Why large companies like McDonald's must adhere to higher standards when it comes to workplace harassment

McDonald’s was recently hit by adverse publicity regarding historic and wide-scale complaints of sexual harassment.

A former employee has publicly stated that a manager exposed himself to her while she was working at McDonald’s in 2018. Unfortunately, this type of complaint appears to be far from unique. The Bakers, Food and Allied Workers Union claimed that it has heard over 1,000 complaints of sexual harassment from McDonald’s staff. It has further alleged that McDonald’s has masked the extent of the problem and a “toxic” work culture through widespread use of non-disclosure agreements and confidentiality clauses in settlement agreements.

Notably, and it is assumed as a consequence of this, McDonald’s has now taken the unusual step of signing an agreement with the Equality and Human Rights Commission (EHRC). The agreement reached with McDonald’s is known as a “section 23 agreement” (after the relevant section in the Equality Act 2006). These agreements commit a company, organisation or individual to take meaningful action to prevent unlawful discrimination and harassment. These can be enforced by the EHRC in court if the signatory fails to deliver.

Similar agreements have previously been reached with Sainsbury’s and Highways England. Under its section 23 agreement, McDonald’s has promised to take steps to ensure a “zero-tolerance” approach to sexual harassment and invest in training across the business.

The key aim of the section 23 agreement is to ensure McDonald’s takes action to prevent all forms of discrimination, although the focus is clearly on sexual harassment. While one hopes that McDonald’s genuinely wants to improve the workplace culture that has led to such claims being brought, it will also be concerned about the possibility of employment tribunal claims.

Under the principle of vicarious liability, an employer can be legally responsible for the acts of its employees. This includes paying compensation when one employee unlawfully discriminates against or harasses another.

When an employee brings a discrimination or harassment claim under the Equality Act 2010, it can bring it against the employer, the individual responsible, or both.

However, in most cases, the employee will focus on the claim against the employer. This is because employees will find it easier to recover any compensation from the employer, who is likely to have deeper pockets than the individual.

Vicarious liability for discrimination and harassment can be avoided if the employer can show that it took “all reasonable steps” to prevent their employees acting unlawfully (see 109(4) of the Equality Act 2010).

Policies in the staff handbook are not enough

This “section 109 defence” is rarely used in practice, and rarely successful. An employer must have robust, regularly updated, and genuinely enforced anti-discrimination and harassment policies. This must be supported by training employees about the same. Having a few policies in the staff handbook or directing staff to the internet is not enough.

Furthermore, any training must be regular. In the case of Allay (UK) Ltd v Gehlen, an Indian employee faced numerous racist comments. The employer tried to plead a section 109 defence on the basis that it had provided equality and diversity training to all of its employees. The employment appeal tribunal found that the employer’s training was “stale”, as it was over a year old and their section 109 defence consequently failed.

When considering a section 109 defence, the tribunal will adopt a two-stage process:

• Firstly, the tribunal will identify whether the employer took any steps at all to prevent the employee from doing the act or acts complained (ie, did it provide training, were there policies in place and did it respond quickly to complaints?)
• Secondly, having examined what steps were taken, the tribunal will consider whether there were any further acts that the employer could have taken which were reasonably practicable.

When looking at what is “reasonably practicable”, the tribunal will consider the resources of an employer. A small shop with only a few employees will be treated far more leniently than a global brand like McDonald’s. A company with such significant resources will be expected to have gone above and beyond to prevent harassment.

The standard McDonald’s must aspire to

The fact that there is a high bar does not mean that large organisations cannot succeed. In 2005, the Ministry of Defence (MoD) succeeded in using an equivalent of a section 109 defence (under previous legislation consolidated by the Equality Act 2010). The employment appeal tribunal considered that the MoD’s policy was a “model of its kind”. Furthermore, the MoD acted immediately when the policy was breached and when complaints were received. Numerous witnesses testified that the policy was widely communicated and enforced. This is the kind of standard that McDonald’s needs to aspire to, and will almost certainly be what is set out in the relevant section 23 agreement.

Ultimately, section 109 aims to strike a fair balance. An employer does not have absolute control over the actions of its employees. It would clearly be unfair for an employer to take responsibility for every action of deliberate wrongdoing. However, an employer has a lot of control over the company culture it creates. An employer (and senior management of the same) can seek to create an atmosphere where wrongdoing is overlooked, or it can choose to take real action. Section 109 sets a high bar for employers, but it is one that is appropriate. Tackling discrimination is not easy and it requires more than an up-to-date policy in a handbook.

It is right that genuinely conscientious employers are protected, but it is also right that those employers must show that they have taken all reasonable steps to prevent harassment happening in the workplace and that they are working towards real change.