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In this next blog in our series on the government's consultation on sexual harassment in the workplace, published on 11 July 2019, we take a closer look at proposals to reintroduce employer liability for the harassment of employees by third parties. This covers a wide range of scenarios: harassment of a waitress working at an event by the guests of the event, harassment of a cashier by a customer, harassment of an employee by an external consultant or contractor. The list goes on.
Historically, the law has imposed liability on employers for third party harassment of their employees on a "three strike" principle: told of the first and second incident of harassment (no matter how serious), the employer could heave a sigh of relief and think to itself, "not my problem". On the third occasion, the employer would gulp and (to avoid public disclosure of the fact that it had allowed its employee to be harassed on multiple occasions) cough up a settlement sum. These provisions, section 40 of the Equality Act 2010, were repealed in 2013, but it was thought that employers would nonetheless have liability for harassment of employees by third parties under the existing prohibition against sexual harassment in the workplace provisions of the Equality Act (i.e. under section 26). In May 2018, the position changed following a Court of Appeal decision that clarified that section 26 could not, as previously supposed, be extended to cover harassment by a third party.
In light of this ruling, the government is now proposing to reinstate explicit protections against harassment by third parties, and we expect that these proposals are very likely to be put into law in some form, whether by this government or by a following government. Questions remain around the detail. The "three strikes" rule has come under heavy fire (in our view, for good reason). However, should employers be liable for any harassment, even if they did not have prior indication (through a prior incident) that the harassment was likely to occur? If some prior incidence of harassment is required to trigger this liability, should incidents of harassment that it does not know about count? What about incidents that it ought to have known about but chose not to see? We share the ECHR's view, cited in the consultation, that "it is possible for employers to be aware that harassment is likely to occur without a worker having demonstrated that it has happened before". In the President's Club scenario, this is obvious. However, in many other situations, businesses may not be in a position to assess the risk of their employees suffering harassment. It will be interesting to see how hard a line the government will ultimately take.
We note that, as in the case of sexual harassment by a fellow employee, it is proposed that the employer will have a defence in the event that it has taken "all reasonable steps" to prevent the harassment from occurring. It is unlikely to be possible, in our view, for detailed guidance to be prepared around what this would look like, as situations in relation to potential third party harassment will vary very widely. However, it may include signage, communications and, in the case of third parties embedded in the business (such as consultants or agency workers) appropriate contractual provisions.
Businesses, and particularly businesses working in high risk areas with high numbers of customer-facing employees, should keep a close watch on the development of this legislative proposal and seek advice to take appropriate protective measures at an early stage. This may include offering training to employees, reviewing internal grievance and reporting procedures to ensure that concerns are dealt with effectively, and a review of contractual arrangements with third party business partners to consider introducing obligations and indemnities around third party harassment.