The Health and Safety Executive estimates that bullying costs employers 80 million working days and up to £2 billion in lost revenue every year. Stress and ill-health can become part of the daily life of those being bullied, which can in turn mean higher levels of absence, lower motivational levels, reduced work output and ultimately a loss of resources when individuals whom employers have spent time and money recruiting and training, leave their Company.

Employers who fail to tackle bullying may not only pay a high price in terms of business productivity, performance and profitability, but could also face legal claims as well. This has been highlighted this week by the House of Lords decision to dismiss the appeal in Majrowski v Guys and St. Thomas NHS Trust. The Lords agreed with the Court of Appeal that an employer can be vicariously liable in damages for its employees breach of the Protection from Harassment Act 1997 ("the Act"). The Marjowski decision is a potential nightmare for employers as it means that there is another potential liability under employment law, and they will face a further risk if they do not have a good anti-harassment policy in place, and a proactive approach to prevention of harassment.

Employers have a duty under the Health and Safety at Work Act 1974 to ensure the health, safety and welfare of their employees. If they do not do this they are breaching an individual’s contract of employment. A failure to tackle bullying may also amount to a breach of sexual harassment and racial discrimination legislation as well as the Criminal Justice and Public Order Act 1994. Now, under the Marjowski decision an employer can be vicariously liable for a breach of the Act if an employee can establish a sufficiently clear link between the work and the harassment. So employers will be forced to pay up even when they are not in the wrong but their employees are.

This decision is likely to lead to an increase in the numbers of claims of harassment against employers. Up until now, employees who are victims of workplace harassment have experienced difficulty in finding a harassment specific claim to bring against their employers. They have either had to bring such a claim as part of a constructive dismissal action or for stress amounting to personal injury. Alternatively, they could bring a claim for harassment under the fairly new harassment rights under discrimination laws, but these require a discriminatory context before they can be brought.

Whereas now, under the Act:

• there is no statutory defence available to employers under the Act as there is under discrimination legislation.
• it is not necessary for the victim of harassment to prove that they have suffered physical or psychiatric injury or that their suffering was reasonably foreseeable; both factors would need to be proved in a personal injury claim.
• the employee only has to demonstrate there was a course of conduct, consisting of two or more instances that caused him/her anxiety or distress, and that the perpetrator must have known or objectively have known that the conduct amounted to harassment.
• the claim now needs no discriminatory element.

A further advantage to the employee is that the Act provides individuals with six years in which to bring a claim compared to just three months under anti-discrimination laws. However, because bringing a claim under the Act is dealt with in a County or High Court rather than an employment tribunal, the cost to the claimant of bringing the claim is likely to be higher; the unsuccessful party will generally bear both parties’ costs. This cost implication may act as a deterrent to an employee thinking about bringing a claim.

It is important to remember that although this article refers to the potential claimants as being employees, the Act offers protection to the public at large, meaning that so long as the harassing behaviour is carried out in the course of an employee’s employment the employer will potentially be vicariously liable for their employees’ conduct.

Furthermore, as the Act creates both a criminal offence and civil entitlement to a civil remedy, employers may find themselves facing fines, compensation and possibly a jail sentence.

The best way for employers to limit such liability is to have an effective anti-harassment policy. This means that employers must address any behaviour that could be seen as harassing and, where possible, action must be taken to prevent employee behaviour that could cause others distress and anxiety. Also employers should check that their employer’s liability insurance will cover any claims brought under the Act.