UK employers weigh commercial relationships against new third party harassment duties

As you will be aware, important changes to workplace harassment law take effect on 30 October, and employers have just eight days left to prepare. The reforms under the Employment Rights Act 2025 will require employers to take all reasonable steps to prevent sexual harassment and introduce new liability where employees are harassed by third parties, including customers, clients, and contractors. That second change has been the focus of recent HR press coverage, highlighting the difficult decisions employers may face where protecting staff could put valuable commercial relationships at risk. We’ll speak to a D&I expert about that.
The new third party harassment protection extends beyond sexual harassment to harassment related to protected characteristics such as race, disability and religion or belief. Employers will be liable where harassment occurs in the course of employment and they have failed to take all reasonable steps to prevent it.
An article published in People Management on 1 October highlights one of the more difficult scenarios employers could face – where the alleged harasser is a commercially important customer or client. Taking action to protect an employee could mean restricting contact with that individual or, in serious cases, jeopardising a valuable business relationship. The point is that commercial considerations cannot be allowed to prevent employers from taking appropriate protective action.
The article also raises the practical difficulties of investigating complaints involving third parties. Unlike their own employees, customers and contractors may be unwilling to cooperate, and important evidence may be held by another organisation. One suggestion is to review commercial agreements to ensure appropriate arrangements are in place for cooperation and access to evidence.
Then there is the question of who has authority to act. If protecting an employee means removing a contractor, restricting a client’s access, or potentially ending a commercial relationship, those decisions may need to involve senior management. The article suggests establishing clear escalation arrangements in advance, rather than waiting until a serious complaint arises.
Kieron O’Reilly is a D&I consultant helping a number of clients prepare for the changes. So why are HR directors raising this issue at board level?
Kieron O’Reilly: “I think the main reason here is that this is more about accountability than it is liability. So having it raised at the board level allows people to have that knowledge and understanding of where the risk sits and to be able to deal with it proportionally and appropriately. So I think that's the key point here. It's accountability rather than liability that needs to be focused on and that's what allows HR directors to have that information that they can give around accountability and pass it through to the board for them to make decisions on.”
Joe Glavina: “Where does that risk tend to sit in an organisation, and why can it be difficult for employees to deal with it on the ground?”
Kieron O’Reilly: “So the risk in this situation tends to be frontline. So we're talking about where employees are dealing with contractors, or with customers, in public domain for example. So wherever there is a lot of public or third-party engagement that's where that risk sits and I think that is where the challenge can come from because, in many cases, there are situations that occur that are fairly low level and in that respect they don't tend to get reported, they don't tend to get escalated, because they are apparently low level, but as they build up over time, they start to have an impact and then the situation is that it goes from low level to quite serious, and that's when there is damage done, and HR has to step in, and sometimes the board has to take considerations around consequences where a situation of harassment has become quite serious. So I think the situation here is it's frontline staff, a lot of these situations are low level, and they build up without them being reported, without the risk being spotted, until it becomes a big problem.”
Joe Glavina: “What does a more proactive, risk-based approach look like in practice, and what are boards and HR leaders doing differently as a result?”
Kieron O’Reilly: “So I think what we're seeing now is that people are starting to have a good look at where risk actually sits. So where we're looking in a situation where in the past is a little bit reactive, so people were looking at where incidents occurred, dealing with those as is appropriate, and then looking at trends, that proactive response now isn't really sufficient for us to manage risk in the situation with liability. So what we're now looking at is predicting where risk is. So this is the idea of looking at risk assessments, where could risk occur and what actual level is that risk? Having that sort of proportional, forward looking, approach carried out by HR directors and teams around them presents a really solid set of information of where risk sits which they can provide to the board so people can make decisions around reducing the risk, but they're proportionate, reasonable and effective. Essentially doing what's needed where it's needed, rather than having a situation where you're doing the same thing across a whole organisation and potentially wasting time and, even worse, maybe missing some of those risks that needed focus on.”
So the key takeaway for HR is that employers need to understand where third party harassment risks arise and take proportionate steps to prevent them. That may involve some difficult commercial decisions, but having the right arrangements in place will help employers respond effectively. If you’d like help reviewing your approach or understanding where risk sits in your organisation, please do contact Kieron – his details are there on the screen for you.