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Employers' liability for third party harassment to go as part of discrimination law changes

Rules making companies liable for harassment of their employees by third parties is one of a number of "unnecessary" discrimination regulations that could be repealed in a drive to remove employment law related "red tape", the Government has announced.

The Government said that employers are already legally required to take "reasonable care" of the health, safety and wellbeing of their employees at work. This responsibility, enshrined in case law and health and safety legislation, provides "adequate protection" for employees whose employers are aware of inappropriate action by third parties.

The Government also plans to repeal an employment tribunal's power to make recommendations that apply to all members of an employer's staff, a power designed to be used to address discrimination in situations where  the employee discriminated against has already left the workplace. It will also review the public sector equality duty, and remove "burdensome" statutory questionnaire procedures. It has set out plans to restructure and scale back the powers of the Equality and Human Rights Commission (EHRC).

Home Secretary Theresa May said that "bureaucracy and prescription" were "not routes to equality".

"Over-burdening businesses benefits no-one, and real change doesn't come from telling people what to do," she said. "Today's announcement strikes the right balance between protecting people from discrimination and letting businesses get on with the job."

Employment law expert Maria Passemard of Pinsent Masons, the law firm behind Out-Law.com, said that removing employers' liability for third party harassment would be a "welcome change" for employers, who often found this "very difficult to prevent in practice". Under the Equality Act 2010, employers are required to take "reasonable steps" to prevent the harassment of its employees by third parties, such as customers or suppliers.

"In practical terms many employers are unclear about exactly what they need to do to establish that they have taken 'reasonable steps', other that the obvious examples of signs around the workplace informing third parties that they will not accept harassment of their staff," she said. "However, employers should not get complacent about the level of protection they should provide to their employees - the consultation document makes it clear that the Government considers that, even if the third party harassment provisions contained in the Equality Act are removed, the current legislation does impose liability on employers for the actions of third parties in any event due to the wide definition of harassment in the Act."

The Government said that statutory questionnaires had created "burdens and risks" for employers without increasing pre-hearing settlements or reducing tribunal workloads. Employees who think they could have a discrimination claim may currently submit written questions to their employer, the answers to which will be admissible in evidence at a tribunal hearing. Although the employer is not obligated to reply, a tribunal can draw an adverse inference from silence or evasive answers if it is "just and equitable" to do so. The Government estimates that between nine and 10,000 businesses complete the forms each year, with each form taking five to six hours to complete.

"Often the claimant issuing a 'questionnaire' in the context of tribunal proceedings would raise a very long list of questions which in many cases was little more than a 'fishing expedition' to try to find evidence which might point to discrimination by the employer," Passemard explained. "The process adds to the administrative burden for employers in preparing the responses and significantly adds to legal costs due to the time taken in responding appropriately to such questions."

In its response to last year's consultation on reforming the EHRC, the Government proposed tighter financial controls, a new chairman and a smaller board. It also suggests scrapping some of its powers and duties under the Equality Act 2006, enabling the statutory body to focus on its "core functions" as a national expert on equality and human rights issues and strategic enforcer of the law. Further reforms, including the potential to split up the EHRC's responsibilities across new or existing bodies, could follow by 2013 if it had not "progressed sufficiently", the Government said.

"If the EHRC is split up, as is suggested might be a possibility here, this will see it move full circle," said Passemard. "Many will remember the previous Disability Rights Commission, Commission for Racial Equality and Equal Opportunities Commission so it will be interesting to see whether these return albeit under new labels."

The EHRC was established in 2007 and took over the responsibilities of its three predecessor bodies.

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