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Dominic Holden comments on DeepSeek and data protection in The Lawyer

Posted on: January 29th, 2025 by Hugh Dineen-Lees

With Chinese AI platform DeepSeek rapidly becoming the most downloaded free app in the UK and the US, Director Dominic Holden comments on the potential cybersecurity and data protection concerns, in The Lawyer.

Dominic’s comments were published in The Lawyer, 28 January 2025, and can be found here.

“DeepSeek’s privacy policy makes clear that they will collect your personal data, use it for a broad range of purposes and store it in China. This data is very valuable especially when provided at scale by thousands of users. The same concerns which gave rise to the proposed TikTok ban seem to apply here.

“With China’s national security laws obliging Chinese firms to share data with government agencies, users cannot know what will ultimately become of their data or how it might be used. Great care should be taken by users in deciding what to share with the platform.”

Matt Green provides insights on bitcoin recovery to Thomson Reuters

Posted on: January 27th, 2025 by Hugh Dineen-Lees

In a recent article published by Thomson Reuters, Matt Green, Head of Blockchain and Digital Assets, explores the topic of recovering lost Bitcoin. Alongside his co-authors, Brian Mondoh, Barrister at Titan Chambers, and Marcin Zarakowski CEO of Token Recovery, Matt addresses the common belief that Bitcoin is a decentralized network and explains how recent developments have made it possible to recover lost Bitcoin assets.

The article highlights two primary scenarios for losing Bitcoin: theft or scam, and losing access to private keys or seed phrases. They delve into the Digital Asset Recovery (DAR) process on the BSV blockchain, which allows for the reassignment of lost or stolen digital coins through valid court orders.

By ensuring compliance with court orders, the BSV network can freeze and reassign assets to their rightful owners, making the recovery process more efficient and cost-effective.

Read the full article here.

Matt Green presents evidence to Property (Digital Assets etc) Bill Special Public Bill Committee

Posted on: January 23rd, 2025 by Hugh Dineen-Lees

Head of Blockchain and Digital Assets, Matt Green, recently submitted evidence to the House of Lords Special Public Bill Committee on the Property (Digital Assets etc) Bill. 

Matt argued that the Bill is both necessary and effective. He suggests that legislation, as opposed to common law, would provide the judiciary and policy makers with the confidence to apply property right principles to a new asset class – which is vital for consumers and financial institutions who are increasingly reliant on digital assets. Matt further argues that the Bill prescribes a negative definition which allows for things not yet created or not easily defined as capable of inclusion – providing additional flexibility to policymakers.

He notes that the Bill is a response to nervousness in the judiciary in deviating with established definitions of property, and that the wording is the door ajar to give decision makers the freedom to create new asset classes where required, without falling foul of common law principles.   

Discussing the Bill’s potential for negative or unexpected consequences, Matt warns that the wide wording of the Bill may open the floodgates and policy must therefore be carefully considered and robustly drafted. He also notes that monitoring the benefits and drawbacks of the Bill must be considered on an ad hoc basis by policy makers, to prevent any unexpected consequences.

In all, he senses that although there are more pressing matters at law, including (i) liability of decentralised entities, and liability of coders/ software developers (ii) regulation of digital assets, and the rules of engagement and (iii) the effectiveness of the Economic Crime and Corporate Transparency Act (2023), the Bill, of a version of it, must be passed to give confidence to the market and to show this jurisdiction is taking digital assets seriously.

In relation to improving the Bill, Matt argues as to why the chosen thing should be an object of personal property rights – suggesting it may be considered as heavy handed. He also notes that it may be useful to include some non-determinative wording as part of this legislation to help guide decision makers when considering property rights.

Click here to read Matt’s evidence in full.

Dominic Holden comments on the potential cybersecurity risks surrounding RedNote and TikTok, in Yahoo! News

Posted on: January 15th, 2025 by Natasha Cox

Director Dominic Holden comments on the potential cybersecurity and data protection risks of downloading RedNote, the social media platform which users are downloading before the potential US TikTok ban, in Yahoo! News.

Dominic’s comments were published in Yahoo! News, 14 January 2025, and can be found here. 

“Like TikTok, RedNote is owned by a Chinese company which potentially raises the same privacy and data concerns that led to TikTok’s possible ban. 

“Whilst the app itself does not appear to be dangerous, users concerned about their data privacy and how their data is to be used by RedNote, may be slow to adopt it until more is known

“There is also the further risk that as RedNote gains popularity, as a Chinese-owned company, it too may need to deal with the same regulatory issues TikTok has faced. Failure to do so could result in a future ban or legal action against RedNote.”

For more information on our technology disputes practice please click here

Danny Schwarz and Sophie Levitt discuss how the rise in NICs will affect property investors and landlords, in FT Adviser

Posted on: January 13th, 2025 by Natasha Cox

Head of Commercial Real Estate Danny Schwarz and Solicitor Sophie Levitt discuss how the increased rate of employer Class 1 national insurance contribution rates will impact property investors and landlords.

Danny and Sophie’s article was published in FT Adviser, 13 January 2025.

NIC Rate Hike: UK businesses brace for landlord and tenant turmoil

Rachel Reeves presented her Autumn Budget 2024 to Parliament on 30 October, to a mixed reception. One of the most controversial changes announced was that the government will be increasing the rate of employer Class 1 National Insurance Contribution (NIC) rates from 13.8% to 15%. The current rate of 13.8% is payable on the amount that an employee’s earnings exceed the secondary threshold of £9,000 per year/£175 per week. However, the increased rate will be 15% and the secondary threshold will be reduced to £96 pounds per week/£5,000 per year. These changes to employers NIC rates will come into effect on 5 April 2025, however are already posing concerns for the UK’s retail and hospitality sector.

While the increase in employer NICs aims to raise revenue for vital services, such as the NHS, and may increase funding for contributory benefits, such as the State Pension, the measure could have a profound effect on retail and hospitality businesses due to the increasing costs such businesses face and may result in shop closures, and others feeling the strain.

As a result of these changes, it is vital that property investors and landlords consider how these measures will impact their buying strategies, and tenants may well consider renegotiating their lease agreements to offset the higher operational costs which may otherwise impact their businesses.

For landlords and tenants alike, these reforms pose a number of challenges.

Operational costs

The prospect of raising employer National Insurance costs could prove to be a major setback for businesses. As a result of these reforms, businesses could be forced to face higher operational costs due to increased NICs, which would reduce their profit margins and place a greater strain on their livelihoods. For instance, it has been estimated that Tesco alone could face a £1 billion pound increase in its National Insurance bill over the course of this parliament.

Smaller and medium-sized enterprises (SMEs) are expected to be the most severely impacted as a result of these changes. SMEs often operate on tighter profit margins and many such businesses will therefore be forced to decide whether to fund the higher NICs by operating on reduced profits, cutting back on expenses or increasing their prices.

As a result, a phased introduction of the NIC threshold may be a better way for businesses to absorb the costs without passing them on to consumers in the form of higher prices.

Price increases

If a retail business opted to increase their prices of goods and services to offset the higher costs, consumer spending and demand could also be impacted as a result of the NIC hikes. Higher prices could exacerbate the cost-of-living crisis, making everyday items more expensive for shoppers.

It therefore comes as no surprise that more than 70 of Britain’s largest retailers have signed an open letter to warn the Chancellor that the NIC hike may lead to price increases and job losses throughout the high street. Some of the signatories included Aldi, Lidl, Boots, Ocado, Morrisons, Greggs and JD Sports – all of whom share concerns about the viability of such proposals.

Lease agreements

Business tenants who face the higher operational costs from the increased NIC rates may also seek to renegotiate their lease terms as a result of these changes. This could potentially lead to more flexible or reduced rent agreements since landlords are likely to be reluctant to lose longstanding tenants and will want to avoid being left with vacant properties and no rental income.

There are several ways for landlords to offer incentives and concessions to tenants to help them through this new financial burden. Temporary rent reductions could help tenants manage their cash flow during challenging times. Landlords could otherwise offer reduced rent for early renewal, waive certain fees or provide additional services such as maintenance.

Consequently, the terms of the lease could be made more manageable for tenants.

Rent arrears

Moreover, under the strain of these measures, certain landlords may also be less willing to renegotiate their lease terms and tenants may struggle to absorb the additional costs. Tenants, particularly in the retail and hospitality sectors, may be unable to generate enough income to meet their rent obligations. This could lead to higher rates of tenant defaults, leaving landlords with no choice but to forfeit their leases and to re-market the property. If landlords were left with no rental income, this would place a further strain on their finances.

There would also be additional expenses including administrative costs and legal fees when dealing with tenant defaults.

The fact that the British Retail Consortium is seeking a meeting with the Chancellor to discuss their concerns about the increased NIC rates, is proof that the scale of the new costs has the potential to cause severe financial hardship across different businesses.

Property transactions

The hike in NIC rates could affect the overall cost structure of property transactions and lead to higher property prices for buyers and sellers. Buyers may face higher purchase prices, which can affect affordability and demand in the property market. This could create a more challenging environment for property transactions, with reduced demand leading to slower market activity. 

If property investors and developers must operate on reduced profit margins, therefore, certain projects may seem less attractive or viable. This could lead to a decrease in the number of new development projects.

Higher NIC rates would also likely lead to increased labour costs for property investors and developers. This would inevitably make construction and development projects more expensive, potentially leading to higher prices for new properties.

Additionally, higher costs may be reflected by the fees of the professionals who are involved in the development projects, such as surveyors, architects and contractors.

Reduced investment

With increased costs due to higher NIC rates, landlords and tenants may also reduce investments in property improvements, expansions, or new technology, potentially slowing growth and innovation in the sector. The NIC rate hike has the potential to exacerbate economic uncertainty and make buyers, sellers and investors more cautious.

It is highly likely, therefore, that the changes will affect the overall health of the property market and have a significant knock on effect on the UK’s retail and hospitality sector.

Potential for legal disputes

Unsurprisingly, therefore, changes implemented as a result of the Budget could lead to legal disputes over lease agreements, employment terms and other obligations as parties adjust to the new financial landscape. There is also potential for businesses to struggle to comply with these new NIC regulations, which could lead to disputes with HMRC over unpaid contributions or penalties for non-compliance.

It is vital that businesses stay updated with the latest NIC regulations to ensure that they remain complaint. Payroll systems will need to be reviewed and updated to reflect the changes in the NIC rates. Compliance will reduce the risk of disputes arising from regulatory issues and will ensure a smoother operation of business.

Navigating the increased secondary NIC liability

As a result of Reeves’ proposals, the UK government estimates that 940,000 employers will face an increased secondary NIC liability. It is therefore inevitable that businesses across the UK and especially SMEs are feeling the pressure of this financial burden. It is essential for businesses to consider a variety of cost saving measures and to save price increases and redundancies as a last resort.

Landlords must also take a balanced approach and agree to renegotiate their lease agreements with loyal tenants if it is reasonable to do so. Landlords may be able to offer more flexible payment plans or allow temporary reductions with the agreement to recoup the difference at a future date.

However, maintaining open and transparent communication is fundamental.

Landlords and tenants should discuss the financial challengers together to find mutually beneficial solutions. By adopting this strategy, landlords can help their tenants through financial hardship whilst maintaining occupancy and fostering positive landlord-tenant relationships.

Looking ahead

Unsurprisingly, the proposed NIC hikes has provided cause for concern for many UK businesses in the retail and hospitality industry. From the impact on operational costs to the risk of litigation, there are a plethora of factors that must be considered if businesses are to weather the storm and remain both profitable and compliant.

In order to navigate these choppy waters, it is therefore vital that businesses seek tailored legal advice concerning their employment obligations and property agreements to ensure that they are braced for the upcoming changes and able to tackle the issues head on.

For more information on our Commercial Real Estate services, please click here. For our services in the Retail and Hospitality sector, click here

 

Abtin Yeganeh comments on the Renters’ Rights Bill capping up-front payments for renters

Posted on: January 13th, 2025 by Natasha Cox

Director and Head of Property Litigation Abtin Yeganeh comments on a new provision of the Renters’ Rights Bill making it illegal to ask tenants to pay more than one month’s rent plus a six-week deposit up front.

Abtin’s comments were published in Metro, 10 January 2025, and can be found here.

Will the new legislation work?

So, why have landlords been allowed to ask for such vast amounts upfront until now?

As Abtin Yeganeh, Director and Head of Real Estate Disputes at Lawrence Stephens tells Metro, landlords often use these hefty deposits for peace of mind when, for example, tenants might not have a UK-based guarantor.

‘In order to tackle issues of bad credit and/or renting to overseas individuals, landlords often seek rent in advance as additional financial security. This can amount to six months’ rent in advance,’ Abtin details.

But as he believes, we’ll have to wait and see how it pans out – and whether landlords listen to the details of enforcement.

‘The outcome of these reforms is that tenants should, in theory, have more options when it comes to securing rental properties as they will not have to compete with prospective tenants who can pay a lump sum in advance. 

‘However, given that landlords have a choice as to who they want to take on as a tenant, it remains to be seen whether the proposed changes have the desired effect.’

For more information on our Real Estate Disputes services, please click here

Emma Cocker comments on managing discrimination and harassment in the workplace

Posted on: January 9th, 2025 by Natasha Cox

Senior Associate Emma Cocker comments on the legal action facing McDonald’s over allegations of widespread harassment and discrimination, and discusses employers’ obligations to protect their staff and workplace.

Emma’s comments were published in Business Matters Magazine, 7 January 2025, and can be found here.

“All employers have duties to protect their staff against discrimination and harassment in the workplace – obligations which apply regardless of whether people are engaged on a full-time, part-time or zero hours basis.

“However, with most McDonald’s workers being engaged on a zero hours basis, individuals will be acutely aware of their employment insecurity. They are also likely fearful of being subjected to detrimental treatment for raising complaints. The abuse which arises from the imbalance of power inherent in these types of workplace relationships can lead to significant liability for businesses, of which employers must be conscious.

“It would appear that McDonald’s still has a long way to go in providing a safe working environment free from discrimination and harassment. How they handle these claims will likely be carefully scrutinised. The longer businesses allow this kind of behaviour to persist, the longer the list of grievances and legal claims they will face.”

For more information on our Employment services, click here

Matt Green comments on the rise of Big Tech lawsuits in CDR Magazine

Posted on: January 7th, 2025 by Natasha Cox

Head of Blockchain and Digital Assets and Technology Disputes Matt Green comments on the rise in litigation against Big Tech companies, and explores how regulation must adapt to provide better protection and recourse for consumers.

Matt’s comments were published in CDR Magazine, 6 January 2025.

“There have been very few useful regulatory protections for consumers, although attempts have been made under financial promotions regimes.

“There is a severe lack of protections for consumers broadly when dealing with crypto assets, particularly at retail exchanges. Under recent case law, the trend is to treat crypto exchanges like banks, which themselves are governed following hundreds of years of banking law with consumer protection in place. 

“However, these laws cannot be applied to crypto exchanges given technical and operational differences. On that basis, crypto exchanges are given wide protections for how they custody and pool assets (tilting in favour of their own interests), but consumers are left without recourse where those exchanges are unwilling to help.”

For more inforamtion on our regulatory services and crypto practice, please click here

William Bowyer comments on the significance of McLaren Racing’s $30m claim against Alex Palou 

Posted on: January 2nd, 2025 by Hugh Dineen-Lees

Associate and sports law specialist William Bowyer comments on how McLaren’s claim against Palou will likely set a precedent for similar F1 contract disputes going forward – it will either enable racing drivers to have greater choice with respect to moving teams, or discourage them from moving whilst still under contract.

William’s comments were published in City AM, 24 December 2024, and can be found here. 

“Given the value of the claim, the current profile of F1, the nature of a driver’s role within a race team and McLaren’s position in the sport, this is a hugely important sports law case and will likely set a precedent for similar F1 contract disputes going forward.

“Given the nature of this case, it will be interesting to see what the court considers – or does not consider – to be caused by Palou’s breach of contract and/or what is reasonably foreseeable regarding the losses claimed by McLaren. McLaren will be pushing for a wide range of losses to be considered from livery changes, new marketing spend, unforeseen spend on new drivers and loss of sponsorships.

“When a party breaches a contract, the “innocent” party (in this case McLaren) often has a right to an award of damages if they have come into loss as result of the breach. It is important to remember that the purpose of damages (from an English Law perspective) is to put the innocent party in the same position as if the contract had not been breached. Therefore, McLaren can only be awarded as much as the court considers necessary to reach that position. We often see scenarios where parties attempt to recover beyond what is necessary to place them back in that position.

 “Should the court side with McLaren, drivers would be discouraged from moving teams whilst still under contract based on their perceived chances of success, and help ensure that race teams hold the power.

“However, should the court consider the damages to be far lower than McLaren claims, racing drivers will likely breathe a sigh of relief. Whilst they would still have to pay damages for breaching a driving contract, it may enable them to have greater choice to choose teams based on the opportunities presented to them – if they consider the pros of switching teams whilst still under contract to be greater than the costs they may incur.

 “Importantly, McLaren’s dispute with Palou highlights the importance of drivers seeking tailored and sports-specific legal advice before signing any ‘seat deal’ – especially before a decision as big as changing teams.”

Joanne Leach, Emma Cocker and Becci Collins examine the government’s crackdown on foreign labour exploitation, in People Management

Posted on: December 19th, 2024 by Natasha Cox

Senior Associates Joanne Leach and Emma Cocker and Solicitor Becci Collins explore the government’s recently announced plans to tighten immigration systems, and discuss how this will impact employers and employees, in People Management.

Joanne, Emma and Becci’s article was published in People Management, 17 December 2024, and can be found here.

Government cracks down on foreign labour exploitation: what employers need to know

Emma Cocker, Joanne Leach and Becci Collins explain recently announced plans to tighten immigration systems, and how they will affect business that hire overseas talent.

On 28 November 2024, the government announced that it intends to tighten immigration worker systems by extending categories of breaches, as well as strengthening sanctions. In its pre-election manifesto, the government stated that it intended “to reduce net migration through proper control and management of the visa framework”. The proposed new rules are evident of the government’s intent to “crackdown on visa abuse and prevent exploitation”.

The government proposes extending the circumstances in which sanctions can be issued to companies that sponsor overseas workers, to include those who commit serious employment breaches. It is expected that this will include the reforms proposed in the Employment Rights Bill published in October, as well as existing rights, such as the entitlement to national minimum wage. However it is unclear how a company will be judged to be in breach of employment laws. Such a finding could potentially derive from a successful employment tribunal claim, or a new regulatory body may be tasked with assessing failure to comply with minimum standards.

The current sanctions available to enforcement officers in relation to companies held in breach of immigration laws can only be issued for a period of 12 months. For those who commit repeat offences, this period will be doubled to “at least” two years, suggesting there is a possibility of longer sanction periods.

There will also to be a new initiative to take pre-emptive action against those who are suspected of committing serious breaches.  Where there are already signs of rule breaking, the government intends to use action plans to bind businesses to take specified steps to improve and correct issues. Currently, action plans can be implemented for a period of three months. However, this is to be extended to 12 months. If the required improvements are not made, the sponsor’s licence will be revoked.

Tougher rules to prevent companies exploiting cheap foreign labour should be welcomed. Workforces are strengthened by the diversity brought to organisations by migrant workers and those individuals deserve not to be exploited. This issue is also addressed by proposals that intend to prohibit exploitation by passing on the costs of recruiting overseas workers to the individual, sometimes at a premium or excessive rate. These costs can result in individuals being left with unfair and unmanageable debts to their employers. The proposal to ban these practices will help to ensure that only businesses who genuinely require overseas workers – and can afford to recruit them in a fair and respectful way – benefit from the immigration system.

Prudent employers will take the recently published statistics as a warning, indicating how seriously the government takes the issues of tackling abuse and failing to adhere to the immigration system rules. For example:

  • In October 2024, there were 856 visits conducted to businesses suspected of employing illegal workers, a 55% increase on visits carried out in October 2023.
  • Between January and October 2024, more than 6,600 visits were made, a 22% increase on the same period in 2023.
  • Between January and October 2024, over 4,600 arrests were made, a 21% increase on the same period in 2023.

The government’s intention to expand the circumstances in which sanctions can be issued to include employment law breaches, and to extend the penalty from being banned from hiring overseas workers from one year to two, will shift the compliance landscape considerably. Further extending the power of Home Office officials to permanently withdraw a company’s sponsorship licence if they breach employment laws could have catastrophic consequences for businesses relying on an overseas workforce. However, it seems that the proposed expansion only applies to companies. It may be more effective to increase the sanctions on individuals who facilitate these breaches – perhaps further changes are to come before the draft legislation reaches parliament.

It is uncertain when we can expect this law to come into effect, but we shouldn’t expect this to be the final crackdown by the government. We may also see the reintroduction of the resident labour market test, or salary thresholds and visa fees being increased. Hopefully, the government will consult early as to how these changes may be implemented but, in the meantime, companies effectively have a grace period to get their house in order.

Companies should take an active approach to ensure compliance in all areas of employment and immigration law and they should do more than take a simple ‘tick box’ approach. Employers should review their policies and procedures to ensure they are up to date and meet minimum standards to avoid the above-mentioned sanctions, as well as the reputational damage and disruption to the running of a business held to be in breach of immigration and/or employment laws.

This announcement should serve as a wake-up call to all employers that they must comply with employment laws as well as immigration rules, otherwise they will face increasingly severe consequences of enforcement.

If you have any questions about the government’s plans and how you can ensure your business is complying with employment and immigration laws, please contact a member of the Employment team.

Matt Green co-authors chapter of The Founders’ Guide to UK Crypto Law

Posted on: December 16th, 2024 by Natasha Cox

Matt Green, Director and Head of Blockchain and Digital Assets at Lawrence Stephens has contributed to the launch of a new guide, The Founders’ Guide to UK Crypto Law by Lisa McClory, Digital Technologies Lead at D2 Legal Technology, an award-winning legal data consulting firm.

Matt’s co-author is Marcin Zarakowski, CEO of Token Recovery. In their chapter on ‘Tracing, Freezing and Recovery – when crypto assets are stolen‘, they explain the risks, and the legal procedures available to those affected.

The publication came about through the recognition of the urgent need for some solid and practical guidance for projects looking to start out in the Web3 space (the concept emphasising personal data ownership and the use of blockchain technology and cryptocurrencies).

The guide brings together many of the top experts in the area to deliver on this objective. It is intended as a starting point for Web3 builders and entrepreneurs in the UK. The guide acknowledges the important role that law and regulation play and seeks to assist projects in overcoming uncertainty, avoid pitfalls and generally equip the reader with the essential knowledge to empower and catalyse their ideas.

To read the guide please follow the link: The Founder’s Guide to UK.pdf – Google Drive

Seasonal parties and employer liability for acts of misconduct by employees

Posted on: December 6th, 2024 by Natasha Cox

‘What happens on a staff night out, stays on a staff night out’

The holiday season is well underway with Christmas parties planned and booked. However, with seasonal joy and merriment comes a warning: inappropriate acts carried out by staff at company events can lead to liability on the part of employers.  

While it is well known and accepted that employers may be liable for inappropriate conduct by staff members in ‘the workplace’ and during office hours, employers are often less well versed in how to deal with inappropriate conduct at work-related events. So where is the line between work and non-work-related events, and how can employers best protect themselves?

Events outside the workplace and outside of working time

The law states that employers are liable for acts of harassment and sexual harassment carried out by their employees ‘in the course of employment’.

Despite this, there is a common and somewhat dangerous misconception that “what happens on a staff night out, stays on a staff night out.” This was the exact sentiment declared by a manager to Ms Pealing, a junior employee, before he attempted to place a banknote in her cleavage[1]. The respondents’ representative submitted that the manager’s conduct “wasn’t in works time, nor was it on works premises; it happened outside of work,” suggesting the employer would not be liable for the manager’s sexual harassment.

In Chief Constable of Lincolnshire Police v. Stubbs[2], the Employment Appeal Tribunal acknowledged that the dividing line between employment and off-duty conduct can become especially blurred where social events involving colleagues are concerned. Further, in Lister & Ors v. Hesley Hall Ltd[3], the House of Lords held that the question to be asked is whether the employee’s wrongful acts were “so closely connected with his or her employment that it would be fair and just to hold the employer vicariously liable”.

In the present case, the night out was attended almost exclusively by the first respondent’s employees. The premises at which the event took place was closed for the evening, and the two directors of the respondent company made a financial contribution to the night out. For these reasons, the Tribunal arrived at the unanimous view that there was a sufficiently ‘close connection’ between the employer and the incident to render it just that the employer should be vicariously liable for the manager’s sexual harassment.

The claimant in this case said she was left feeling “objectified” and “humiliated” and was awarded more than £5,000 in compensation.


Christmas parties in the employment tribunal

Each year the employment tribunal publishes a report on cases heard. This year to date, ten employment tribunal claims have cited Christmas parties and one third of the reported cases related to sexual harassment and/or discrimination related to sex.  

Employers must be aware that work-related events carry risk, in particular, where alcohol is involved. Sexual or sex-based harassment and discrimination is the largest area of risk, with the heady combination of alcohol and seasonal jollity sometimes becoming a toxic combination clouding employees’ judgement.

In addition to Ms Pealing’s case described above, there are a number of other cases which highlight the risks arising from such events, including:

  • In P v Chrest Nicholson Operations Limited[4], P’s complaints of harassment were upheld and her employer was liable, following a colleague of P attempting to kiss them whilst travelling in a taxi to a hotel following the company Christmas party, and P subsequently being raped by her colleague.
  • In Phillips v Pontcanne Pub Company Limited[5], Ms Phillips brought a successful constructive dismissal claim after she was put in a ‘playful’ headlock by a colleague during the company Christmas party which left her unconscious.


What steps can employers take to mitigate risk arising from workplace events?

While it is unlikely that employers will be able to eliminate all risks arising from workplace events, there are steps that can and should be taken both preventatively and following any complaint, to avoid escalation to an employment tribunal claim.

Preventative steps are even more important since the introduction in October of the new requirement for employers to take a positive action to prevent sexual harassment. Under the Worker Protection Act 2023 employers must take ‘reasonable steps’ to actively prevent the sexual harassment of their employees. If they don’t and the worst happens, they may be liable for compensation plus an additional uplift of 25% on the total compensation in relation to such failures. Examples of preventative steps include:

  • Carrying out risk assessments of the workplace and any particular events;
  • Implementing (or updating) policies relating to discrimination, harassment and disciplinary and grievance procedures; and
  • Training the workforce on what constitutes discrimination and harassment, the employer’s behavioural expectations and what to do if they are a victim.

As well as the positive duty to prevent sexual harassment, the law on harassment may afford an employer a defence to a claim of vicarious liability by showing that they took ‘all reasonable steps’ to avoid harassment (which is a higher bar than the ‘reasonable steps’ required under the preventative duty). An example of such a defence succeeding (albeit in the context of a personal injury claim) can be seen in the case of Shelbourne v Cancer Research UK[6] where the employer had risk assessed the event and sought to minimise any risks identified by hiring additional security guards and so they were not liable for the injuries suffered by one employee who was assaulted by another employee.

Employers should also be aware of the culture they are creating. The effect on the victim of any harassment is viewed subjectively, meaning that the effect is viewed through the eyes of the victim. As such, any claims that the behaviours were ‘banter’ or ‘a compliment’ are not an adequate defence. Employers should aim to cultivate a culture of respect and inclusivity and make it clear that discrimination and harassment will not be tolerated and will lead to disciplinary action.

If complaints of discrimination or harassment are made, these should be properly investigated, and disciplinary action meted out where necessary. In addition, complainants should never be treated less favourably for raising issues of discrimination and harassment.

How we can help

If you have any questions about employers’ duties to prevent discrimination and harassment or if you need assistance regarding employee complaints, please contact a member of our Employment team.

 

Sources:

[1] 8000363.2024_-_Miss_Freya_Pealing_v_1__The_Croft_Aberdeen_Ltd_2__Andrew_Robert_Eagar_-_Judgment.pdf (publishing.service.gov.uk)

[2] [1999] ICR 547

[3] [2001] ICR 665

[4] P v Crest Nicholson plc and Crest Nicholson Operations Limited: 3311744/2020 and 3313454/2020

[5] Phillips v Pontcanne Pub Company Ltd: 1600719/2018

[6] [2019] EWHC 842 (QB)