We all love a bit of gossip (perhaps a bit too much when it involves someone else’s misfortune!) and one of the office events which never fails to disappoint is the Christmas party.

However, when gossip takes place in the workplace, employers must be mindful of the risks for them if it is not kept in check. A recent case before the Employment Appeal Tribunal (“EAT”) in the UK, may have been more suited to the “red top” tabloids than the law reports, but is helpful for our purposes in illustrating the possible consequences for an employer who fails to address its employees’ concerns as a result of workplace gossip.

Christmas party capers…

The case involved a firm of solicitors and the gossip which followed on from events at the firm’s Christmas party. One of the firm’s employees, Ms Nixon, was in a relationship with one of the solicitors, Mr P. However, at the Christmas party she was spotted canoodling with the IT Manager, Mr Wright. At the end of the night, Ms Nixon and Mr Wright left the party together and, so the story went, spent the night together in a hotel room.

A few weeks later, Ms Nixon discovered she was pregnant. She duly informed the Managing Partner. Within an hour, the HR Manger had found out about the pregnancy and within a short time speculation was rife in the office as to “Who’s the Daddy?”.

Perhaps unsurprisingly, Ms Nixon was upset and embarrassed by the gossip and requested a transfer to a different office. She also raised a formal grievance with the firm, complaining about the way the situation had been handled. Her grievance was not investigated and the firm refused to pay her for any time she stayed away from the office as a result of these issues. In addition, her transfer request was refused.

The cost of the Christmas party…

Having been unable to progress matters through the grievance route, Ms Nixon resigned and claimed unfair constructive dismissal, sex discrimination, discrimination on the grounds of pregnancy and harassment.

At first instance the Employment Tribunal dismissed Ms Nixon’s complaints of sex and pregnancy discrimination and harassment. However, it held that she had been constructively dismissed in that her employer had fundamentally breached the implied term of trust and confidence by insisting that she returned to the office, and refusing to investigate her grievance and withholding pay from her until she did so. Having found in Ms Nixon’s favour, the Tribunal then went on to reduce the amount of her compensatory award by 90% on the basis of her contributory fault, in that she was “almost exclusively the author of her own misfortune in the events which unfolded by her foolhardy behaviour at the end of the office party”.

Ms Nixon appealed against the decision. On appeal, the EAT noted that the office gossip had related to the paternity of her unborn child and was therefore connected with her pregnancy. The gossip and conduct were unwanted and caused embarrassment and upset to Ms Nixon. This amounted to harassment by her colleagues for which the firm, as her employer, was vicariously liable. The failure to allow Ms Nixon to transfer to another office was also found to have amounted to sex and pregnancy discrimination.

Counting the cost

The EAT upheld the original Tribunal’s finding of constructive unfair dismissal. However, it took a very different view to the Tribunal with regard to the compensatory payment which Ms Nixon should receive. The EAT held that the original Tribunal had been wrong to apply a 90% reduction, finding that the Tribunal members had let their unfavourable view of Ms Nixon’s conduct affect their judgment regarding her contribution to the unfair dismissal and sent the case back to the Tribunal for the question of compensation to be reconsidered.

Although this case proceeded in the UK rather than Guernsey, the EAT’s findings serve as a useful warning to Guernsey employers of their potential liability for the behaviour of their employees, which will be judged according to similar principles. Employers should be alert to and mindful of any office gossip and, where appropriate, take steps to curtail it as much as possible. It will be interesting to see how the Tribunal assesses the issue of compensation following the EAT’s judgment.

Whilst these are areas over which an employer may have limited control, the main failing of the employer in this case was its failure to deal with Ms Nixon’s grievance at the outset. When it becomes apparent that an employee has a grievance, the employer should ensure that this is acknowledged promptly and then investigated appropriately. This is likely to include arranging a hearing to give the employee the opportunity to fully explain the grievance and to consider how the grievance might be resolved. In accordance with best practice, the employee should be permitted to be accompanied by a work colleague to a grievance hearing.

In the majority of cases it will be necessary to conduct an investigation with regard to the allegations raised by the employee. Any such investigation should be impartial and conducted expeditiously.

Once the investigation has concluded, the employee should be informed of the decision which the employer has reached in respect of the grievance and of any action that will be taken as a result or, indeed, if no action will be taken in this instance why this is so. In both cases, clear reasons should be provided for the decision, by way of explanation. It is advisable to provide a right of appeal against the grievance decision. However, it is important that any appeal is also dealt with impartially and, whenever possible, by another manager who has had no prior involvement in the grievance.

If Ms Nixon’s grievance had been dealt with promptly, in accordance with the procedure outlined above, it is likely that matter would not have ended up in the headlines.

And finally - for those of you that are interested – in the fullness of time Ms Nixon duly gave birth to a bouncing baby boy and Mr Wright was not the daddy!