Change is the only certainty

In association with pwc.

Alex Novarese, The In-House Lawyer: How well do employment lawyers and the legal teams inside in house operations generally work with the HR department?

James Noble, Genius Sports: It depends on the HR department.

Richard Stovell, BAE Systems: To be fair, it depends on the legal department as well.

James Noble: Agreed! I am very fortunate that I have some excellent operations colleagues with whom I get on very well and, crucially, see eye to eye with on approaches to tackling issues, which, on both sides, is rooted in common sense as much as anything else.

Having that similar attitude to picking up on problems before they become problems and resolving them in a sensible, elegant, low impact way is crucial. It makes my life a lot easier that I do not have to put my legal hat on so much. We are all coming at the same thing from slightly different angles.

Mustafa Faruqi, Tesco: For a time at British Airways, the HR department reported to the general counsel and it was one merged function.

Alex Novarese: Did that work well?

Mustafa Faruqi: For a time. Eventually, it was broken up and allocated a separate director. People in the HR department felt subservient to the legal side, so I am not sure it worked entirely well. It depends on the personalities as well but I have seen it organised in that way before.

Richard Stovell: It also depends on how the lawyers are being used. In that sense, are you an intrinsic part of the business in terms of the direction it is moving, the decisions you are taking and the thought process to strategically achieve your objectives? Alternatively, are you the tick-box sign-off at the end, which will create conflict and confusion when you come up with a view that does not support the approach the business is taking? At its best, obviously, you work hand-in-glove with HR and operations to help with whatever you’re trying to achieve as a business.

Alex Novarese: How much demand is there for major companies to build up their in house legal experience in employment law?

Allison Brown, Google: There are a lot more in-house employment lawyers than there were 12 years ago. I do not know if that is strip-and-buy economics or just the realisation that it is a strategic area of work that companies need to have a closer purview of.

Nick Willis, PwC: About 12 years ago, we went from an outsourced employment advice model to an insourced employment advice model. At that time, the lawyers were used very reactively and I have found, over the years, that getting in there first and stopping problems arising before they ever happen and knowing the business and who the stakeholders are in a big, difficult organisation is a slightly better model.

“Getting in there first and stopping problems arising before they ever happen is a better model.” Nick Willis, PwC

Oliver Loach, Mitie: I have seen the change. Mitie has 55,000 people and, historically, did not have an employment lawyer, but a panel law firm on a retainer model where they would pick up the phone and fire questions and, when I first arrived, they did exactly the same to me. What I am trying to get them to understand is that there is no real value-add in me dealing with a problem at the end of whatever change project they are doing – for example, telling me where something has gone wrong and asking me to fix it. If they have a conversation with me and my team right at the start, there is a lot more value in me doing that bit even if at the end of it. I have to outsource the tribunal work, the reactive stuff, which can go to a law firm. The proactive stuff upfront, though, I feel strongly sits in-house.

Tom Williams, PwC: We are deliberately trying to look at the provision of legal services slightly differently, for the reason you describe. There is already a market for the people who come in at the end to deal with the problem, whereas where our business is selling services to clients, lawyers bring a different perspective to things right from the start and they help form solutions rather than just deal with problems.

Richard Stovell: It is also the case that you might be an in-house employment lawyer and there is a bunch of things that people will bring to you in relation to your specialism, but it is not about law or about employment law, it is about common sense, it is about taking decisions, collaborating and finding a route through. The role of a lawyer is not just about the law; it is far wider than that.

Allison Brown: The role of the in-house lawyer is evolving into that. You have your narrow-eyed specialism, which is employment law for me, but that is not why clients come and talk to me. This is what I am focused on with my team. I take it as read that they can do employment law, but can they be business responsive and can they listen to perspectives other than their own? Accepting that you are not the smartest person in the room is when you can be most successful and most helpful and have the most valuable input.

“The role of the in-house lawyer is evolving. You have your narrow-eyed specialism, but that is not why clients come and talk to me.” Allison Brown, Google

Alex Novarese: Gender pay gap reporting has certainly grabbed the headlines recently. What has the impact of that been for your companies?

Oliver Loach: Gender pay reporting started lots of very good and interesting conversations that businesses needed to have about their workforce and the way they paid them. We are two years in now and my sense is that it will slip down the list of things that people are thinking about day in, day out and certainly in terms of newsworthiness. Last year, there was a bit of shaming of companies that had either become worse or not moved at all. I bet next year there will be no reporting at all and, in terms of the external interest, I suspect it will die down.

Richard Stovell: It is the stuff that sits behind it that is probably more newsworthy and interesting, which is the equal pay claims for certain corporations or certain parts of the country, or it is the #MeToo claims that come out of it, which are not directly related to gender pay reporting but they sit behind it and are linked to it.

Tom Williams: You are seeing lots of private sector equal pay stuff now, much more so than before. Most of the big supermarkets have claims against them. They all started in the public sector; once that was exhausted there was a move to the private sector and then to individual claims, like the ones in the press recently. There is now becoming more of a focus on pushing points, which is linked to the #MeToo movement.

“In big businesses with small teams, bringing the story together in a single overall picture can be really powerful.” Tom Williams, PwC

Alex Novarese: Do you think gender pay reporting has helped to encourage that or were those trends happening anyway?

Tom Williams: The conversation around it potentially has. I am not sure the numbers have.

Oliver Loach: What I see are journalists using numbers as a discrimination metric. There was the McDonald’s CEO who left earlier this year – after his resignation, all the bylines were ‘McDonald’s with a gender pay gap of…’, and it had no relation to the story but it is a convenient hook to say, ‘Let us just measure their diversity and discrimination by using a single number that kind of works’. I have seen quite a lot of people just using it as a shorthand.

Tom Williams: The gender pay reporting is important, but it is part of a bigger conversation about gender representation and ethnicity representation in the workplace. We have set targets at all levels of the organisation and we publish them in our annual report and we say what progress we are making against them. Obviously, we do it in a legally compliant way, but we are taking that step. We voluntarily reported our gender pay gap three or four years before it was required. In doing that, we started looking at it and once you are open about the conversation, you start thinking about it openly and about how you can make change and we are certainly seeing the business be very engaged with that as a topic.

Alex Novarese: There has also been a lot of debate about the use of NDAs. What is the general feeling about how they are used currently?

Mustafa Faruqi: Something I have noticed, certainly with my last two employers, is the number of claims relating to sexual harassment has shot up. People are now of the view that behaviour that was previously tolerated is no longer being tolerated. People now have new rules of what is and is not acceptable conduct and that is having an impact on in-house employee relations and probably legal teams too.

Alex Novarese: Is this a helpful development for employment law teams, in that it gives you a chance to talk to the business and, hopefully, influence behaviour positively?

Richard Stovell: When somebody makes a complaint, whether they make the complaint and withdraw it, whether they leave the business or not, a good employer should be looking at it. They should be saying that there is a problem with an individual or there is a cultural issue or there are a number of poor behaviours, whatever the case may be; they should be looking into it full stop. It does not necessarily need to follow, just because you have entered into an agreement with someone and because there is a confidentiality clause, that that is the end of the matter, it can go on further. We should not forget that it works both ways. The individuals themselves often want confidentiality clauses; it is not something just for the employer.

Allison Brown: The scrutiny that these agreements will now be put under brings in more discipline and it makes you focus your advice on these agreements on what is appropriate for the facts. If that brings more discipline, that can only be a good thing.

Oliver Loach: I have also found it helpful as giving you context, to say, ‘Okay, we have dealt with the immediate situation, but we need to be alert to the fact that this might come back to bite us at some point, so whatever the failings were in that situation we need to show some progress to ensure that this does not happen again’. That is a helpful stick to be able to say to the business, ‘We cannot just say that we have wrapped it up and dealt with it. We have to show progress.’

Alex Novarese: To what extent have existing employment policies or measures to mitigate that behaviour been up to the task?

Mustafa Faruqi: When the McDonald’s thing happened, we had a call and I suspect most large companies had calls from journalists to say, ‘Do you have an anti-fraternisation policy?’ Most UK employers would say, ‘No, we do not say you cannot have relationships at work’, but one of the risks is that UK employers start to think maybe the US model is the right one and we have anti-fraternisation policies. That is a risk – that the UK might start to move in that direction.

Richard Stovell: Most businesses will have covered it off in terms of either their ethics or conflict of interest policy and they will not preclude it; they will just say, ‘If you have a relationship at work, you must declare it and obviously your behaviour must be appropriate’. That is a fairly sensible approach and probably common among many, many employers.

Alex Novarese: How important is technology and automation to your functions?

“The number of claims relating to sexual harassment has shot up. Behaviour that was previously tolerated is no longer tolerated.” Mustafa Faruqi, Tesco

Richard Stovell: There is a real drive for data to show that the changes you make are not based on myths and individuals’ views, but are centred on hard facts. Without that data, it is difficult sometimes to make those changes or there is a real inertia to make them, because you need something to back it up.

Alex Novarese: How difficult is it to get that kind of data from your businesses?

Richard Stovell: It is really difficult, on the basis that you need a joined-up system, which many businesses do not have. You need the ability to take different information from payroll, from absence, anecdotally around the business and put it into some form of hard data, which you can consolidate, analyse and get an overall picture from. As with any form of data, we all know you can interpret it in different ways. I am not sure I have seen that many businesses or systems have a complete package that brings that information together and enables you to effect change.

Tom Williams: We are looking at ways to analyse and present data back to clients as part of our advice, because if you can capture and consolidate that data you can deliver back to a business a better picture of where things are going wrong and how they can improve. In big businesses with small teams responsible for certain things, bringing the story together in a single overall picture can be really powerful.

Richard Stovell: You have to put it in two buckets of the inward and the outward, in terms of: are you looking at managing your legal function, and what you do internally within your team, or are you looking outward? Are you looking at projecting what you can do as a legal function in terms of effecting business change, operational changes, efficiency changes in the wider business? That is the bigger prize.

Alex Novarese: Thank you for your thoughts.

The panellists

  • Allison Brown, director, legal – employment, Google
  • Mustafa Faruqi, head of workplace relations, Tesco
  • Oliver Loach, head of employment law, Mitie
  • James Noble, group employment counsel, Genius Sports
  • Richard Stovell, chief counsel – labour law, BAE Systems
  • Tom Williams, partner, PwC
  • Nick Willis, director, PwC
  • Alex Novarese, editor-in-chief,  The In-House Lawyer