With effect from 1 October 2013, the third party harassment provisions contained in Section 40 of the Equality Act 2010 were repealed.
The provisions made employers liable for harassment of their employees by third parties, such as customers or clients, when unwanted conduct had taken place on at least two other occasions and the employer was aware of it but failed to take reasonably practicable steps to prevent it. The harassment did not need to be by the same person each time for the ‘three-strikes rule’ to apply.
The Government was of the view that the provisions were unworkable, given that an employer has no easy way of controlling the behaviour of third parties, and there was little evidence that there was a significant need for them or that they were effective in practice. In 2012, therefore, as part of its ‘red tape challenge’ to relieve businesses from unnecessary and burdensome regulations, a consultation on proposals to remove the provisions was carried out. Although a majority of those who responded were against any change in the law, the Government was not persuaded that there was a case for retaining the provisions as other avenues of legal redress are available to protect employees in such circumstances.
The law on an employer’s liability for third party harassment developed over time. In 1997, the Employment Appeal Tribunal ordered a hotel group to pay compensation to black waitresses it employed after they were the butt of racist and sexist jokes made by the comedian Bernard Manning during a function at one of its hotels (Burton v DeVere Hotels). This seemed to establish that employers could be liable to their employees for sex or race discriminatory acts committed by a third party in a wide variety of circumstances. In 2003, however, the House of Lords criticised the EAT’s logic and expressed the view that an employer is not liable to an employee in respect of sex or race harassment of the employee by a third party unless the employer failed to prevent the harassment for a reason related to the sex or race of the employee (Pearce v Governing Body of Mayfield School).
In 2008, the Sex Discrimination Act was amended. The definition of sexual harassment was expanded to include unwanted conduct that was ‘related to’ the sex of another person instead of ‘on the grounds of’ sex. This change enabled a claim to be made by someone who was not the subject of the unwanted conduct but where its effect was to violate that person’s dignity or to create an intimidating environment for them. In addition, it became unlawful for an employer to fail to take reasonably practicable steps to protect an employee from harassment by a third party where such harassment was known to have occurred on at least two other occasions. The person responsible for the harassment did not have to be the same on each occasion. The Equality Act extended the protection afforded by these changes to all protected characteristics.
However, the repeal of the specific provisions protecting employees against third party harassment does not mean that employers should not have procedures in place to deal with complaints, as there are other ways in which an employee can seek redress if they are subject to conduct that would count as third party harassment.
For example, a claim might be possible under Section 26 of the Equality Act, which contains general provisions regarding harassment and unwanted conduct, on the basis that the employer’s failure to act is unwanted conduct related to a protected characteristic that causes a hostile, intimidating or degrading environment. Alternatively, a claim of direct discrimination under the Act might be pursued on the basis that the employer’s failure to act was on account of a protected characteristic and constitutes less favourable treatment.
In some cases, it might be argued that an employer’s failure to act to prevent third party harassment was a fundamental breach of the employee’s contract of employment, thus entitling them to resign and claim constructive dismissal.
There may also be situations where an employee suffers psychological damage as a result of repeated third party harassment, in which case a negligence claim might be pursued in the civil courts. If the harassment is such that it amounts to a criminal offence, the Protection from Harassment Act 1997 would apply.
It is perhaps difficult to see how the repeal of the third party harassment provisions has simplified matters for employers. We recommend a zero tolerance approach, with prompt remedial action being taken as soon as you receive a complaint from an employee or become aware of unwanted conduct of any kind.