“An employee has complained to us that they have been subject to sexual harassment and race discrimination from a customer. As an employer can we be held liable for this harassment/discrimination?”
Following the repeal (with effect from 1 October 2013) of explicit protection for employees against repetitive harassment by third parties (such as customers and suppliers), an employer now has no explicit liability under the Equality Act 2010 for the harassing actions of third parties.
That does not necessarily mean, however, that the employee has no protection, and the employer no liability, in such circumstances.
The Court of Appeal in Unite the Union v Nailard [2018 IRLR 730] confirmed that, where an employer fails to take action following complaints by the employee about a third party's harassing actions, an employer will be liable if the proscribed factor (i.e. the relevant protected characteristic) forms part of the motivation for the employer’s failure to act.
In Conteh v Parking Partners  All ER (D) 223 (Feb) (a case decided under the Race Relations Act 1976), the Employment Appeal Tribunal concluded that the employer could only be liable itself for harassment if:
- the employee asked the employer to take action with regard to the third party's actions, and the employer failed to act
- the employer's failure to act helped to create an environment that was intimidating, hostile, degrading humiliating or offensive to the complainant, and
- the employer's failure to act was decided upon 'on grounds of' the relevant protected characteristic, i.e. on grounds of race, sex etc
The EAT also held in Conteh the employer's failure to act in relation to the third party's harassment could only amount to direct discrimination by the employer against the complainant if that failure was decided upon 'on grounds of' the relevant protected characteristic, i.e. on grounds of race, sex etc.
In summary whilst an employer is not liable to an employee for harassment by an external third party it is prudent for an employer to investigate and take steps to address this to avoid the risk of a discrimination claim in relation to failure to act on the grounds of a protected characteristic.
Motor Industry Legal Services
Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.