Repeal of Third Party Harassment Provisions in the Equality Act 2010 – Has this removed the employer’s risk of liability?
As part of its UK Employment Law Review in 2012, the UK Government announced that it intended to remove the third-party harassment liability provisions from section 40(2) of the Equality Act 2010. This provision was repealed on 1 October 2013. This article considers the impact of the repeal and whether employees can still bring third party harassment related claims against their employer.
Background
In October 2010, section 40(2) of the Equality Act 2010 introduced a provision which directly covered third party harassment liability. Under this provision, employees could bring a claim against their employer if they had been subjected to discriminatory harassment by third parties during the course of their employment on at least two occasions and their employer had failed to take any reasonably practicable steps to prevent the harassment – the so called “three-strike” test. This provision had a potentially far reaching impact as employers became potentially liable for acts committed by third parties such as their suppliers, customers or visitors over whom they had little or no control.
The rationale for the repeal
The UK Government’s rationale for the repeal was that it recognised that imposing such a duty on employers was unworkable because employers have little or no direct control over the actions of a third party. During the UK Government’s consultation process on the proposal to repeal this provision, the UK Government received 80 responses from the individual public, public sector employers, unions, equality lobby groups, not-for profit sector employers and business organisations. Interestingly, only 20% of the Respondents were in favour of the repeal and 71% were opposed to it.
Nonetheless, there was little or no specific evidence or case law in support of retaining this provision. On this basis, the UK Government concluded that the provision should be repealed because there is “no evidence to suggest that the third-party harassment provisions are serving a practical purpose or are an appropriate or proportionate manner of dealing with the type of conduct that they are intended to cover" and the employees were still adequately protected by other provisions in the Equality Act 2010 and by other legislation.
Has the risk of liability relating to third party harassment been removed?
While the repeal is helpful to employers as there is no longer any direct legislation covering third party harassment, employees can still potentially bring a claim against their employer relating to third party harassment by relying on other provisions in the Equality Act 2010 or under the Protection from Harassment Act 1997. Employees could argue that the failure to prevent third-party harassment relating to a particular protected characteristic (e.g. race or sex) in itself amounts to “unwanted conduct” under the general harassment provision in the Equality Act 2010. If that conduct has the purpose or effect of violating the employee's dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for them, then that would amount to discrimination by harassment, and there is a risk that a sympathetic Tribunal may find in the employee’s favour. Similarly, an employee could argue that being placed in a situation where the employee is subjected to third party harassment amounts to direct or indirect discrimination.
An employee could also claim that being subjected to such harassment and the employer failing to take any appropriate actions amounts to a breach of mutual trust and confidence entitling the employee to resign and claim constructive dismissal. It is likely that the parties will rely on case law decided before the third party harassment liability provision existed, where the test for liability is whether the employer had control over the event and whether it could control if the harassment occurred or not. However case law remains inconsistent on these issues and clearer guidance will be required from the courts in future cases.
Practical steps
It will be prudent and good employment practice for employers to continue to take any concerns or complaints from their employees about third-party harassment seriously and deal with it appropriately in accordance with the employer’s grievance procedure, harassment and equal opportunities policies. Outsourcing agreements should continue to have adequate provisions and indemnities covering such potential claims.