As part of our series of bulletins on the duties and obligations of directors, we will focus on the application of the general concepts of psychological and sexual harassment.
Ending intolerable behaviour: also a governance issue
Few topics have dominated the news over the last two years more than the numerous allegations and accusations of sexual harassment made against public figures in Quebec and abroad. These recent scandals remind us of the need to take all necessary measures to prevent or put a stop to any form of harassment in their workplace but also in a non-work context that can nevertheless be associated with the organization. The #MeToo movement and the media attention it has received are a reminder that harassment has become a major risk for an organization’s reputation and that of the individuals who manage it. And who says risk, says governance issue!
In fact, as part of their obligations of care, diligence, honesty and loyalty, directors play an active role in overseeing the affairs of the organization. They are also subject to legislative norms that may directly render them personally liable if they “have prescribed or authorized the perpetration of the offence or agreed or was a party thereto”.
An employee who files a complaint of psychological and/or sexual harassment against his employer must prove(i) the presence of vexatious behaviour or serious conduct, from the standpoint of a “reasonable victim”, (ii) the violation of dignity and integrity, and (iii) a harmful work environment. If the evidence is established, it is up to the employer to show that it did not fail to meet its obligation to prevent harassment and to stop it when it is brought to its attention. Please note that sexual harassment is a form of psychological harassment.
First, strive to prevent harassment … then react swiftly if it nonetheless occurs
The board of directors must thus ensure that the employer has effectively fulfilled its obligations, both with respect to prevention and with its actions to stop to the harassment brought to its attention.
It is important to note that the law does not define the means that must be implemented by an employer to show that it has fulfilled its obligations. As the Court of Appeal points out in Association des médecins résidents de Québec v. Leclerc [TRANSLATION]: “Each case is sui generis, such that the measures taken by the employer must be adapted to the circumstances specific to it.”
It is therefore up to the organization to ensure that it takes the measures that a reasonable person would consider appropriate under the circumstances. This standard may change over time, and what were deemed appropriate measures in 2010, may no longer be in 2018, with the emergence and discovery of behaviours that can no longer be tolerated. It is therefore essential to regularly review the measures in place to counteract these behaviours. The major issues that harassment issues raise for organizations, both the well-being of their employees and the organization’s reputation, make the directors’ involvement necessary in order to ensure that prevention and control measures are in place and are being applied. This is all the more important in light of section 142 of the Labour Standards Act, referenced above.
Because it’s 2018!
But what should be considered appropriate in 2018? As far as prevention is concerned, there should be in particular a policy in place regarding harassment, and a code of ethics, signed by all employees and included in the employment contract, as well as regular training for all employees and members of senior management, including the directors themselves. Indeed, both above-mentioned policy and training must apply at all levels of the hierarchy.
The harassment policy should also provide for complaints implicating senior management, including any member of the board of directors, to be made directly to the board and possibly even a board committee designated to receive complaints of this kind. It may also be appropriate to consider an anonymous hotline for making complaints, as well as annual audits to verify the work climate and determine if there are harmful behaviours within the organization. In addition, the board of directors must make known its support for a zero-tolerance organizational culture and concrete actions in the event of any breach.
Thus, the board of directors must ensure that internal policies, procedures and internal controls related to harassment are not only in place, but that they are actually being effectively applied. The board must therefore actively:
i) ask management about the existence of such policies and internal control;
ii) become familiar with the latter, and with the internal investigation process;
iii) ensure that such policies are updated regularly in accordance with industry standards;
iv) ensuring the presence of a proven, experienced and capable human resources team able to implement such policies when required;
v) question and challenge human resources management;
vi) ensure processes whereby the board is informed of complaints (e.g. for large organizations, obtain reports on complaints involving management, as well as statistics regarding complaints filed in offices/establishments/plants or any other useful information regarding the existence of delinquent patterns beyond unique and isolated instances of such behaviours within the organization);
vii) obtain a report from human resources management on potentially problematic situations;
viii) retain an independent professional to conduct an objective investigation, if warranted;
ix) create a board committee overseeing human resources, and put in place a mechanism for reporting complaints of this nature to the board;
x) ask for and participate in training sessions in this regard;
xi) review the anti-harassment program on a regular basis and amend it when circumstances warrant;
xii) ensure that an effective crisis-management plan has been adopted;
xiii) ensure by means of adequate internal communications that a zero-tolerance culture prevails and concretely show that such delinquent behaviours will not be tolerated.
In any such situation, the directors’ duty is not only to act prudently and diligently to prevent delinquent behaviours and protect victims, but also to ensure that the person targeted by allegations of harassment or improper behaviour can defend himself or herself. And when such allegations are raised in the workplace, often the best approach is to suspend the targeted employee with pay, in order to carry out an independent investigation as quickly as possible.
Obviously, the board of directors cannot be complacent or negligent to intervene because the problem situation involves a senior executive or key employee of the corporation. No “economic” grounds can justify inaction on the part of the board upon being informed of allegations (or even rumours) of harassment. It is their responsibility to take action.
In conclusion, given the reputational, legal, operational, financial and regulatory risks involved, directors must be able to demonstrate that they have taken reasonable steps to ensure that effective internal policies and processes are in place, that they respect the standards and practices that a reasonable person is entitled to expect and that they were proactive with respect to both the prevention and management of problematic situations.