The recent press reporting of McDonald’s committment to the introduction of sexual harassment for managers, following the intervention of the Equality and Human Rights Commission (EHRC), clearly illustrates how employers are increasingly facing legal obligations to protect their staff from sexual harassment in the workplace. This trend will continue with future measures proposed in the Employment Rights Bill.
The Equality Act 2010 protects employees and workers against sexual harassment from managers and colleagues, and employers are usually liable for sexual harassment committed by their employees at work. However, it does not provide the same protection where employees are sexually harassed by third parties such as customers, contractors and suppliers.
Since October 2024, employers have been under a proactive duty to prevent sexual harassment by colleagues. Changes in the Employment Rights Bill will enhance this duty and will also make employers liable for sexual harassment of their employees by customers and other third parties.
We look at the existing law, the new obligations and other expected changes, and what employers should be doing to get ready.
What is sexual harassment?
Sexual harassment is unwanted conduct of a sexual nature that has the purpose or effect of violating an individual’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment. When looking at the effect of the conduct, employment tribunals take into account the individual’s perception as well as other circumstances.
A wide range of behaviour can amount to sexual harassment. Examples include sexual jokes or comments, displaying or sharing sexually graphic images, questions about an individual’s sex life or talking about their own sex life and unwelcome physical contact. Tribunals will look at the context, and for example may recognise that sometimes engaging in sexual “banter” can be a coping strategy for employees.
What are the implications for employers?
Employers as a rule will be liable for their employees’ actions, even if they did not know about them or condone them. Employers can therefore face having to pay substantial compensation including damages for injury to feelings or personal injury, for instance if the harassment causes or exacerbates mental health problems.
Employers should also be aware that failing to protect employees from sexual harassment, or failing to deal properly with complaints they raise, could lead to a successful claim for constructive dismissal.
Is there a defence?
If the employer can show that they took ‘all reasonable steps’ to prevent the sexual harassment, they will not be liable. To establish this defence, employers need to do more than just have a ‘dignity at work’ policy; other reasonable steps would for example include appropriate training and operating an effective complaints procedure. In practice this is a very difficult defence for employers to run and so rarely argued.
How will the employer’s duty change?
Since October 2024 employers have a duty to actively take ‘reasonable steps’ to prevent the sexual harassment of employees. Failure to comply with this duty will risk an employment tribunal adding an uplift of up to 25% to compensation awarded to an employee and could lead to an investigation by the Equality and Human Rights Commission.
The Employment Rights Bill will change this duty to a requirement to take ‘all reasonable steps’. It will also enable regulations to be issued which specify the reasonable steps which an employer must take to prevent sexual harassment. These are likely to include risk assessments, publishing policies or action plans, and having procedures for reporting and investigating complaints of sexual harassment.
Liability for third party harassment
The Bill will make employers liable for third party harassment of their staff in the course of their employment. This will not only apply to sexual harassment, but will cover all forms of harassment related to a ‘protected characteristic’ such as age, disability or sexual orientation. The employer will be liable if the third party harasses its employee in the course of the employee’s employment, and the employer has failed to take all reasonable steps to prevent the third party from doing so.
Employers could be liable under this provision for a one-off incident; there does not need to be a repeated pattern of harassment for liability to arise. It remains to be seen how different the reasonable steps required in relation to third parties will be compared to the steps required in relation to work colleagues.
These are significant changes, particularly for businesses with staff in customer-facing roles or working with the public, contractors or partner organisations.
Whistleblower protection
One further layer of protection will be given to employees who disclose that they have been subjected to sexual harassment. Changes expected from April 2026 will add sexual harassment to the categories of wrongdoing covered by the whistleblowing legislation, and so extend to these employees the legal rights of whistleblowers to protection against detrimental treatment and unfair dismissal.
Changes to non-disclosure and settlement agreements
Agreements that prevent employees from discussing any allegations of harassment will be void. No date has been given for this change and further details are expected, but these changes could restrict employers when entering into a settlement agreement with an employee to avoid an employment tribunal claim for sexual harassment.
A new law has already come into force on 1 August 2025 which prevents higher education providers from entering non-disclosure agreements with staff and students in relation to allegations of sexual harassment.
How should employers prepare
The changes to the duty to prevent sexual harassment are expected to come into force in October 2026, but any regulations setting out the detail would come later. Changing practice and workplace culture now, however, will ensure you are not caught on the back foot, as well as improving staff engagement and retention and enhancing your reputation as a best practice employer.
We can advise you on the most effective measures that you can take to support and protect your organisation, such as:
- provisions in contracts with third party suppliers;
- policy statements on websites and signage;
- risk assessment, risk prevention, monitoring of high-risk situations and practical strategies for staff to seek support;
- education and staff training, including training managers on handling situations with customers and other third parties;
- clear and robust policies and effective implementation of policies;
- supportive reporting and investigation mechanisms; and
- fostering a zero-tolerance culture.
For further information, please contact Patrick in the employment team on 01227 769939 or email pg@furleypage.co.uk.
Furley Page has offices in Canterbury, Chatham and Whitstable, Kent.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.
