How to minimise the reputational damage of employment disputes

When a disgruntled employee brings a high-stakes or newsworthy employment claim against a business, that company has far more to worry about than just their legal defence.

There are ways to prevent an employment tribunal from becoming a PR disaster, writes Lydia Christie
There are ways to prevent an employment tribunal from becoming a PR disaster, writes Lydia Christie

Minimising the reputational risk of negative press coverage and social media rants repeating an employee's allegations against the business often plays a key part in the strategic management of employment-related disputes.

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The potential reputational damage can significantly impact staff morale, consumer and customer perception of the business and its brand, as well as a business' share price.

The introduction last year of the searchable online database of employment tribunal decisions has also made access to this information much easier.

So what can businesses do to manage the reputational risks when facing a contentious employment related dispute?

Employment tribunal hearings are open to the public, including the press. It is, however, possible to obtain a restricted reporting order (RRO), which prevents or restricts the public disclosure of any aspect of formal employment tribunal proceedings.

RROs are available in a wide range of circumstances where the tribunal considers it necessary in the interests of justice or to protect human rights.

They can cover a variety of restrictions, including that hearings be held partly or completely in private, that the identities of specified parties are not made public, or preventing witnesses being publicly identifiable.

RROs have historically been used in cases involving sexual misconduct or disability.

Where a privacy order is not available, the anticipated reputational damage will often outweigh the alternative options for managing the conflict.

Commercial settlement is often considered in this context as an effective way of managing the claim and minimising the potential PR fallout.

Resolving employment-related disputes at an early stage avoids incurring significant time and cost and offers the business the opportunity to include appropriate confidentiality provisions within a legally binding agreement as part of the deal.

These types of restrictions can effectively prohibit the individual disclosing details of not only the settlement terms, but also the circumstances of the dispute… assuming the beans have not already been spilled.

Whilst enforcing confidentiality provisions can be challenging in practice, they can often serve as an effective deterrent, particularly if receipt of settlement monies is conditional on the employee keeping matters under wraps.

Confidentiality restrictions may not however be effective in all cases.

They have been the subject of considerable scrutiny in the healthcare and financial services sectors and described as unreasonable gagging clauses.

In cases involving whistleblowing allegations, trying to prevent a worker from raising concerns that are covered by UK whistleblowing law is not permitted.

New rules introduced in 2016 for specified financial services firms require settlement agreements to include a clear statement that the individual is not prevented from reporting wrongdoing under whistleblowing law, including to the Financial Conduct Authority or the Prudential Regulation Authority.

Businesses should also consider whether settling employment-related disputes sends out the wrong message to staff who are aware that the business routinely pays out to disgruntled employees as soon as there is the possibility of potential negative PR.

A careful balance is required to identify the key priorities in each case.

Lydia Christie is a senior associate at Howard Kennedy LLP


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