Non-Financial Misconduct: When ‘off-duty’ behaviour impacts work

In today’s interconnected world, employee conduct outside the workplace can significantly impact their professional life.

Social media has made personal behaviour more visible than ever, blurring the lines between private and professional worlds. While many believe that an employee's personal life is entirely separate from their work, the reality is more complex. Employers may be able to discipline employees for conduct outside work if it has a direct or indirect effect on their business, reputation, or workplace culture.

Non-financial misconduct, which includes bullying, harassment and discrimination, has long been a consideration in regulated industries. The Financial Conduct Authority (FCA) has recently taken a firmer stance on the issue, stating that non-financial misconduct can render an individual unfit for their role. The FCA expects individuals in regulated roles to uphold a high standard of behaviour. Personal misconduct, such as sexual harassment or discriminatory behaviour, can undermine trust and seriously call into question an employee’s ability to maintain ethical standards.

Employee right to privacy

Employees in the UK are protected from excessive control by employers to safeguard their privacy and freedom of expression. Under Article 8 of the Human Rights Act, employees have a right to a private life, which includes personal conduct outside work. Employers must ensure that any action they take is fair, reasonable, and proportionate, particularly when dealing with off-duty behaviour.

The new Labour Government intends to publish a Code of Practice for employers on the ‘right to disconnect’, which allows employees to disengage from work outside regular hours. This signals an increasing recognition of employees' right to privacy and autonomy outside work.

General principles for employers

When considering disciplinary action for conduct outside work, employers must first assess whether the behaviour in question genuinely impacts the business or its culture. Disciplining an employee for conduct that has no clear effect on the company could lead to legal disputes (such as claims of Unfair Dismissal).

As a rule, there must be a clear link between the employee’s conduct and its impact on the company’s interests. If there is a no apparent connection, employers may struggle to justify disciplinary actions. The UK courts will typically weigh any adverse impact on the employer against the employee’s right to privacy.

Types of behaviour that could constitute misconduct

Certain behaviours outside work could legitimately be considered as misconduct, particularly when they impact the workplace, the employer’s reputation, or contradict regulatory standards. Examples include:

• Social media misconduct: Posting derogatory comments about the company on personal social media accounts could harm the company’s reputation and may warrant disciplinary action.
  
  
• Criminal activity: If an employee’s criminal behaviour outside of work affects their ability to perform their job or undermines the company’s values, it may justify employer intervention. For instance, convictions related to dishonesty or breaches of trust could raise concerns.
  
  
• Inter-personal issues between colleagues such as allegations of inappropriate behaviour or sexual harassment may fall under the misconduct umbrella if there is a work-related context (for an example, an office party or business event).

FCA’s stance on non-financial misconduct (NFM)

The Financial Conduct Authority (FCA) has made it clear that non-financial misconduct, such as bullying, harassment, or discrimination, can indicate that an individual is not ‘fit and proper’ to perform their role. The FCA expects high standards of behaviour from individuals in regulated roles, and personal misconduct that undermines trust in the firm can call into question an employee’s ability to uphold ethical standards. This includes incidents like sexual harassment or discriminatory behaviour outside work.

Practical considerations for employers

A good starting point for tackling this issue is the recent FCA Culture and non-financial misconduct survey which contains a wealth of data and insight into the problem.

The following strategies can help protect business interests:

• Incorporate FCA guidance: For firms in the financial services industry, it is essential to communicate the FCA’s expectations regarding non-financial misconduct. Ensure employees understand how their personal conduct can affect their role under the Senior Managers and Certification Regime (SM&CR).
• Include conduct clauses in employment contracts: Employers can set clear expectations regarding off-duty behaviour, particularly around confidentiality and activities that might conflict with business interests. These clauses can be tailored to ensure that employees understand their responsibilities both inside and outside the workplace.
• Implement clear policies on off-duty behaviour: Employers should draft policies that outline acceptable conduct outside of work. A well-defined social media policy can clarify what constitutes inappropriate behaviour online and how it could impact the employee’s standing in the company.
• Provide training and clear communication: Regular training sessions can help employees understand the company’s expectations regarding their behaviour both inside and outside of work. Open communication about these policies helps reinforce the importance of maintaining professionalism in all aspects of their lives.

Handling off-duty misconduct

When an employee’s conduct outside of work conflicts with the company’s interests, it is critical for employers to handle the situation fairly and transparently. A thorough investigation should be conducted before any disciplinary action is taken to avoid claims of unfair dismissal or discrimination. Employers should carefully document all decisions related to off-duty misconduct, as these records are essential in the event of a legal claim or regulatory (FCA) investigation.

Given the complexity of these issues, employers are advised to seek legal advice when addressing off-duty misconduct to ensure they are acting within the law and to minimise the risk of legal disputes.

How can we help?

With the FCA's expectations in mind, establishing clear policies and seeking legal advice is crucial to minimise potential legal disputes. Weightmans expert HR Rely employment lawyers frequently advise employers considering disciplinary action for off-duty misconduct, providing tailored guidance that aligns with FCA standards. If you find yourself dealing with a situation involving an employee's conduct outside of work, we are here to assist you in navigating this complex area effectively. Furthermore, we can offer these services in a very competitively priced HR Rely fixed fee employment law and HR Advisory service.

If you would like to discuss how to potentially adapt your working practices or have any other employment related needs please feel free to reach out to Seema Champaneri directly at seema.champaneri@weightmans.com or find out more about HR Rely by clicking the following link to the Weightmans website.