Many employers face allegations of harassment after the Christmas period. Recently we have seen a trend of employers facing complaints that they have not done enough to prevent harassment by third parties, such as clients or contractors. If one of your staff is harassed by a client, are you liable?

It really depends on the circumstances. The firm could, in certain circumstances, be liable since employers can be liable for harassment of their employees by third parties i.e. people from outside its organisation (here its clients).  The position under the Equality Act 2010 is as follows: an employer will be treated as harassing an employee where:

  1. a third party harasses the employee in the course of his or her employment;
  2. the employer failed to take such steps as would have been reasonably practicable to prevent the third party from doing so; and
  3. the employer knew that the employee had been harassed in the course of their employment on at least two other occasions by a third party (whether or not the third party was the same person on each occasion).

Formerly, this was the position only in relation sex discrimination. With the introduction of the Equality Act 2010 in October 2010, the above reflects the position regarding all the protected characteristics (e.g. race, age, religion, sexual orientation etc).

Has the firm taken steps to prevent harassment? An employer will not be liable for harassment by third parties if it has taken reasonably practicable steps to prevent it. The Equalities and Human Rights Commission Code suggests that, depending on the size and resources of the employer, such steps could include:

  • having a policy on harassment;
  • notifying third parties that harassment of employees is unlawful and will not be tolerated for example, by the display of a public notice;
  • including a term in all contracts with third parties notifying them of the employer's policy on harassment and requiring them to adhere to it;
  • encouraging employees to report any acts of harassment by third parties to enable the employer to support the employee and take appropriate action;
  • taking action on every complaint of harassment by a third party.

The other relevant issue is the employer’s knowledge of previous harassment. An employer will not be liable unless it knows the employee has already been harassed by a third party on at least two occasions.  Arguably, employers cannot know with certainty something that has simply been reported by an employee (since there is limited scope for it to investigate the matter), so often what an employer can know is limited (although it would be dangerous to disregard an employee’s assertion that he or she has been harassed before).  Consequently, the firm might well be able to avoid liability due to its lack of knowledge of previous third-party harassment – this would obviously be the case if this is the first instance of any harassment.

Earlier in 2011, the Government said it was considering scrapping the requirement that employers take reasonable steps to prevent harassment by people outside their organisation since it believes it is “unworkable”. This is unlikely to be supported across the Coalition and could place the UK in breach of EU law so there may be difficulties in repealing this. For the time being, the law is in place and employers ignore it at their peril.

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