corporate governance / director / employment / women

Directors accountability for failures in employment conditions and practices

Recent controversies about the alleged abuse of the positions of power by individuals in the arts and political world have received extensive media attention with associated demands for change (Clarke 2017; Mackin & Gallagher 2017; Staunton 2017).   It is thus appropriate to consider, in general, the Directors and Boards responsibility to employees who experience harassment or bullying by officers, employees or representatives of the company.  The next section will consider the law governing bulling and harassment in the workplace in Ireland and then consider the Board of Directors accountability for workplace safety.

Under the Safety, Health and Welfare at Work Acts 2005 and 2010, employers have a duty to ensure employees’ safety, health and welfare at work as far as is reasonably practicable.  One of the employer’s duties is to prevent improper conduct or behaviour, which includes bullying. An employer should also have established grievance procedures for dealing with complaints of bullying in the workplace and deal with such complaints immediately. In addition, the Employment Equality Acts 1998-2015 place an obligation on all employers to prevent harassment, including sexual harassment, in the workplace.  Sexual harassment includes any “unwanted conduct” including words, gestures, facial expressions, offensive calendars, e-mails, and screensavers with a single incident sufficient to ground a complaint of harassment.  Ignoring complaints of bullying or harassment could thus leave an employer open to a possible claim for damages by an employee.   To avoid liability employers are to have policies and procedures to deal with and prevent bullying and harassment at work, an effective grievance procedure to deal with complaints, and all employees to be made aware of these policies and procedures.

Boards and directors have no specific responsibility for bullying and harassment in the workplace under the relevant legislation.    However, directors do sign a consent form, when accepting the directorship, which states “I acknowledge that, as a director, I have legal duties and obligations imposed by the Companies Act, other statutes and at common law”, S223.3 Companies Act 2014.  In addition, larger private companies and PLCs also have to sign an annual compliance statement which sets out the company policies and that the company is in material compliance with all “its relevant obligations”, S225.2. The statement must also state that the board put in place appropriate arrangements or structures designed to secure material compliance and the conducting of a review of these arrangements during the year, or if these have not been done, an explanation as to why they were not done, S225.2.  Compliance with the Safety, Health and Welfare at Work Acts 2005 and 2010, and the Employment Equality Acts 1998-2015 could reasonably be argued to fall within a company’s “relevant obligations”. Failure to comply with the companies “relevant obligations” is a Category 3 offence, with a fine of up to €5,000 and or up to 6 months imprisonment on conviction.

The S225 provision only applies to larger private companies and PLCs, and the extent of the provision remains to be tested by the courts.  However, it does indicate that Directors of some companies could face personal fines and prison time for the legal failures in their employment policies. Legislators could provide additional clarity by specifically including in S225 the relevant employment legislation, similar to how the relevant tax laws have been listed in S225.1(b). In addition, they could extend these compliance requirements to smaller private companies, which at almost 70% of the total employees in Ireland, employ the majority of employees (CSO Business Demography 2017).  This would motivate Directors to seriously address company policy and breaches of employment law including harassment and bullying, resulting in a more active board that includes a focus on ensuring the company is compliant with more of its legal obligations, and not just its financial and tax obligations.

References

Clarke, D (2017, Oct 9).Harvey Weinstein is no longer getting away with it. That’s good. The Irish Times. Retrieved November 13 2017 from http//irishtimes.com

Companies Act, 2014. Companies Act, Ireland. Available at: http://www.irishstatutebook.ie/pdf/2014/en.act.2014.0038.pdf

CS0 Business Demography (2017).  Retrieved November 13 2017 from http://www.cso.ie/en/releasesandpublications/er/bd/businessdemography2015/

Mackin, L & Gallagher, C (2017, Nov 4). Seven women allege abuse and harassment by Michael Colgan. The Irish Times. Retrieved November 13 2017 from http//irishtimes.com

Mackin, L (2017 Nov 7). Gate Theatre run like ‘family business’, 2016 report claimed. The Irish Times. Retrieved November 13 2017 from http//irishtimes.com

Staunton, D (2017, Nov 1). Michael Fallon quits cabinet post over harassment scandal. The Irish Times. Retrieved November 13 2017 from http//irishtimes.com

For further information on your rights and duties as an employer and an employee a good starting point is Citizens Information, see http://www.citizensinformation.ie/en/employment/

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s