It was 1 November 2018. From San Francisco and São Paulo to Sydney and Stockholm, more than 20,000 employees and contractors in Google offices spanning 50 cities staged a walkout to protest the tech giant’s handling of sexual harassment complaints. The backlash erupted after The New York Times reported that Google had allegedly paid off executives accused of sexual misconduct with exit packages worth millions of dollars.

Allegations of workplace sexual harassment, as well as the way they are handled, are putting the interests of corporations at stake. To put forward the ethical and economic case for businesses to combat sexual harassment, Mr Ricky CHU Man-kin, EOC Chairperson contributed an article to the January 2020 edition of CSj, the monthly journal of The Hong Kong Institute of Chartered Secretaries, published by Ninehills Media Ltd.

“Under the Sex Discrimination Ordinance (SDO) in Hong Kong, employers may be held vicariously liable for any act of sexual harassment committed by an employee – even when they have no knowledge of it – unless they can prove that practicable steps have been taken to prevent the transgression, such as adopting an anti-sexual harassment (ASH) policy,” wrote Mr Chu. “Financial remedies may be ordered by the court and, in the case of small and medium-sized enterprises, this can deal a crushing blow to their business.”

He continued, “In the absence of a transparent ASH policy and an impartial complaint-handling procedure, employees are bound to work in an atmosphere of fear and intimidation. It saps their morale. A study published in the academic journal Personnel Psychology in 2007 found that companies could face a loss of up to US$22,500 per employee in terms of productivity drops and turnovers due to sexual harassment.”

Profitability aside, in 2016 the Hong Kong Stock Exchange made it compulsory for listed companies to disclose their performance in relation to environmental, social and governance (ESG) issues on an annual basis. Employment and labour practices, including those concerning “equal opportunity, diversity, anti-discrimination, and other benefits and welfare”, fall under the “social” reporting area. As professional compliance advisers, company secretaries can and should enable management and the board to appreciate the value of an ASH policy for employee well-being and good corporate governance.

Click the link below to read the full article, which includes examples of preventive measures that would help organisations mitigate potential vicarious liability.

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