A review of the law on liability for sexual harassment in the workplace by non-employees, in the context of a Government Equalities Office consultation on possible reforms

The #metoo movement has in dramatic form brought the issue of sexual harassment in the workplace to the fore in all sectors and industries in the United Kingdom. One aspect of this is the liability of employers for sexual harassment perpetrated towards their employees by a third party, meaning someone an employee interacts with as part of their job but who is not a co-employee. This could include customers, clients, business contacts, and staff who are not employed directly, such as agency workers or those who work in a self-employed capacity. 

Third party harassment will clearly be a significant concern to employers in many industries, in particular where workers come into regular contact with the public (e.g. retail, hospitality, healthcare and aviation). This review will consider recent developments in this area of law, and most notably the Government Equalities Office Consultation on Sexual Harassment in the Workplace (11 July 2019), on plans to strengthen protection against sexual harassment at work, including whether the law concerning employers’ liability for harassment of their workers by third parties should be clarified and changed. 

Before considering the nature and scope of the consultation process, it is necessary to consider the outcome of research into this issue and thereafter briefly recap on the need for the proposed changes in the law. 

Research studies

Unfortunately, there has been a lack of widespread research undertaken into third party harassment in the workplace in the UK, although there are some notable research surveys. The TUC recently undertook a survey into young peoples’ experiences, covering more than 1,300 young workers aged 18-34 who had been subject to some form of third-party harassment, abuse or violence. The results were not only surprising but alarming. 

Respondents were asked about their experience of reporting third party harassment to their employer, the impact the behaviour had on them and their attitude to work. The researchers found that, of those who reported the harassment, over three-quarters said nothing changed or the situation got worse. They also found that of the young workers they polled who had experienced some form of harassment from third parties, 85% had experienced verbal abuse. Another surprising discovery was that 70% of those who experienced verbal abuse from third parties had been subjected to it three or more times. 

In 2017 the BBC commissioned ComRes to undertake research. They found that third party sexual harassment was most likely to be experienced by those working on temporary contracts, or agency workers. They also found it particularly prevalent within the retail, care and hospitality industries. Lastly, around 18% of respondents had been sexually harassed by clients or customers. And in a 2018 report the Equality & Human Rights Commission gathered evidence from around 1,000 individuals and employers. It was found that around a quarter of those reporting harassment had identified the perpetrator as a third party. 

What is clear from the results of these and other studies is that sexual harassment by third parties is a much more serious and widespread issue than first thought. Verbal harassment is a very common type of harassment undertaken by third party harassers. There are certain types of worker (young or working in temporary or casual employment) who are particularly prone to being harassed. What follows is a review of certain of the current legal rules that apply to third party harassment under equality law. 

Legal position in the UK

It is the case that the legal position of employers for third party harassment of their workers has always been unclear. Prior to the addition of the harassment provisions under s 40 of the Equality Act 2010 (EA), the matter was dealt with by case law, starting with Burton v De Vere Hotels [1996] IRLR 596. The EAT held that two waitresses who were subjected to racially offensive remarks by a person working as a comedian at a private function in their employer’s hotel had been subject to direct racial discrimination. The hotel was held liable on the basis that it had been in a position to prevent the abuse and had failed to do so. 

However, the House of Lords in Pearce v Governing Body of Mayfield Secondary School [2003] IRLR 512 held that Burton had been wrongly decided. The Law Lords were of the opinion that to render an employer liable for direct discrimination in this context, there must be a failure on the part of the employer which must in itself be an act of discrimination. 

However the High Court in Equal Opportunities Commission v Secretary of State for Trade and Industry [2007] IRLR 327 held that the UK position on third party harassment did not properly reflect the extent of employers’ obligations to protect their employees from harassment under the EU Equal Treatment Directive. This was an application for judicial review of the Employment Equality (Sex Discrimination) Regulations (SI 2005/2467). It was alleged, and found, that the regulations were incompatible with the Framework Directive, 2000/73/EC. 

This ultimately led to Parliament's enactment of specific statutory provisions on third party harassment in s 40 of the EA. This stated that an employer could only be liable when they knew that an employee had been harassed by a third party on at least two previous occasions and did not take reasonably practicable steps to prevent the harassment. This three strikes requirement was substantially unworkable in practice, and was repealed in 2013. 

There resulted the current position, where there is no express statutory provision extending liability to an employer for harassment of their employees by a third party. Until recently, it was thought that there was another potential route to liability, under the harassment provision in EA, s 26 on the basis that an employer's failure to prevent harassment by a third party is itself unwanted conduct related to a protected characteristic that has the required harassing effect. However, in Unite the Union v Nailard [2018] EWCA Civ 103 the Court of Appeal held that this type of action has a very high threshold, with a need to prove that the employer has a discriminatory motive for failing to take action in the face of complaints of third party harassment in order for them to be liable. The court also concluded that the liability of employers for third party harassment was a matter for Parliament and specific statutory provisions were needed to cover this. 

Businesses with workers who come into contact with third parties have a difficult dilemma. They need to make sure their staff are supported and protected, but at the same time they often want to maintain the cooperation of third parties and will struggle to control their actions. There are various other areas of employment law that have application to third party harassment, but these have been fully considered in the EHRC’s new Sexual Harassment Guidance technical report (2020).

Recent developments 

The intense media focus on stories of sexual harassment in the wake of the Weinstein scandal and other high-profile accusations has led to the current legal regime being scrutinised. The EHRC and the Women & Equalities Select Committee of the House of Commons (WEC) have both repeatedly called for the third party harassment provisions in the EA to be reinstated. The EHRC published a paper in 2018 which specifically recommended not only reinstating the third party harassment provisions but amending them to remove the requirement for the employer to know of two or more previous instances of harassment before they become liable. 

The WEC has also held an inquiry into sexual harassment in the workplace and released its report in mid-July 2019. One of the stated aims of the inquiry was to obtain evidence on how workers can be better protected from sexual harassment by clients, customers and other third parties. The report recommended the reintroduction of a specific statutory provision making employers liable for failing to prevent third party harassment of workers. Similarly to the EHRC, the WEC recommended that this should not be limited to cases where the employer was aware of two previous occurrences of harassment. The WEC also recommended the introduction of a statutory duty on employers to prevent sexual harassment at work, and punitive fines for those who do not comply. 

Consultation 

As a consequence of these reports, the abovementioned Government consultation ran from 11 July to 2 October 2019 on whether new third party harassment provisions should be reintroduced, and if so, in what circumstances should an employer become liable. The outcome is still awaited. 

The three strikes rule in EA s 40 has been heavily criticised, and the first question in the consultation was what should replace it? Some commentators such as the Fawcett Society and the EHRC think that one incident should be enough to establish liability. As already seen, the EHRC view is 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. This would be the case where through their previous dealings with a third party they are aware of their propensity to harass workers or they have heard of it from other business contacts. The question for the consultees was whether or not they agree that liability of an employer for third party harassment should be triggered without the need for a previous incident.

The second question concerns the need for an employer to have knowledge of the harassment. So, before an employer can be liable should they be required to know that an incident of harassment took place, or is it sufficient that they ought to have known? As pointed out in the consultation document, the latter option would usefully avoid cases getting fixated on establishing whether an employer was told of the harassment or not. However, the downside is that it introduces an additional subjective element into the case, namely to determine in what circumstances it can be considered that an employer ought to have known about an incident. 

Another issue identified in the consultation (para 2.14) was, could the defence provided to employers under EA s 109, to show they have taken all reasonable steps to prevent the harassment from happening, already available in harassment cases brought by workers (EA s 26), be available to employers in third party cases? The Gender Equalities Office (the unit of the British Government with responsibility for social equality) proposes that the same defence should apply. Were these proposals adopted, the stakes would be raised significantly for employers who do not sufficiently protect their employees. They could be liable for third party harassment even if they are unaware of any misbehaviour by the third party and have not received a previous complaint about them. Also, once liability was established, they would then have to rely on the defence provided by EA s 109. As part of this they will need to show that they have taken proactive steps to deal with this behaviour.

Conclusion 

According to the EHRC, “harassment by a third party can be just as devastating for a worker as harassment by a fellow worker” (Sexual harassment technical guidance, para 4.37). Workers often come into contact with third parties at work, such as customers, clients, service users, visitors and those who have a different employer, e.g. agency workers or independent contractors. Why then do workers who are harassed by third parties not sue them directly under EA s 26? A worker could make an employment tribunal claim against an agent of the employer who personally harassed them, without also making a claim against their employer (EA s 110). However, it is not straightforward as in order to succeed they must be able to show that the employer would also have been liable under the Act had they been included in such a claim.

Employers might consider whether their commercial agreements (with clients, suppliers, and other third parties) should expressly prohibit unlawful harassment of their staff by third parties or their representatives and whether appropriate contractual remedies could be built into those agreements in the event of a breach.

There is clearly a need to reintroduce rules into the Equality Act 2010 to make this type of behaviour unlawful, but the vexed question for the UK Parliament is what do they replace the original provisions with? What is being proposed by the GEO under their consultation seems a viable course of action, and it is difficult to arrive at a better alternative. 

It will be interesting to see the response to the Government’s consultation on these proposals. Unfortunately, it seems likely that the response will not be forthcoming until the current national medical emergency is over.

 

 

The Author

Dr Sam Middlemiss is formerly reader at Robert Gordon University, Aberdeen

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