Ever since Basil Fawlty whacked Manuel around the head with a spoon, bullying has been one of the comic clichés of the hospitality industry, fuelled by images of temperamental, swearing chefs. Yet it is a serious matter, and poses a real threat to business, to profits and to employees' health.

"Bullying is the hidden menace in the workplace," says Petra Cook, head of public affairs at the Chartered Management Institute. And according to arbitration service Acas, as many as 18.9 million working days a year are lost because of bullying.

The cost of bullying can cripple a business. Items on the balance sheet might include the cost of sickness absence, and reduced productivity by the victims and their colleagues, as well as the cost of potential litigation.

"The hospitality industry needs to be mindful of its effects," says David Battersby, managing director of Hospitality and Leisure Manpower. "Bullying accelerates staff turnover and is a warning to employers that they need to be proactive about people management."

So what is bullying and how does it arise?

"Bullying is offensive discrimination through persistent, vindictive, cruel or humiliating behaviour," says Lyn Witheridge, chief executive of anti-bullying charity the Andrea Adams Trust.

We can all visualise a ranting chef or lunatic manager, but there are other ways of bullying, such as strong-arm tactics, and employers and managers need to be aware of them. Managers who let a tough-talking supervisor "get on with it" could be perpetrating or condoning a system of bullying. "Bullying includes attempts to undermine, criticise, condemn and hurt or humiliate an individual or group of employees," Witheridge says.

The law comes down hard on guilty employers, and if complaints are not investigated, or an employee comes to harm, then they run the risk of being accused of constructive dismissal and even facing criminal prosecution under the Health and Safety at Work Act 1974.

The main way to avoid bullying is to have a culture that doesn't tolerate it. Zero tolerance has to be communicated to employees from day one, says Fiona Lowe, HR director of Marriott's Renaissance Manchester hotel.

Lowe feels that her hotel benefits from the group-wide Marriott Guarantee of Fair Treatment. "Employees know from the guarantee what sort of behaviour is not tolerated," she says. "This is good because they need to feel that there is an atmosphere of trust. If staff are not happy, it will come across to customers."

Bullies can be difficult to identify, says Jane Sunley, managing director of talent retention specialist Learnpurple. "On the whole, bullying happens in workplaces as a clear example of an abuse of power," she says. "But it is common to hear people say that they find it difficult to believe that so-and-so is bullying his staff as he is always so polite and friendly. However, dig deeper and the evidence will point towards the workplace being a competitive or stressful environment, where the bully is able to feel secure enough to behave in an aggressive way."

It is up to managers to police bullying. The telltale signs are a poor work atmosphere with raised voices and swearing, staff appearing stressed, high absence levels, communication between departments becoming difficult, and a high level of staff turnover.

Some bullies intentionally abuse their power, or create a power base for themselves, whereas others misunderstand what is required from them and impose bullying because of a lack of direction from the top.

This second group of confused bullies can cause even greater problems. The company may think that it has employed a firm but fair supervisor, particularly if staff do not have the opportunity to raise concerns, but it could find that it has a tyrant on its hands.

How can managers detect the differences between motivators and menaces?

"There are a number of differences between strong managers and bullies," says chartered psychologist Noreen Tehrani. "Managers and motivators encourage team members to get better, whereas a bullying manager or supervisor enforces targets and ideas without discussion or explanation."

The bullying scenario worsens when a team fails to achieve standards of performance. "A strong manager and good motivator will identify individuals who are struggling and provide support," Tehrani says. "A bully will put team members under unfair pressure to conform by ridiculing, shouting, demoting or teasing."

As Tehrani's perspective shows, there is a correlation between bullying and business failure. Good, fair management techniques are always an investment - and could ultimately cost less.

Motivator or menace?

Menaces:

• Aggressors controlling others by intimidation. "I harass others to pay attention to me. If you are scared of me, you will do what I want."
• Interrogators find fault in others by continuous questioning. "I am more powerful, as your behaviour is inappropriate and bad."
• Aloof managers control others by not communicating what is required. Staff are confused.

Motivators:

• Are assertive. They understand themselves and what is required to do the job well.
• Coach. Aim to be someone who can walk alongside staff, offering support and honesty.
• Are communicators. Share targets; let staff know whom they can approach if they are in difficulty.

Inside the law

Kerstie Skeaping, senior associate at commercial law firm Halliwells, gives an overview of the victim's rights and employer's responsibilities.

The victim's rights

If the bullying is essentially harassment on the grounds of discrimination - such as sex, race, disability, sexual orientation, religion/belief or (from October 2006) age - then the victim potentially has a discrimination claim, which can be brought while they are still employed. Such claims have no compensation limit.

If the bullying is more general, and cannot be associated with a discriminatory act, then the individual potentially has a claim for constructive, unfair and wrongful dismissal. However, the individual would need to resign and claim that there had been a breach of the implied duty of trust and confidence. The average cost to employers is £8,000 for an unfair dismissal.

In addition, the individual may have a potential claim for personal injury if the bullying has affected the employee's health.

The Protection from Harassment Act 1997 also provides civil and criminal law protection from harassment and bullying in the workplace. This offers protection against the offending party.

Employer's responsibilities

All employers have a duty to provide a safe system of working. If the employee's health suffers because of the bullying, he or she may be able to argue that the employer breached this statutory duty. The employee may also be able to argue that the implied duty of trust and confidence has been breached.

In discrimination claims, the individual bully themselves may be personally liable, but the company may also be liable.

Case studies

Jackie, the chef

"As a young trainee chef, I was keen to learn, but my first lesson was to duck out of the way when the head chef flung a soup ladle across the kitchen at me. I also learnt that bullying was part of the culture where I worked.

This kitchen relied on adrenalin, not organising skills, to get things done. Everybody just accepted that this was the way things worked around here.

The 40-year-old head chef was the worst - he held the power - but he managed to train his 25-year-old deputy to be a bully, too. He didn't correct the deputy's behaviour and laughed when his deputy flicked hot food at me.

The deputy got braver, and developed a game of flicking food while singing in my face. I didn't react and the "game" got worse. It developed into prodding in the back with a slim knife.

The first time this happened I had jeans under my whites and I didn't feel its impact. However, the second time was during a heat wave when I was wearing simply my whites and underwear. This time the knife drew blood, very visible through my whites. He laughed and said: "Got you this time."

No one was controlling the situation apart from the kitchen porters, who sometimes got into fights with the chefs.

There was no-one I could talk to - the whole place was ruled by fear - so I decided to leave. I resigned and went travelling."

Robert, the manager

"From the beginning, my new senior manager totally undermined me in front of clients. He gave them the impression that I was not capable of helping them.

Then he wouldn't pass on messages from clients or colleagues. He delayed some of my essential paperwork.

I got so nervous that I made a mistake with an estimate. I was blamed in front of the entire office.

He started setting unrealistic targets and made me feel unprofessional when I couldn't meet them. I was lucky enough to find another job and left."

* Names have been changed.