Much of the attention on the Employment Rights Act 2025 (the ERA) has focused on reforms to the unfair dismissal regime. Less discussed, but no less significant, is a new form of employer exposure: liability for third-party harassment.
The new rules will come into force on 30 October 2026. Below we consider what they mean in practice.
What the new rules say
From 30 October 2026, under the new rules introduced by the ERA, an employer will be liable if a third party harasses an employee in the course of their employment and the employer cannot show that it took all reasonable steps to prevent that harassment. For these purposes, a “third party” is anyone other than the employer or a fellow employee, so customers, clients and contractors are all within scope. Importantly, liability for harassment by a third party in this context is not confined to sexual harassment; the rules cover harassment related to any protected characteristic. In short, a business's risk profile will extend to the behaviour of individuals with whom it has no employment relationship and over whom it has only limited influence. The risk is also not limited to any one sector. Front-line staff in shops, restaurants, hotels and hospitals are obvious examples, but the same issues can arise with a business's own clients and service providers.
A refresher on harassment
The familiar Equality Act 2010 test continues to apply. The question is whether unwanted behaviour connected to a protected characteristic, such as age, disability, gender reassignment, race, religion or belief, sex or sexual orientation, has the purpose or effect of violating the individual’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment. Sexual harassment remains a distinct category, covering unwanted behaviour of a sexual nature with that same purpose or effect.
Employers already have a duty to take reasonable steps to prevent sexual harassment of their employees, including harassment by third parties. This preventative duty will continue to apply only to sexual harassment. However, from 30 October 2026 it will be strengthened to require “all” reasonable steps. The new test closely mirrors the employer’s defence to other types of third party harassment claims which only bites if the employer has not taken “all reasonable steps” to prevent it. In practice, therefore, an employer facing a sexual harassment claim is likely to argue that it has complied with its preventative duty, and also to plead the statutory defence that it took all reasonable steps to prevent the harassment.
Practical steps
With the new changes fast approaching, businesses should consider how well placed they currently are to deal with complaints involving third parties. This may include considering the following:
- Refresh policies and assess risk. Check that harassment policies expressly address conduct by third parties and reflect current EHRC guidance. Map which teams and office locations have the most exposure to third parties and build that into risk assessments. A more focused mapping exercise for employees in external-facing positions may be beneficial.
- Third-party onboarding. Set clear standards of behaviour at the outset of any new third-party relationship. Consider including in contracts with third parties a clause requiring them to assist with investigations and, for any key third-party relationships, consider agreeing in advance a joint process for escalating and resolving complaints of harassment.
- Adapt internal investigation procedures. Existing processes are usually designed with internal disputes in mind. Going forward, employers should consider how they will approach external individuals and their businesses, what to do where evidence is incomplete, how to keep matters confidential, and when findings point to systemic problems requiring broader action that could put a third-party working relationship at stake. An internal HR playbook may be a useful reference point for these difficult issues.
- Learn from history. Look back at any historical reports or grievances involving conduct by third parties (however informally raised) and consider whether there are any risk areas within the business that need addressing.
- Equip and reassure the workforce. Train managers and employees on the upcoming changes and ensure employees know the appropriate route for reporting any concerns.
The reform moves the boundary of employer responsibility beyond the workforce itself. Complaints involving third parties will never be straightforward, so employers should give careful thought to these changes and put sound processes in place before 30 October 2026.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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