Firms shouldn’t rely purely on employment practices liability insurance to shield them from sexual harassment claims.
As employment tribunals continue to rocket since fees were abolished for those bringing a claim, many firms are looking to employment practices liability insurance (EPLI) cover to fireproof them against sexual harassment claims.
Yet relying on insurance to offset the risk of a predatory director hitting on a junior at the Christmas party has drawbacks, says Simon Rice-Birchall, partner at law firm Eversheds Sutherland.
“I know of employers who have regretted taking out, or even cancelled, these policies because they are unhappy at the loss of control when a claim is made. Aside from being told which lawyers you must use and how to carry out the investigation, you will find that if the insurer demands that a case must be settled, you have no option but to comply.”
He believes many clients are becoming nervous about probing too far into a C‑suite candidate’s background, particularly in the light of the GDPR data privacy regulations.
“You can vet people to the ends of the earth but if the harassment has been done in private and nobody has complained, you won’t find it. I’m already seeing significant fear from clients about being too invasive.”
Ben Willmott, head of public policy at the Chartered Institute of Personnel and Development, calls on firms to challenge the bare minimum references which disclose nothing.
“Although rumours of bad behaviour don’t count as fact, any formal allegation of sexual impropriety, whether proven or not, needs to be shared between employers, yet many firms seem unaware of this,” he says.
“If a director leaves an organisation with a serious issue over their performance and/or behaviour and this has not been factually and truthfully reflected in their reference, the new employer has the right to mount a legal challenge if it subsequently suffers harm.”
Charlie Grubb, managing director of headhunting firm Robert Half Executive Search, advocates the use of 360-degree, multi-source referencing to arrive at a more objective view of would-be hires.
“Don’t rely solely on the references provided, but look to seek out your own based on the potential candidate’s CV and career history,” he says.
Although Mr Grubb believes that GDPR can make the referencing process “more challenging”, the use of pertinent questions such as ‘would you rehire him or her if you had the chance?’ may encourage reticent referees to open up.
Tom Hadley, director of policy and professional services at the Recruitment & Employment Confederation, agrees that in the current climate, a more rigorous approach to references will expose potential bad apples.
“In a tight, candidate-driven market such as this one, it’s tempting to take shortcuts to get the person you want. But at a time when other forces are at play – including the problems of allowing a blokey culture to go unchallenged – on-the-hoof hiring will only increase your exposure to risk,” he says.
“We’d like clients to invest more time and energy on the entire recruitment process and to start carrying out second, third or fourth interviews in a shorter time frame to help build momentum. By clearly communicating any enhanced vetting requirements to your search consultant or agency, you may well avoid the hires who could prove costly further down the line.”
While the use of private investigators to probe deep into a candidate’s background is reportedly on the rise, it all comes down to proportionality, says Mr Rice-Birchall of Eversheds Sutherland.
“Given that the majority of the directors you hire won’t have nasty skeletons in their closet, the use of detectives would seem a bit excessive for most firms.”
“What I would suggest though is that any organisation facing a sexual harassment charge, particularly one which includes a personal injury claim for mental distress, looks to their existing employers’ liability insurance as a first port of call.”
Virginia Matthews is an award-winning writer for newspapers and magazines specialising in business, education and people management issues.