Employment Alert No. 62 "Disability Discrimination - Employers' Liability for Third Parties" (sent on 13 May 2003) reported that an employer could be liable for the harassment of employees by third parties (who are not employees), where the harassment occurs in circumstances in which the employer could prevent the harassment but does not. In effect, by omitting to stop the third party harasser, the employer is held to have discriminated against the employee.
However, in the recent joined appeals of MacDonald v Advocate General for Scotland and Pearce v Mayfield School the House of Lords decided that more than mere failure to act must be shown to prove discrimination.
What did the House of Lords decide?
Ms Pearce, a lesbian teacher, suffered homophobic abuse from pupils at her school. She claimed sex discrimination, arguing that the school failed to take effective action to protect her in circumstances which were under the school’s control. The House of Lords held that an essential element of direct discrimination is that the employer treats the employee less favourably on the grounds of his or her sex/race/disability. An employer's inadvertent failure to take steps to prevent discrimination is not sufficient to amount to discrimination - the failure must be because of the employee’s sex/race/disability. Accordingly, to succeed, Ms Pearce would have to have shown that the school was treating her less favourably because it would have protected a male homosexual teacher (the appropriate comparator) from similar abuse.
The House of Lords went on to state that even if an employee can satisfy this first stage, the tribunal should still consider whether in fact there were any effective steps which the employer could have taken to prevent the harassment by the third party. If, in fact, no act by the employer would have made any difference, the Tribunal should not hold an employer liable for the act of the third party.
Under the law as it currently stands, therefore, an employer's motivation for failing to take appropriate steps is central.
Will the new draft statutory definition of harassment make any difference?
The Government has recently published draft Employment Equality (Sexual Orientation) Regulations 2003 and Employment Equality (Religion or Belief) Regulations 2003 which include the first statutory definition of harassment. To comply with its EU law obligations, the Government is required to insert a similar definition into the Sex Discrimination Act ("SDA") by 2005, although no draft regulations have been published yet. The new statutory definition of harassment will first be seen in relation to the Race Relations Act 1976 as the amendments to this Act come into force on 19 July 2003.
The draft definition provides that person A subjects person B to harassment where, on grounds of sexual orientation/religion or belief/race, A engages in unwanted conduct which has the purpose or effect of violating B’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for B.
The draft Regulations then go on to provide that it is unlawful for an employer to subject an employee to harassment.
Applying this definition and presuming it will be incorporated into the SDA 1975, the phrase "to subject an employee to harassment" suggests that an employee will not need to establish that the employer subjected them to less favourable treatment on the grounds of sex, merely that they were so subjected. In other words, it is only when considering the actions of "A" (the third party harasser) that Tribunals will need to consider how the relevant comparator would have been treated.
On the other hand, "to subject" could suggest that the employer must have taken action or omitted to take action, which led to or did not prevent the harassment of the employee by the third party. As such it seems that Tribunals may still need to consider if there were any effective steps which the employer could have taken to prevent the harassment. If not, it seems arguable that an employer should not be held liable for the actions of the third party.
What does the decision mean for employers?
In light of the changes which will be made to the SDA in 2005, this decision will be of relatively short application. Further, once the Race Relations Act 1976 (Amendment) Regulations 2003 (which also contain the new statutory definition of harassment) have come into force we will soon know how Tribunals will interpret employers’ liability for the harassment of employees by third parties.
In any event, where employees are being harassed (by their employer or third parties), sex, race or disability discrimination should not be the employer’s sole concern. Claims for constructive unfair dismissal and personal injury may also result from such behaviour.
In the meantime, although the House of Lords adopted a strict, literal interpretation of the current discrimination legislation, employers should treat this as the minimum standard of behaviour. Best practice involves employers:
- carrying out an audit on their staff seconded or assigned to work with third parties to check there is no discrimination in practice;
- being alert to situations which may indicate bullying by those third parties or their employees;
- considering implementing a procedure with those third parties to minimise harassment/bullying of their employees;
- ensuring that a bullying/harassment policy is in place;
- encouraging employees to bring to their attention any workplace harassment/bullying by third parties;
- showing that they take action as soon as any harassment/bullying is brought to their attention - e.g. by transferring the "victim" of the harassment/bullying to another job while the matter is being sorted out and/or taking action against the alleged harasser, this being particularly so if the employer is aware of any similar behaviour of the harasser/bully on previous occasions.