting romantic relationships, the extracts on page 16 from
"consensual relationship agreements" – commonly known as love
contracts – devised by US law firm Littler Mendelson are likely to draw hoots
of derisive laughter.

Most Brits would regard this recent legal development, rather like the
pre-nuptial agreement, as the horribly cold-blooded creation of a
litigation-crazy national psyche. In the US about 1,000 such agreements are
thought to exist, designed to forestall sex discrimination claims rising from
the ashes of in-house relationships.

According to Garry Mathiason, senior partner at Littler Mendelson, such
action is recommended only in limited circumstances. "We designed the
contract in response to requests from clients asking if there was some
specialised legal mechanism which could be used to protect businesses from
unfair sexual harassment claims, especially involving a higher level executive
and an employee under his or her direction.

"Unfortunately there have been many instances of office affairs coming
to a natural end and the employee later deciding to pursue claims against
companies for their own financial gain."

The extent of US employers’ concern over sexual harassment litigation, which
is attracting ever higher damages, was illustrated recently in an episode of
the US television drama Ally McBeal.

On this side of the pond, the recent removal of the compensation cap for sex
discrimination and a burgeoning sexual harassment case load is paving the way
for ever increasing concern over the issue. With Valentine’s Day drawing out
the sort of ardour not seen since the Christmas party, employers may be once
again wondering how to protect themselves from the increasingly unpredictable
consequences of love among the terminals.

Eversheds is "working closely" with Littler Mendelson to monitor
the types of claims emerging in the US and to assess whether UK employers
should follow suit and introduce love contracts into their policies and
procedures.

"There are parallels to be drawn between the US and the UK," says
Eversheds’ Anne-Marie Thompson. "Generally cases and claims that emerge in
the US emerge in the UK a few years later. The number of sexual harassment
claims made in the UK has also increased dramatically and there is nothing to
say for sure that the love contract could not be used here."

Most leading UK employment lawyers, however, question its effectiveness on
both legal and cultural grounds. Legal because it is virtually impossible to
contract out of the right to go to an employment tribunal – where most sexual
harassment/discrimination complaints are heard – especially in respect of
events which have not yet happened. Cultural, because, as David Whincup of Hammond
Suddards puts it, "Most people would run a mile from anyone who sidled up
to them at an office do and waved one of these agreements."

Also, says Thompson, "You have to question what is in it for the
employee? This kind of agreement is purely for the protection of the employer –
why would any employee agree to it?"

The love contract seeks to address three main issues, says Thompson. First,
that the relationship is voluntary and truly consensual; second that if either
employee involved believes the company’s sexual harassment policy is violated,
this should be reported to a company representative; and third that any
allegations of harassment are dealt with internally rather than through the
courts.

From a technical point of view the third is very hard to achieve in the UK –
signing away basic employment rights is effective here only in very limited
circumstances. "A love contract would not satisfy these
circumstances," says Thompson. "It would need to be done in the
presence of an Acas officer or as part of a fully constituted compromise
agreement where all parties had taken independent legal advice."

Some argue that harassment claims are always going to be a fact of life in
situations where powerful people work closely with the not-so-powerful – and there
probably isn’t a workplace in the land where that juxtaposition doesn’t exist.
But Thompson warns that it is essential to give thought to how delicate
situations are to be handled: the days are gone when the "junior
partner" could be ushered out of the door without so much as a by your
leave.

Says Thompson: "In the past it was often company policy that in such
situations it was the less senior employee who had to go. But that is changing
– employers realise it will no longer be justifiable and that a proper policy
should be followed."

There are two big problems for employers when it comes to sexual harassment
claims. One is that the courts are not interested in the motive or intention of
the "harasser": "it was only a bit of fun" or "she was
asking for it" just won’t wash. The second is that the question of whether
the behaviour was offensive is broadly a subjective one: it is in the eyes of
the individual victim.

There is no statutory definition of sexual harassment: claims are brought
under the Sex Discrimination Act (SDA) 1975 as direct discrimination – where a
person is treated less favourably than others as a direct consequence of
gender. But the tribunals rely heavily on the EU Code of Practice on the
Dignity of Men and Women at Work, which states that sexual harassment means
unwanted conduct of a gender-specific nature. Such behaviour will be
unacceptable if, inter alia, it is unwanted (that is, uninvited), unreasonable
and offensive to the recipient.

Clearly the subjective test for whether offence has been caused has limits.
"If the victim appears to the tribunal to be excessively sensitive then
the tribunal will try to find that offence was not in fact-caused,"
Whincup points out. If there is no offence there is no less favourable treatment,
and hence no unlawful discrimination."

Judging how seriously to treat a complaint, however unlikely it may sound,
is a very problematic call for an employer. The case law illustrates the
difficulties in establishing whether offence was in fact caused. In Snowball v
Gardner Merchant, 1996, ICR 790, for example, a manager asked a woman em-
ployee for sex on the table and sent her exotic underwear through the internal
post, but said she had not suffered any offence from his conduct as she was
allegedly in the habit of referring to her bed as a "playpen" and
boasting of her black silk sheets. "Eventually the tribunal decided that a
rather racy taste in bed linen by itself did not necessarily mean that she was
a woman with no moral standards – the defence was massively unsuccessful,"
Whincup says.

On the other hand, the case of Stagg v the Property Services Agency,
unreported, where a woman was found not to have been offended by dirty jokes on
the basis that she had been married three times and was known to swear, shows
the sometimes idiosyncratic reasoning of the tribunals.

The problem, says Whincup, is that there is very rarely direct evidence as
to the state of mind of the "victim" at the time the alleged
harassment took place. "Unless the employee has burst into tears and run
out of the room in front of witnesses, written steaming letters or gone to the
doctors on the verge of a breakdown, it is often very difficult to establish
the state of mind in a tribunal six months down the line.

"That said, the tribunals will be very ready to infer offence from
gender-specific conduct unless there is clear evidence to the contrary."

Even if a claim does turn out to be unfounded or even false, a failure by
the employer to give a considered response could itself give rise to a separate
claim of sex discrimination. "The fact that a claim turns out to be
rubbish is not an excuse for not investigating it", says Whincup.
"There is a duty on the employer to respond."

There are only two defences for employers where an employee’s act has been
found to be sexually discriminatory: first, that the employee was not acting
"in the course of employment" (thus removing any sort of vicarious
liability) and second, under section 41 (3) of the SDA 1975, that the employer
took such steps as were reasonably practicable to prevent the employee doing
that act or acts of that sort in the course of his employment.

The first of these is very difficult to prove, says Whincup. In practice,
most conduct that takes place between colleagues risks being construed as
occurring "in the course of employment". The successful use of the
second defence hinges mainly on paperwork; it is about being able to prove that
sexual harassment policy not only exists but is inculcated and enforced.
Disciplinary and grievance procedures, specific anti-harassment or equal
opportunities policies, e-mail/Internet policies: all these are important not
just in providing the defence but in assisting in the fair dismissal of the
harasser if necessary, and hopefully preventing that form of conduct in the
first place.

Employers’ duty

The extent of an employer’s duty was brought home quite starkly in the case
of Bourdouane v Go Kidz Go, IDS Brief 578, where a children’s entertainer was
offended by the lewd actions not of a fellow employee but by the parent of one
of her audience. She subsequently persuaded the employment tribunal that her
employer had not taken reasonable steps to prevent this unconnected third party
committing the harassment. The tribunal accepted the argument that as soon as
the employer knew the harassment was happening but did not take any reasonable
steps to prevent it, it became liable.

The general workplace culture now plays an important part, too: cases of
"environmental sexual harassment", such as Morse v Future Reality,
IDS Brief 637, show that generally offensive gender-specific behaviour, even if
not targeted at anyone in particular, can be discriminatory. Employers, it
seems, must take visible steps to eradicate the worst excesses of
"laddish" and anti-social behaviour of all kinds from the workplace.

So while the idea of your treasured staff signing bits of paper before
embarking on a fling might still seem a little far-fetched, the message is
clear. Without a documented policy on harassment and clear parameters defining
the acceptable limits of staff behaviour towards each other, those cheap
thrills once regarded as part of the rough and tumble of daily life could
actually cost the employer very dear indeed.

Love contracts – could it come to this?

"X and Y each, independently and collectively, desire to
undertake and pursue a mutually consensual social and/or amorous relationship
(‘Social Relationship’) with the other."

"X\Y’s desire to undertake, pursue and participate in said
social relationship is completely and entirely welcome, voluntary and
consensual…"

"X\Y has entered into said Social Relationship after having
discussed in depth with Y\X the ramifications and implications of entering into
a Social Relationship with a co-worker of X\Y’s professional position and after
having had the opportunity to discuss such matters with counsel of choice or
any other person of his choosing."

"X and Y understand and agree that conduct or speech in the
workplace which is sexual or amorous may be objectionable or offensive to
others. Therefore X and Y agree not to engage in such conduct on company
property or when performing work related tasks in public areas. Such prohibited
conduct includes, but is not limited to, the following: holding hands or
touching in an affectionate or sexually suggestive manner; kissing or hugging;
romantic or sexually suggestive gestures…speech…or communications, whether
oral or written; and display of sexually suggestive objects or pictures."

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