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ICSA Isle of Man Conference 2017, 10 May


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Presentation slides from the ICSA Isle of Man Conference 2017 which took place on 10 May 2017.

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ICSA Isle of Man Conference 2017, 10 May

  1. 1. The ICSA Isle of Man Conference 2017
  2. 2. Join the conversation @ICSA_News #IoMConf17
  3. 3. The UK Government’s review of corporate governance Chris Hodge Policy Advisor, ICSA 10 May 2017, Isle of Man
  4. 4. Who’s doing what? • The UK Government has consulted on the need for reform to the corporate governance framework, and commissioned a series of reports on diversity. • The House of Commons Select Committee published its recommendations to the Government in March. • The FRC plans a “comprehensive review” of the UK Corporate Governance Code, and is bidding for new legal powers to monitor the entire annual report and accounts and to impose sanctions on all directors for financial reporting breaches and “associated issues of integrity”. • The FCA plans to extend the SM&CR regime to all regulated firms, and is considering a “governance light” listing segment for international companies
  5. 5. Purpose of the Government review “For people to retain faith in capitalism and free markets, big business must earn and keep the trust and confidence of their customers, employees and the wider public… It is clear that in recent years the behaviour of a limited few has damaged the reputation of the many. It is clear that something has to change.” “The UK is already an established leader in corporate governance – one reason why we are an attractive destination and a great place to invest and do business. We want to retain and extend that leadership and support companies to take better decisions, for their own long-term benefit and that of the economy overall”. Theresa May, in the introduction to the Green Paper
  6. 6. Three specific objectives • Ensuring that executive pay is properly aligned to long-term performance. • Giving greater voice to employees and consumers in the boardroom. • Raising the bar for governance standards in the largest privately-held companies. Each objective is seen as being “about competitiveness, and creating the right conditions for investment, as much as they are issues about fairness”.
  7. 7. Executive remuneration: options (1) • Some or all of the pay package to be made subject to a binding vote (i.e. the annual remuneration report as well as the remuneration policy), with variations on that theme, such as: • Stronger consequences for losing the advisory vote. • More frequent binding vote on the policy. • Other ways of enhancing shareholder involvement, such as shareholder committees, mobilising retail shareholders, and/or requiring remuneration committees to consult shareholders (and others)
  8. 8. Executive remuneration: options (2) • More pressure on institutional investors as the “enforcers” – for example, by requiring them to disclose their voting record. • More disclosure on pay, for example: CEO/ workforce pay ratio; and/or more detail on the performance targets that trigger bonus payments. • Restrictions on holding periods for share options (suggested minimum of five years). • Remuneration committee chairs to have had previous experience on a committee.
  9. 9. Greater voice: options • The Green Paper hints that there will not be any mandatory structures imposed on companies, but identifies a number of approaches including: • Worker and other “representatives” on company boards. • “Designated NEDs” to bring stakeholder considerations to board discussions. • Stakeholder advisory panels. • More reporting on how the views of, and impact on, stakeholders have been taken into account; possibly by reporting on how the directors’ duties in S172 of the Companies Act 2006 have been applied.
  10. 10. Greater voice: ICSA/IA guidance • The guidance will be addressed to all companies, and will cover: • Stakeholder identification • Board composition, induction and training • Board and committee responsibilities • Engagement mechanisms • Reporting and feedback • Hope to publish the guidance by the end of June 2017.
  11. 11. Private companies • The Green Paper argues that large private companies, whose activities can have a significant public impact, should be expected to apply high standards of governance. The challenge is how to make that happen: • Which standards should they be expected to meet? And should they report on how they have done so? • Is a voluntary approach sufficient in the absence of external shareholders to apply pressure? • If regulation is used, who does it apply to and how is it enforced? • No reference to sanctions in the Green Paper
  12. 12. What happens next? • Everything is on hold until after the General Election. But in the event of a Conservative victory we might see: • Additional regulation and/or Code amendments on executive remuneration; • New requirements to report on how directors’ duties have been applied (possibly to be enforced by the FRC); • Those requirements extended to large private companies, with a Government/ FRC endorsed voluntary code for those companies; • A revised UK Corporate Governance Code in 2018, with more on corporate culture, diversity and stakeholder engagement.
  13. 13. Minute taking Peter Swabey, FCIS, Policy & Research Director, ICSA 10th May 2017 – ICSA Isle of Man Conference
  14. 14. The minuting of meetings Consultation published 23rd May – closed 24th June 89 responses to 31 questions 2,759 answers Summary of feedback now published on
  15. 15. So what did we find ? • Good minuting is a deceptively difficult and time consuming task which is often under-valued, notably by directors. It is far more than an administrative formality • An enormous variety of minute taking practices • Many people are absolutely convinced that they take minutes ‘the right way’ BUT…..
  16. 16. So what did we find ? There is no one-size fits all approach for minute- writing and no ‘right way’ to draft minutes • Context is always important and each chairman and each board will have their own preference for minuting style • It is up to each individual organisation to decide how best its meetings should be recorded
  17. 17. What are minutes for? • The purpose of minutes is to provide an accurate, impartial and balanced internal record of the business transacted at a meeting • Minutes should document the reasons for the decision and include sufficient background information for future reference – or, perhaps, for someone not at the meeting to understand why the board has taken the decision that it has. ‘to record key points of discussion, record decisions and the reasons for decisions, and agreed actions’ ‘accurate’, ‘impartial’ ‘balanced’ ‘to demonstrate challenge’
  18. 18. What are minutes for? In simple terms, their purpose is to record what was done, not what was said but with sufficient context to give assurance that it was done properly
  19. 19. What are minutes for? ‘They should be the single source of truth, and should be a complete, self-standing record (together with the papers). They should act as evidence of the meeting and as a record of those matters discussed/noted, concerns raised, decisions made and, where considered helpful, the rationale for those decisions, and demonstrate the directors acting in accordance with their duties under the Companies Act.’ Sectoral variation: • A charity or public sector organisation may focus more on ensuring there is clear accountability visible through the minutes • A regulated financial services company is more likely to focus on providing evidence of robust decision making.
  20. 20. Who is responsible for the minutes? • The Company Secretary … or other governance professional is responsible to the chairman for the preparation and retention of minutes • The chairman and the other members of the board are responsible for confirming their accuracy • The person taking minutes should be properly qualified to do so – i.e. they should have the necessary knowledge and skills • Too often minuting a meeting is left (at short notice) to a junior member of staff without the appropriate experience or training
  21. 21. Who is responsible for the minutes? Key skills of a good minute taker include being able to: • listen to multiple voices at the same time and capture both their arguments and tone • summarise an argument accurately and record decisions taken and action points on which to follow up • identify which parts of the discussion are material and should be recorded • have the confidence to stand firm when someone asks them to deviate from what they believe to be an accurate record • have the confidence to ask for clarification
  22. 22. • Wherever possible, the company secretary should be supported at the meeting by a suitably skilled minute taker if one with the necessary skills is available • It is generally a good idea for the company secretary to discuss with the chairman before the meeting any relevant procedural issues and, perhaps most importantly, how they can best support the chairman Who is responsible for the minutes?
  23. 23. • It can take at least as long, often twice as long, to draft minutes as the meeting itself took • It may be helpful to develop a minute taking policy or style guide to set the house style and conventions. This could be approved by the board • Minutes are normally written in ‘reported speech’ style; they should not be a verbatim record of the meeting • The minutes should be clear, concise and free from any ambiguity as they will serve as a source of contemporaneous evidence in any judicial or regulatory proceedings Drafting minutes
  24. 24. Drafting minutes – preliminary information • The infrastructure of the meeting • Who, where, when, what, how etc • Quorum • Directors’ duties • Conflicts of interest ‘These items are not legal boilerplate and are important. The wording of the guidance should be revised.’
  25. 25. Drafting minutes – preliminary information Quorum • A matter for each individual organisation • Probably only need be mentioned if there were a lot of absences, or a high quorum requirement such that there might be doubt • For example, if one or more directors have to absent themselves owing to a conflict of interest • Of course, if the chairman does mention quorum it should be minuted • It is the responsibility of the company secretary to be aware whether the meeting is quorate at all times, and advise the chairman should this not be the case
  26. 26. Drafting minutes – preliminary information Conflict of interests • Legal, regulatory and constitutional requirements must be observed • Unless the sectoral regulator requires otherwise, it is reasonable only to refer to conflicts of interest in the minutes where: • the chairman or another board member raises the issue, which they might do if there is a perceived risk of a conflict arising • a potential or actual conflict of interest is declared by one or more of those present • a conflicts register is circulated, tabled or reviewed as part of the business of the meeting • it is necessary to amend the conflicts register.
  27. 27. Drafting minutes – level of detail • The degree of detail recorded will depend to a large extent on: • the needs of the organization • the sector in which it operates and the requirements of any regulator • the working practices of the chairman, the board and the company secretary. • As a minimum, however, we would expect minutes to include: • the key points of discussion • decisions made and, where appropriate, the reasons for them • agreed actions, including a record of any delegated authority to act on behalf of the company
  28. 28. Drafting minutes – naming names • Individual contributions should not normally be attributed by name, but this will be appropriate in some cases. Practice is changing in this area, particularly in the corporate sector • Demonstrate individual director participation and challenge • Equally it became clear that the charity and public sectors have very different practice whereby individual contributions are often attributed. • Once again this is a matter for individual organisations • Guidance includes suggestions on where it will usually or may be appropriate
  29. 29. Drafting minutes – dissent • Most board decisions are reached by consensus • However, in exceptional circumstances, where the whole board cannot reach agreement, individual directors may request that their dissenting view be recorded in the minutes. It is normal to comply with such requests • The question of how dissent is recorded will be a matter of organisational preference. • One suggestion for specimen wording might be: ‘There was a robust discussion about x, with considerable challenge around a, b, c and d. The board agreed to y, with Mr z requesting that his dissent be recorded.’
  30. 30. Drafting minutes – other matters • If board papers are received for noting and no decision is required, then unless there is material discussion that needs to be recorded, minutes should indicate that the relevant report was ‘received (or reviewed, if that is what happened) and its contents noted’ • Conflicts of interest • Legal professional privilege • Offshore companies • “not for the minutes”
  31. 31. Drafting minutes – the regulator • Minutes are increasingly used to demonstrate that the directors have fulfilled their statutory duties • evidencing appropriate challenge in order to hold the executive to account • showing that issues of risk and both shareholder and stakeholder impact have been properly considered • Minutes should facilitate regulatory oversight, but this is not their primary purpose • Nonetheless, those drafting minutes should be mindful of regulatory needs • The well-written minutes of an effective board meeting should convey all the assurance that a regulator requires
  32. 32. Review and approval of draft minutes • Draft minutes should be clearly marked as such and amendments to the draft minutes should be thought of as ‘enhancements’ rather than ‘corrections’ “Editing by board members who are ultimately responsible for the accuracy should not be regarded as a failing on the part of the person drafting the minutes but a sign that responsibilities are understood and taken seriously.” • Need to guard against attempts to rewrite history • The audio recording of board meetings or the publication of board minutes is not, generally, recommended • Treatment of ‘post-meeting events’ • To redact or not to redact …..
  33. 33. Access to the minutes • Who – auditors, regulators and other third parties • For example, as a board responsibility, minutes should be included as part of the board evaluation process • What – unrestricted / restricted (e.g. senior audit partner) / view-only / redacted • How – electronically / minute book / electronic portal • Publication of minutes • Retention of minutes
  34. 34. Company secretary’s notes • Great care should be taken with the company secretary’s notes of the meeting, both in terms of content and retention. We recommend that they are destroyed once the minutes to which they relate have been approved • Wide variety of practices • Retention periods ranged from as soon as they were written up to pretty much forever ‘only one version of the truth is required’
  35. 35. Conclusion • A very interesting and rewarding process • 89 responses to a consultation – isn’t it great that there are so many people with such strongly held views? • All this may suggest that minute taking is a necessary yet thankless task, but as one respondent to our consultation asked, how many other people in an organisation get their work in front of the board as frequently and consistently as company secretaries? • Thanks to everyone who shared with us their wisdom and experience gained from minuting literally countless meetings and, in particular, to Colin Passmore at Simmons & Simmons and Carol Shutkever at Herbert Smith Freehills for their guidance and support.
  36. 36. Further information
  37. 37. Dennis Tourish Professor of Leadership Sussex University Co-editor of ‘Leadership’ Email: DYSFUNCTIONAL LEADERSHIP IN CORPORATIONS Ken Lay AKA ‘Kenny Boy’ Jeffrey Skilling
  38. 38. Amazon April 2017 -180,007 books with ‘Leadership’ in their title. If you read one every day including weekends it would take you 493 years…. BUT – there are only 168 books with ‘Followership’ in their title We have a fixation on leadership, though without followers there are no leaders…
  39. 39. SOME ASSUMPTIONS • Followers should conform – mostly, do what they are told • Leaders know best (but do they always?) • Dissent is resistance to be overcome Who’s the boss BBC 2 March 2016
  40. 40. KEY LEADERSHIP INSIGHT The norm of reciprocity ‘I’m not going to Ted’s funeral. He won’t be coming to mine.’
  42. 42. WHAT ABOUT TRUST? • Survey of 33,000 people in 28 countries • CEO credibility dropped worldwide, by 12% from previous year • At an all time low of 37% who say CEOs are ‘credible’ Edelman Trust Survey, 2017
  43. 43. ‘You’re an evil bastard, Gilroy. I like that.’
  44. 44. A MAJOR SOURCE OF ERROR??? ‘The temptation to tell a Chief in a great position the things he most likes to hear is one of the commonest explanations of mistaken policy. Thus the outlook of the leader on whose decision fateful events depend is usually far more sanguine than the brutal facts admit.’ Winston Churchill (1931) INGRATIATION...
  45. 45. EFFECTS OF FLATTERY • A study of 451 CEOs looked at the impact on them of more intense and frequent flattery (e.g., offering exaggerated compliments) and opinion conformity (e.g., expression of agreement even when people don't agree). • Flattery and opinion conformity linked to CEOs having more favourable evaluations of their own strategic judgments and leadership skills, being less likely to make strategic changes when firm performance suffered, and more prone to lead firms that suffered persistently poor performance. Hyuan Park, Westphal and Stern, ASQ, 2011
  46. 46. EFFECTS OF NARCISSISM • Highly narcissistic CEOs less responsive to whether recent firm performance was good or bad - continued to make equally risky investments (e.g. acquisitions of new companies) regardless of recent performance. Their less narcissistic peers more cautious in bad times and tended to take bigger risks during good times. Chatterjee and Hambrick, ASQ, 2011
  47. 47. IRRATIONAL BIAS– ILLUSORY SUPERIORITY • 69% of drivers consciously worry about being killed when driving • Only 1% believe they drive worse than average • 98% think they are safer than, or as safe, as the average driver. Brake (Road Safety Charity) Survey of 800 UK adults, March 2011
  48. 48. MEA CULPA • More than 90% of professors think they are in the top half of their profession! Trivers, 2011
  49. 49. People are especially sensitive to negative input – the ‘automatic vigilance effect’ Which of these movies would you prefer to see?
  50. 50. HOW WE TREAT CRITICAL FEEDBACK • Subjecting critical feedback to criticism/ accepting positive feedback • ‘I DON’T BELIEVE IT’ • Deny failure • Alternative facts??
  51. 51. WHAT CAN BE DONE? • Seek out formal and informal contact with people as often as possible
  52. 52. WHAT CAN BE DONE? • Scrutinise positive feedback more rigorously than negative feedback • Institutionalise dissent into the decision-making process – e.g. promote/ cherish/ reward contrarians • Create a culture that confronts ‘the brutal facts of reality’ – i.e. where the truth is heard
  53. 53. A CLIMATE WHERE THE TRUTH IS HEARD Lead with questions, not answers Practice saying: • ‘I don’t know’ • ‘What do you think?’ • ‘Where have we gone wrong?’ • ‘What could we do better?’
  54. 54. A CLIMATE WHERE THE TRUTH IS HEARD Engage in debate, not coercion • Have chaotic meetings • Loud debate • Heated discussions • Healthy conflict
  55. 55. © 2017 a mindful business slowing down to speed up Dr Dina Gray
  56. 56. © 2017 designing mindful organisations 3.5 3.6 3.7 3.8 3.9 4 1 2 Wave 1 Wave 2 The 10 principles
  57. 57. © 2017 why mindfulness?
  58. 58. © 2017 absent minds Killingsworth & Gilbert, 2010. A wandering mind is an unhappy mind. Science, 330(6006).
  59. 59. © 2017 the one word check-in
  60. 60. © 2017 in touch with the real world?
  61. 61. © 2017 #1 pay attention to the here and now 1. Look straight ahead – no head movement 2. What do you notice? 3. How many things had you not seen before?
  62. 62. © 2017 going fast…
  63. 63. © 2017 going fast in business…
  64. 64. © 2017 going fast by multi-tasking 1. Write out the 26 letters of the alphabet 2. Then write out the numbers 1 to 26 3. Now write out alternatively A, then 1, then B, then 2 e.t.c.
  65. 65. © 2017 slowing down…
  66. 66. © 2017 slowing down in business…
  67. 67. © 2017 what is mindfulness?
  68. 68. © 2017 mindfulness = creating space Stimulus (Re)Action
  69. 69. © 2017 write down the first word that comes to your mind
  70. 70. © 2017
  71. 71. © 2017 now write down other thoughts about the picture
  72. 72. © 2017 generating space = focusing attention #2 Noticing the automatic
  73. 73. © 2017 coming to our senses
  74. 74. © 2017 1. Discuss with your neighbour … what did you notice? #2 Noticing the automatic
  75. 75. © 2017 why focus on the 5 senses?
  76. 76. © 2017 what we’re not
  77. 77. © 2017 today’s reality
  78. 78. © 2017 need to slow down in organisations
  79. 79. © 2017 mindfulness for co. secretaries Exercising personal discretion as an independent mindset • Personal situational awareness and perspective • Able to observe, reflect and feedback • Critical self-reflection • Emotional intelligence • Rational • Pragmatic • Non-emotional “The Company Secretary. Building Trust Through Governance” Andrew Kakabadse 2016
  80. 80. © 2017 mindfulness for co. secretaries Interpret the behaviour of others and know how to deal with it • Sense of inquiry • Listening • Empathy • Intuitive • Find the space to think • Social awareness • Soft social skills • Able to ask tough questions • Able to read people • Be objective “The Company Secretary. Building Trust Through Governance” Andrew Kakabadse 2016
  81. 81. © 2017 one possibility…
  82. 82. © 2017 becoming a mindful organisation • Beyond individuals and leaders practicing mindfulness • Leaders need to • 1. Notice where the organisation runs on autopilot • 2. Embed processes that promote open-mindedness • Self-care to create mental space is essential at all levels • Paying attention to context is key “Culture eats [your mindfulness] strategy for breakfast” Peter Drucker
  83. 83. © 2017 mindfulness = mental exercise
  84. 84. © 2017 reflection for you: 1. where can you generate space? 2. how can you become a mindful organisation 1st Step: paying attention 2nd Step: increasing awareness 3. take away 1 practical action
  85. 85. © 2017 Email: @juttko Thank you! please use OUR free materials & we are here to help the 10 principles
  86. 86. ICSA Sefton Hotel – 10 May 2017 Paul Heckles, AML/CFT Advisor, Cabinet Office
  87. 87. MONEYVAL EVALUATION Will cover:  What it is  What it entailed  What were the results  What happens next  What this means for industry  Questions
  88. 88. MONEYVAL Review  MONEYVAL - a Committee of the Council of Europe and a FATF Style Regional Body  The IOM joined MONEYVAL in 2012 for the purpose of mutual AML/CFT assessment  Our last evaluation in 2008 was under the old FATF standards, by the IMF  The new 5th round evaluation was against the 2012 standards and included both ‘Technical’ and ‘Effectiveness’ assessments
  89. 89.  Began in autumn 2015 – published in December 2017  On-site interviews with authorities and industry in April 2016 (selected by MONEYVAL)  8 Banks, 7 TCSPs, 7 Insurance , 5 Online gambling 5 Securities, 4 Lawyers, 6 Other and 10 Industry organisations and numerous meetings with government departments.  68% on-site meetings were with industry  3 detailed draft reports  Face to face meeting in October 2016  MONEYVAL Plenary 8 December 2016 MONEYVAL Assessment Process
  90. 90. Mutual Evaluation Report - Summary  MER in 2 parts - Effectiveness Report and a Technical Compliance Report  61 Recommended Actions (16 Priority) and 155 Technical matters requiring consideration  Robust but acknowledges strengths in IOM regime  Technical compliance strong  Areas for significant or fundamental attention mostly identified by our National Risk Assessment  IOM reports back to MONEYVAL on progress in April/May 2018
  91. 91.  The Technical Report notes improvements since IMF in 2008  Strong report against the 40 FATF Recommendations  Only 5 Recommendations rated as ‘Partially Compliant’  Measures already in place to address these Technical Compliance Report
  92. 92. Technical Compliance Report The “Partially Compliant Ones”  Recommendation 16 – wire transfers  Recommendation 23 – DNFBPs  Recommendation 24 – beneficial ownership – legal persons  Recommendation 25 – beneficial ownership – legal arrangements  Recommendation 35 - sanctions
  93. 93. Effectiveness Compliance Report
  94. 94. Follow-Up Reports  Regular and Enhanced Follow-Up processes  The IOM is in Enhanced Follow-Up  Report to be submitted to MONEYVAL in February 2018 ready for their April/May Plenary  Plenary will consider progress made  The IOM can request move to Regular Follow- Up process  Review of Technical Ratings can be requested – must be submitted 6 months in advance
  95. 95. Jurisdictional Comparison  New 5th round is very challenging  Problems are mainly Effectiveness issues but some jurisdictions have struggled with Technical as well  To date 30 countries worldwide have been assessed  28 are in enhanced follow-up procedures  Includes the US, Switzerland, Australia, Canada, Belgium, Singapore, Austria and Norway  Enhanced follow-up is the new norm  UK evaluation begins later this year
  96. 96. Government Response  Measures established (e.g. FIU and Asset Recovery Unit) or in hand (e.g. wire transfers)  Some actions originated from the NRA  Commitment set out in Programme for Government 2016-2021  Chief Minister recently stated in the HoKs that responding to the MER was a matter of national priority.  Report is being considered and prioritised  National Strategy being revised and authorities have an action plan  NRA will be revised and updated
  97. 97. Implications for Industry  Significant work falls to Government  Some policy development required  Some legislation already planned e.g. Beneficial Ownership and AML Gambling Bill  Other limited changes and amended guidance but will not be raft of new legislation  Consultation and co-operation will be key feature  We are not under pressure to prosecute – we need quality cases not quantity  Up to the IOM to determine how to deliver improvements
  98. 98. Questions Contacts: Karen Ramsay, Head of AML/CFT Policy Office Paul Heckles, AML/CFT Advisor Joanne Hetherington, AML/CFT Manager
  99. 99. A BRAVE NEW WORLD – THE FUTURE OF WORK IN THE DIGITAL AGE Employment Law Issues Arising from Social Media and Working in the Digital Age.
  100. 100. THE DIGITAL AGE Customers and employees – expect a simple, fast and streamlined experience from the organisations and people they interact with in their jobs and daily lives. For organisations, the key to succeeding in the digital age is not just about technology. As well as developing clear digital strategies, it’s about understanding how the workplace is changing and becoming increasingly mobile. 9 May, 2017 A Brave New World – The Future of Work in the Digital Age108
  101. 101. BENEFITS OF A MODERN DIGITALLY FOCUSSED BUSINESS  Information sharing - Digital transformation can help give people good data to make better decisions and collaborate more effectively with colleagues. It also  means that employees can have access to the right information quickly  to share with customers and colleagues  Customer Focus - Thanks to smart devices, tasks that touch the customer don’t have to be performed in an anonymous back office – employees can deal right in front of the customer.  „„  Talent management - Digital transformation can help make a company more attractive to work for, and empower an effective workforce. To serve customers and attract the best talent, organisations will need to become flexible workplaces – and make sure they are up to date with what employees want. 9 May, 2017 A Brave New World – The Future of Work in the Digital Age109
  102. 102. A VISION FOR THE MODERN WORKFORCE Agile Working: Agile Working uses information technology to enable people to work without the traditional limitations of where and when tasks must be performed to optimise their performance and deliver ‘best in class’ value and customer service. Mobile Working: Mobile working uses information technology to enable people to work away from their regular place of work, whilst retaining a physical base/desk to work within the geographical footprint. Flexible Working: Flexible working is a way of working that suits an employee’s needs e.g.; having flexible start and finish times, part –time employment. 9 May, 2017 A Brave New World – The Future of Work in the Digital Age110
  103. 103. RELEVANCE OF SOCIAL MEDIA TO WORK PLACE Why is it relevant to employment law and the workplace? -People use social media in both a personal and business context (in office hours and out of office hours) and it is this overlap which can create difficulties; -Employees/ workers need to know where lines are drawn; -Employers need to be clear about what rules they have regarding social media; 09 May 2017 A Brave New World – The Future of Work in the Digital Age111
  104. 104. POSITIVES Can be an effective business tool for presenting a positive image of the Company. An efficient way of sharing information, knowledge and best practice, use of branded pages, promotions/contests. Networking opportunities – business development. Gathering information about candidates for recruitment. Platform for promotions. Customer Service and feedback. Responding to rumours and negative publicity. Increasing the company’s profile and reputation – use of branded pages. 09 May 2017 A Brave New World – The Future of Work in the Digital Age112
  105. 105. EMPLOYEE’S USE OF SOCIAL MEDIA - RISKS Can be devastating to a Company if an employee misuses social media. Law is almost devoid of any useful guidance for companies. No statute or applicable regulations that set out guidance for companies to follow. Instead employers must rely on basic principles related to employee privacy, employment law, anti-discrimination and harassment law, intellectual property law, defamation and common law principles concerning breach of trust and confidence. 09 May 2017 A Brave New World – The Future of Work in the Digital Age113
  106. 106. OTHER RISKS TO MANAGE Loss of productivity – excessive use of social media during working hours can detract from day-to-day duties; Misconduct – behaviour at work and outside of work; Posting of Inappropriate Statements: - whether at work or in an employee’s own time employment claim (“vicarious liability”); - defamation; - harassment; - Breach of copyright; - Freedom of expression v commercial interests of the Company 09 May 2017 A Brave New World – The Future of Work in the Digital Age114
  107. 107. FURTHER ISSUES TO CONSIDER Breach of Confidentiality/ Disclosure of Proprietary Information: - where an employee deliberately or inadvertently posts confidential information about the employer or the employer’s clients on a social networking site - could violate confidentiality agreements, cause the company to lose protections of its intellectual property rights, waive privilege and violate securities laws Employee Competition - employee’s contacts and client details – risks solicitation of customers/ clients. - Tailor restrictive covenants accordingly 09 May 2017 A Brave New World – The Future of Work in the Digital Age115
  108. 108. VICARIOUS LIABILITY An employer is vicariously liable for the acts of its employees where the occur “in the course of employment”. Sidhu v Aerospace Composite Technology Ltd – an offsite “family fun day” arranged by the employer and to which staff were accompanied by family and friends not considered to be an extension of the workplace. In a social media context, would expect an employment tribunal to adopt a broad approach in relation to comments directed at specific employees on a social media site, particularly if those comments relate to conduct in the workplace. 09 May 2017 A Brave New World – The Future of Work in the Digital Age116
  109. 109. DATA PROTECTION ISSUES  Recruitment – employers increasingly advertising vacancies on social media. This advert should explain how the data is being collected, used and stored.  Screening – it is lawful to screen candidates provided it is in accordance with the Data Protection Act and any data collated for the recruitment should not be used for any other purpose. Preferable to inform candidates that screening may include publically accessible information on social media websites.  Discrimination – any data collated during recruitment should not be used in a discriminatory way.  Use of Client’s Data/ TP Data – must be made clear to employees that information should not be broadcast on social media without the consent of the individual. 9 May, 2017 A Brave New World – The Future of Work in the Digital Age117
  110. 110. CASE STUDIES – DEROGATORY COMMENTS Derogatory Comments About Workplace: British Waterways Board v Smith UKEAT 0004/15 Comments made on Facebook. Dismissal was fair – fact that misconduct had taken place 2 years before dismissal did not matter. Offensive Comments Unrelated to Work: Anwar v LHR Airports Ltd ET/2700839/14 Monroe v Katie Hopkins (2017) 09 May 2017 A Brave New World – The Future of Work in the Digital Age118
  111. 111. CASE STUDIES: BRINGING THE EMPLOYER INTO DISREPUTE Bringing the Employer into Disrepute: Mazur v Crediton Dairy Ltd ET140095/2014 – employee posted an inappropriate photo on facebook. Dismissal was unfair and wrongful. No grounds to conclude that the employer had been brought into disrepute. Award reduced for contributory conduct. Offensive Personal Tweets: Game Retail Ltd v Laws UKEAT/0188/14 – confirmed social media misuse was fact dependent. 09 May 2017 A Brave New World – The Future of Work in the Digital Age119
  112. 112. EMERGING LEGAL ISSUES Trust and confidence - where an employee highlights on-line his interest in pursuing career opportunities elsewhere Ownership of social media - employees’ online “brand” – personal or commercial? - who owns LinkedIn connections and/or Twitter followers? Who owns a LinkedIn Group? - rights in databases 09 May 2017 A Brave New World – The Future of Work in the Digital Age120
  113. 113. RESTRICTIVE COVENANT CHALLENGES  Challenges:  - the availability and portability of data  - the public nature of social networking sites  - the blurred distinction between company and employee property  - the speed and efficacy of online communication  Ownership of information – Whitmar Publications v Gamage [2013] EWHC 1881  - social media accounts used by employees for business purposes may effectively be regarded as the employer’s property.  Deliberate Migration of data to a social media account is treated differently – Hays Specialist recruitment v Ions [2008] EEHC 745  Solicitation – Sean Hanna Ltd v Barber [2015] EWHC 3113 – it would be unduly restrictive to allow an employee from advertising new business on facebook. 9 May, 2017 A Brave New World – The Future of Work in the Digital Age121
  114. 114. MANAGING THE RISK - Have a social media policy in place – signal to staff - Make it clear that a breach of the policy is likely to be a disciplinary offence - Monitor social media use in the workplace - If social media is used for recruitment, do not use the information in a discriminatory way - Determine whether any client information should be deleted post-termination and identify and agree ownership rights of social media 09 May 2017 A Brave New World – The Future of Work in the Digital Age122
  115. 115. SOCIAL MEDIA POLICY - Link it into IT/Email/Internet/Harassment/Disciplinary policies. - Make it as wide in scope as possible (all kinds of worker). - Cover employee use of IT resources. - Ensure it applies for out of hours social media as well. - Ensure it applies regardless of whether the social media site is accessed using company equipment. - Identify the personnel responsible for implementing the policy. - Include the right to monitor workers computers/ Blackberries/Ipads. - Include rules for business use of social media. - Cover employee use of company IP rights and confidential info. 09 May 2017 A Brave New World – The Future of Work in the Digital Age123
  116. 116. “TWITTIQUETTE” Rules to live by: Would you say it in person? Remember - everything is public Difficult to delete – all postings made on the internet can be recoverable in evidence Respect client confidentiality Respect commercial sensitivity Is the statement that you are making your own view? Do they also represent the views of the Company? If not, specifically clarify that If you would consider the same statement made by someone else to be offensive or infammatory, don’t make it. 09 May 2017 A Brave New World – The Future of Work in the Digital Age124
  117. 117. EMBRACE THE FUTURE 9 May, 2017 A Brave New World – The Future of Work in the Digital Age125
  118. 118. Social Media Reputation Management – Jan 2017126 THANK YOU 9 May 2017