The President’s Club Scandal: Sexual harassment in the news

Employers do always need to be mindful of the risk of claims against them if their staff are harassed at work.

You can’t have missed media coverage of the scandal at the President’s Club – where hired hostesses were allegedly subject to sexual harassment at a men-only charity fundraising dinner. The allegations were shocking and hopefully harassment at this level, which was apparently condoned by the event organiser, is rare. However, employers do always need to be mindful of the risk of claims against them if their staff are harassed at work.

Constructive dismissal

If an employee resigns and claims constructive dismissal following abuse or harassment from third parties whilst at work, a Tribunal is likely to look very hard at the employer and will require some convincing that there is nothing the employer could have done.  If the harassment has occurred before (such as at the same event previously), it will be relatively easy for the employee to allege that the duty of trust and confidence has been fundamentally breached where the harassment re-occurs unchecked.  However an employee must have two years service to bring such a claim and therefore this is not a risk which exists with short-term or temporary workers.

A safe place of work

An employer is also required to provide a safe place of work, so failing to protect employees from a known harassment risk may leave the organisation liable for any personal injury which results as well as other losses. Such claims are relatively rare.

Discrimination law

Discrimination law struggles with the concept of employees being harassed by third parties who are not engaged by the same organisation. The definitions used in the Equality Act do extend discrimination protections to those engaged personally to do work whether as an employee or independent contractor, and will make organisations vicariously liable (that is legally responsible) for harassment of those engaged by the same organisation if the harassment is from those the organisation also employs or engages.  Indeed an employer is also potentially liable for harassment of employees upset by the conduct, even if they are not the subject of it.

However there are two very obvious gaps in the law: if staff are harassed by other third parties such as attendees at a dinner, customers or service-users, an employer is not obviously legally responsible for that harassment; and if staff are provided through an agency arrangement and are not employed by the agency, no one is legally responsible for any harassment which occurs.

Between 2010 and 2013, there were specific provisions in the Equality Act which dealt with the liability of employers for third party discriminatory harassment of their employees.  If an employer knew that an employee had been harassed by a third party on at least two occasions, the employer was liable unless it could show that it had taken reasonably practicable steps to prevent the harassment occurring. When the new law was introduced there was some concern for employers that the provisions might leave them vulnerable to claims as a result of providing services in deprived areas or to vulnerable people, where repeated harassment of their staff by service-users was not unusual. There was some debate about questions such as whether an organisation should cease to provide services if, for example, local service-users used homophobic language towards an employee on two occasions?  The advice given was that certainly notices should be exhibited informing members of the public that abuse of staff would not be tolerated and action taken against known abusers, but whether that was enough was open to debate. 

However, in any event, the law was almost never used in practice by claimants and therefore what exactly amounted to ‘reasonably practicable steps’ was never tested. One of the reasons why the provisions were revoked was because of their lack of use.  In many ways the provisions actually gave employers more protection, because they had the ability to argue that they didn’t know about the harassment and/or they had taken appropriate steps, when the current lack of any provision leaves the position uncertain.

As an employer, you should assume that you might be held liable for discriminatory harassment of your staff by third parties, where you know that it has occurred or may occur.  There have been sufficient examples of Tribunals finding that an employer has created the hostile environment for that to be a genuine risk.   You should certainly never ignore complaints from employees of harassment, simply because the alleged harassers are not your employees. However the law itself at the moment is far from clear and those thinking about bringing claims may well find it difficult to fit their claims within the law.

The key (historic) cases

In the pre Equality Act case of Burton and another v De Vere Hotels Ltd (often known as the Bernard Manning case) the Employment Appeal Tribunal held that the employer (De Vere Hotels Ltd) acted in a discriminatory fashion by allowing its employees to be subject to racist comments/’jokes’ made by the comedian during one of his performances at their hotel. This case was a classic example of the Tribunal making an unsurprising finding on the facts, but one that was probably wrong on the law.

In the later (but still pre Equality Act) case of Pearce v Mayfield Secondary School the House of Lords decided that the Bernard Manning decision had been wrongly decided because it treated an employer’s inadvertent failure to take steps to protect employees from harassment by third parties as discrimination, even though the employer’s failure itself was not on the grounds of the employee’s protected characteristic.  For an employer to be liable in respect of harassment by a third party (other than its employees or agents) it must have had a discriminatory reason for failing to prevent that harassment. 

However, this criticism is less relevant to harassment under Equality Act 2010, which requires harassment to be “related to” the protected characteristic, rather than “on the grounds of” the characteristic.  This gives employees greater scope to argue that the employer’s inaction was itself unwanted conduct related to their protected characteristic. 

Be careful

When the third party harassment provisions were revoked, we were left with a lacuna in the law which has yet to be filled by case law. This may reflect the fact that bringing such a claim is felt to be too uncertain or high risk.

If it is the case that as an employer you are liable for harassment of your staff by third parties if you don’t take sufficient steps to stop the harassment occurring, it has always been uncertain what those steps must be. 

Not accepting a booking from the President’s Club or Bernard Manning might be a straightforward answer to avert the risk.  However if the risk only becomes apparent when the event commences, you must tread with care in deciding what to do. If a venue was to decide to only engage or use male serving staff, or were to require female staff to only undertake certain tasks because they were concerned about sending them into the public areas of the venue, that would certainly be direct sex discrimination (and direct sex discrimination cannot ever be justified).  A sensible dialogue with staff to protect them is advisable. Imposing gender-based decisions on staff will be unlawful even if they are intended to protect the staff from harassment.

Other interesting cases

Equal Opportunities Commission v Secretary of State for Trade and Industry

The court held that aspects of the Pearce decision (explained above) were not compatible with an employer’s obligations to protect its employees from harassment under the Equal Treatment Directive (the European law).  This resulted in the government amending the Sex Discrimination Act 1975 to include third party liability for sex harassment, but legislation relating to other protected characteristics was not amended. 

Gravell v London Borough of Bexley

The EAT held that Pearce did not prevent an employee arguing that her employer had subjected her to harassment under the Race Relations Act 1976 by allowing customers to make racist comments.  The employer had a policy of ignoring racist comments and forbidding staff from telling customers that such comments were unacceptable. 

Conteh v Parking Partners Ltd

The EAT took the view that an employer’s inaction in the face of third party harassment will rarely “create” a hostile environment for the purposes of the statutory harassment definition. It also held that the employer’s inaction to address the racial abuse of the claimant parking attendant by service users was not “on the grounds” of the claimant’s race. However, as noted above, under the Equality Act a claimant now need only show that an employer’s inaction is “related to” a protected characteristic.

Sheffield City Council v Norouzi

The EAT upheld a decision that a public sector employer was liable for third party harassment under the Race Directive (European law which this employee was able to directly rely upon).  Owing to concessions by the council, the EAT was not called on to address whether the council’s inaction had “created” a hostile environment for statutory harassment purposes.  The EAT acknowledged that some employers are in a difficult position regarding third-party harassment, going as far as to suggest that in some work environments such harassment is “a hazard of the job”.  Where this is so, an employer should not be liable unless the Tribunal precisely identifies steps that it should have taken by the employer to prevent the harassment taking place.

Phil Allen and Paul McFarlane are Partners in the Employment, Pensions and Immigration Team at Weightmans LLP. If you have any questions, please do not hesitate to get in touch with Phil or Paul, or speak to your usual Weightmans contact.

This piece contains extensive content which was first published on the website of Employment Solicitor Magazine in January 2018. View the original content online:

The Presidents Club: what employers need to know 

Case law summary: third party liability – from Bernard Manning to the Presidents club.

Share on Twitter