Non-financial misconduct and harassment – a guide for HR, Part 4 (UK)

A Guide for HR

If the Financial Conduct Authority is to extend or confirm (depending on what you read) its remit to include non-financial misconduct and specifically bullying and harassment in its fitness and propriety assessment, then the potentially career-ending consequences for those concerned require that we are all very clear as to what those terms mean.

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Non-financial Misconduct – A Guide for HR, Part 3 (UK): FCA’s Definition of Non-financial Misconduct

A Guide for HR

Non-financial misconduct is misconduct, plain and simple” – that is what Christopher Woolard (former FCA director) said in 2018. Except that as it turns out, fairly predictably when dealing with shades of human behaviour, it’s not that plain, nor that simple. With a lack of guidance on what non-financial misconduct (NFM) actually is, firms have thus far been left to their own devices to define NFM as best they can, and they have been the arbiters of when conduct becomes a regulatory breach. This has led to firms taking differing approaches and applying differing standards, some very much more puritanical than others.

Given this inconsistency and uncertainty, the industry urged the FCA to provide clarity, guidance, and in particular, some tangible examples of NFM. The proposals set out by the FCA in its consultation paper (CP23/20) last year aim to do exactly that. While these proposals still fail to provide a single definition of the term, they do set out when NFM might be relevant to the FCA’s existing rules – specifically, the Conduct Rules, Fitness and Propriety assessments and the Threshold Conditions – and are to that extent useful.

It is important to emphasise again that, at the moment, these are just proposals. The FCA is still considering, for example, how its proposals tie in with existing employment law. So, there is scope for some change, though probably not much. Regardless, as the FCA’s position is that its proposals just clarify its existing expectations rather than amend them, it is certainly worth examining them briefly.

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Federal Court Enjoins Federal Trade Commission’s Rule Prohibiting Non-Competition Agreements (US)

In January 2023, the U.S. Federal Trade Commission (FTC) proposed a sweeping rule that, with limited exceptions (such as for highly compensated executives or in connection with the sale of a business), would prohibit employers from entering into post-employment non-competition arrangements with workers. (See our post here.) Under the proposed rule, an agreement between an employer and a worker – not just employees, but also independent contractors, interns, and even volunteers – that would prevent the worker from seeking or accepting employment, or from operating a business, after the conclusion of the worker’s working relationship with the employer would be unlawful. As proposed, the rule not only applied prospectively, but invalidated previously entered-into non-competition arrangements. After a notice-and-comment period, the FTC issued the “Final Rule” on April 23, 2024 and it is scheduled to go into effect September 4, 2024.

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Non-financial Misconduct – A Guide for HR, Part 2 (UK): FCA Proposals – What Will They Change?

The FCA’s consultation paper (CP23/20) proposes a framework to establish and define the minimum standards expected from regulated individuals in the financial services sector. Specifically, it clarifies the FCA’s expectations around non-financial misconduct (NFM). But, if implemented, will these proposals actually change anything?

We think these rules would have a direct effect on the conduct of workplace investigations and could (if properly enforced) prompt a change in the culture of regulated firms.

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New DOL Overtime Rule Goes Into Effect Nationwide For Private Employers (US)

Employers have been busy preparing and reviewing their exemptions, raising salaries, and/or making updates to their classifications to comply with the new overtime rule promulgated by the Department of Labor (DOL) that went into effect on Monday, July 1, 2024.

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When can a workplace grievance lead to a defamation claim? (UK)

There will be few in HR who have not at some point heard an employee say that he is so incensed by something said about him the course of disciplinary or grievance procedures that he is going to sue for defamation. This is almost always said in anger and for a great many very sensible reasons almost never happens in practice. But what if it does? The recent High Court case of Maria Joao de Azavedo Camacho v OCS Group UK Limited explores a defamation claim made by Ms Camacho against her employer on the back of complaints made against her in a grievance procedure.

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Another foot in the grave of workplace common sense? (UK)

“HMRC boss sending worker unwanted birthday card was harassment“, said the Times Online yesterday, surely a second nailed-on candidate for 2024’s No Good Deed Awards after a similar allegation earlier this year in relation to offering an older worker a chair.

Needless to say, there is somewhat more to the story than that, so those managers increasingly tempted just to give up on the whole people-management thing should hang on in there for a little while yet. Key to that advice is that the harassment in question was not on grounds of age as one might fear, but disability and race instead. Ultimately, the fact that it was a birthday card was broadly (indeed, wholly) immaterial. A much more accurate by-line would have been “Boss sending worker unwanted birthday card is tiny part of bigger problem”.

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Latest instalment on settlement agreements covering future claims (UK)

In an earlier post we looked at how far a settlement agreement could validly waive claims in respect of things which haven’t yet happened.  The Scottish Court of Session in Bathgate -v- Technip UK Limited had very sensibly indicated that you can agree not to pursue future rights provided that the settlement agreement contains wording sufficiently clear to identify the particular claims you are waiving. 

That level of precision is very important.  As all the authorities now agree, commonly-seen waiver wording like “all claims of any nature arising out of your employment or its termination” is not effective in a settlement agreement (though it will be in a COT3), because it does not identify the “particular claim” being waived as required by section 203 Employment Rights Act.  The issue is not whether the grounds for a complaint have yet arisen as at the date of the settlement agreement, but of whether they can be described accurately enough in that agreement to catch that complaint if and when they do. 

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Non-financial Misconduct – A Guide for HR, Part 1 (UK)

Not just more management consultancy buzz words, “non-financial misconduct” is becoming an increasingly important term for everyone working in HR in the financial services sector.

As most readers will be aware, it is the role of the FCA to ensure that the UK financial markets work well. In pursuit of this, and to protect the integrity of the UK financial system, it regulates the conduct not just of businesses but also of individuals employed in regulated firms. There is a requirement for employees to adhere to certain Conduct rules and (for more senior individuals or those performing regulated activities), to reach certain standards of fitness and propriety. For the FCA, the key considerations are the person’s:

a)            honesty, integrity and reputation;

b)            competence and capability; and

c)            financial soundness.

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