Reducing the Cost of Workplace Conflict

A new Act comes into force in October this year, placing duties on employers to take ‘reasonable steps’ to protect employees from sexual harassment.

According to ACAS, workplace conflict costs UK organisations £28.5bn a year – that’s an average of £1,000 per employee.

Multiply the number of employees by £1,000 and you have some idea of how much these disputes cost your organisation annually. This is sometimes nicknamed ‘conflict tax’. The headline statistics on workplace conflict are staggering. Close to 10 million people a year experience it and, of these, over half suffer stress, anxiety or depression as a result. Just under 900,000 take time off, nearly half a million resign, and more than 300,000 are dismissed.

As well as the direct costs of lost productivity, formal grievance processes and conflict-related resignations, there’s also the knock-on effect on organisational culture. A disgruntled employee can significantly impact the engagement levels of their colleagues and/or relationship with your clients.

After unfair dismissal, the most common causes of workplace conflict that make it to an employment tribunal all relate to equality issues – race, disability and sexual harassment.

While the Covid furlough scheme meant fewer people were dismissed from their jobs, the number of sexual harassment claims continued to rise during the pandemic years. This is due in part to the ‘Me Too‘ movement empowering more people to speak out. However, recent times have also seen the rise of ‘alpha male’ social media influencers like Andrew Tate, who have fuelled a rise in misogynistic behaviour which can often spill over into the workplace. To try to reverse that long-term trend, The Worker Protection (Amendment of Equality Act 2010) Act 2023 will come into force on 26 October 2024. This will place new duties on employers to take ‘reasonable steps’ to protect employees from sexual harassment at work. It will also give tribunals the power to increase compensation payments by up to 25% if an employer breaches this duty.

It’s worrying how many employers still seem unprepared for this fast-approaching change. Without the right planning, this new Act – which puts focus on proactive prevention of harassment, and includes the need for policies and safe channels for reporting – is likely to result in an increase in conflict tax for many organisations.

Remember, there is no cap on the amount of compensation that can be awarded for an equality claim, and the record currently stands at £4.6m.To be ready for the change, employers should ensure they have a harassment policy which is frequently reviewed, conduct regular training sessions and ensure any harassment complaints are taken seriously. Establishing a confidential method of reporting, such as an online tool, should also be a consideration.

When I trace sexual harassment complaints back to the beginning, often it’s the initial conversation with a line manager that exacerbates the problem. Managers often mishandle complaints at the first stage, either by not following the correct process or prejudging the outcome. I’ve seen instances when an employee has sued the manager as well as the company, because they failed to properly investigate the complaint.

Equality-related conflict should always be taken very seriously. Sometimes a manager may instinctively try to deal with a complaint informally, but under-reacting to a situation is a much bigger problem than over-reacting.

I tend not to lay too much blame with these managers, as often they have simply not been correctly trained to handle a complaint in line with company policy or legislation. In many cases, policies to guide managers do exist, but they are not well communicated, or nobody knows where to find them.

It goes without saying that training is vital. But this cannot be boring or stale; it must be interactive and engaging to avoid being a tick-box exercise. Role play is an excellent way to practise handling sensitive situations in a safe environment. It’s also worth a reminder that the same equality law that affects huge corporations also applies to a tiny start-up as soon as they employ one person. In reality, however, tribunals are likely to apply higher standards to big businesses.

Having a proactive strategy to minimise and effectively address sexual harassment, along with other causes of employment disputes, can significantly reduce your conflict tax. But it can have other positive outcomes too, such as creating a better workplace culture, improving morale, and enhancing your reputation as a responsible and caring employer.

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