The City is tackling workplace bullies—but what about everyone else?

The City is tackling workplace bullies—but what about everyone else?

Nearly 40,000 financial firms are being brought under tougher rules covering serious workplace misconduct. The changes are intended to stop abusive managers escaping scrutiny by moving between employers. It is a major step for the City—but bullying, harassment and intimidation do not stop at the Square Mile.

BAD BEHAVIOUR ISN’T JUST A CITY PROBLEM

From this month, nearly 40,000 financial services firms, hedge funds, insurers, pension funds, brokers, will be required to report serious cases of bullying, harassment, racism, violence and intimidation to the FCA. They will also have to pass misconduct information to future employers to stop “rolling bad apples”, by which they mean bad managers moving to jobs elsewhere and taking their bad behaviour with them.

It’s a major shift for the City, but the rules won’t reach small firms or businesses outside financial services even though the economic cost of workplace misconduct across the UK is enormous, to the economy and to individual businesses.

The economic cost

The best evidence comes from ACAS (gives employees and employers free, impartial advice on workplace rights, rules and best practice), which estimates that formal disciplinary and grievance cases cost UK employers £2.36bn a year. This includes bullying, harassment, discrimination and toxic management.

Informal resolution costs another £250m a year, meaning workplace conflict costs £2.6bn annually, and that’s before counting productivity loss, turnover, sickness absence or legal claims.

The Fair Work Agency’s (FWA) Working Lives report shows that one in seven UK workers experiences labour‑market non‑compliance or work‑based harm, including bullying and harassment. Handling claims of this sort and resolving disputes is very expensive for firms especially the smallest ones, in terms of costs and time and in the knock-on impact on other workers in the business.

Misconduct damages the economy

Workplace misconduct creates costs that ripple far beyond HR departments:

Productivity loss: Toxic workplaces reduce output, increase mistakes, and slow down decision‑making.

Higher turnover: Replacing staff costs small businesses thousands per employee and microbusinesses often can’t absorb the shock.

Sickness absence and mental health impacts: Bullying and harassment are major drivers of stress‑related absence, and often not just of the person directly affected. Stress spreads.

Legal and tribunal costs: Tribunal cases cost employers and the economy millions.

Lost innovation and risk‑taking: Workers in toxic environments avoid speaking up, suggesting improvements, or challenging poor decisions and often leave.

Reduced labour‑market mobility: “Rolling bad apples” move between firms, spreading harm and reducing trust in the labour market.

Taken together, the economic cost is well above £2.6bn a year. It’s more likely to be between £5–£10bn once the impact on productivity and turnover of people is included.

Small and micro businesses are hit hardest

Small firms experience misconduct differently because they usually don’t have HR departments or formal reporting channels and may have to buy in support from specialists to manage grievances. Teams in small businesses are more likely to be close‑knit teams and conflict is harder to escape, and the risk of retaliation is likely to be greater. Reputation of your business can be easily damaged.

The FWA report shows that work‑based harms are widespread across all sectors, not just finance. The FCA rules only apply to financial services because the FCA only covers the financial sector. This leaves millions of workers in everything from retail and construction to care and gig work without similar protections.

Should the rules apply to all firms?

If the goal is economic growth, fairness and labour‑market integrity, yes the same rules should apply everywhere. The evidence shows misconduct is not specific to any particular sector and “bad apples” move between industries, not just within finance.

The economic cost is nationwide, and small firms suffer disproportionately with one in seven workers affected.  If the FCA’s model prevents misconduct, improves culture and stops rogue managers moving unchecked, then extending similar principles across sectors would reduce economic waste, improve productivity and help improve worker wellbeing

This aligns directly with the government’s growth agenda and the Fair Work Agency’s findings.

Not just the Economy that’s hit

Workplace misconduct costs the UK economy billions every year. However, it’s not just the economy that’s hit. Businesses are affected too. Good processes and policies in every business to keep the workplace safe, may seem like a cost too far when the cost of doing business is already through the roof, but this is a step that could save businesses money in terms of claims, lost hours, recruitment and retention of good people.

If the UK wants stronger productivity, higher growth and safer workplaces, then Misconduct reporting shouldn’t stop at the Square Mile and should be a standard across all sectors, including small and micro businesses.