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Employers will soon be legally required to act to prevent sexual harassment of their staff at work. 

The Worker Protection (Amendment of Equality Act 2010) Act 2023 (‘the Act’) received Royal Assent on 26 October 2023. It imposes a new proactive duty on all employers to take reasonable steps to prevent the sexual harassment of their employees in the workplace and is due to come into force on 25 October 2024. 

However, there will not be a legal duty on employers to prevent sexual harassment of staff by third parties. Whilst this reduces the regulatory burden on employers in relation to the actions of third parties, employers have an existing duty of care to protect their workers, which includes protection from any form of sexual harassment. Even more so in light of several reported cases of sexual harassment taking place within household names. For many employers, taking steps to implement this new duty will also be necessary to advance their equality, diversity and inclusion agenda.  

What does this mean for employers?

Sexual harassment is defined in the Equality Act 20210 as unwanted conduct of a sexual nature which has the purpose or effect of creating an intimidating, hostile, degrading, humiliating or offensive environment. 

Employers will now need to take ‘reasonable steps’ in readiness of the new duty, to eliminate all risks of sexual harassment of employees in the workplace. Where an employment tribunal finds that there has been a breach of this duty, it will be able to increase employee compensation by up to 25%. 

While the term 'reasonable steps' is not defined by statute - existing case law demonstrates that tribunals will want to see that employers have robust anti-harassment policies, training on those policies, and there is positive evidence of  steps taken to prevent sexual harassment.

Employers who fail to comply risk investigations by the Equality and Human Rights Commission (‘EHRC’), increased compensation in employment tribunal claims and reputational damage. 

Complaints of sexual harassment can also lead to costly settlements, high-profile departures of senior management, loss of productivity and an adverse effect on recruitment and employee retention. 

Regulatory enforcement 

Regulators are seeking to take proactive measures to tackle workplace harassment by imposing stricter rules against abusers and regulated firms that fail to comply. 

The Financial Conduct Authority (‘FCA’) alongside the Prudential Regulation Authority (‘PRA’) is consulting on improving diversity and inclusion in the financial sector via a new consultation paper titled ‘Diversity and inclusion in the financial sector – working together to drive change’. The proposals include clarifying and strengthening expectations around non-financial misconduct such as bullying and sexual harassment. It is proposed that this will be built into staff fitness and propriety assessments, conduct rules, and the suitability criteria for firms who operate in the financial sector. The FCA’s proposals state that a failure to take reasonable steps to protect staff from non-financial misconduct is likely to amount to a breach of conduct rules and could lead to individuals being struck off.

The consultation closes on 18 December 2023, and we expect a policy statement to be published in 2024 with new rules coming into force 12 months later. 

It’s crucial that employers in the financial sector fully understand their new legal obligations under the Act and what steps they are expected to take to mitigate the risks and avoid regulatory enforcement action.

How should employers prepare?

We expect the EHRC will publish a statutory code of practice once the Act comes into force. Meanwhile, to prepare for the changes, we recommend that employers do the following:

• review their end-to-end processes to ensure their anti-harassment policy is effective, fit for purpose and includes a zero-tolerance approach to sexual harassment at work. It must ensure employees know how and to whom they can raise harassment complaints and concerns. It should also be explained to new employees at their employment induction;
• provide anti-harassment training for all staff, particularly management teams, on how to deal with sexual harassment reports made and the process they should follow;
• be aware that sexual harassment can be both verbal and physical and can happen out of office hours or online;
• be mindful of ‘office banter’ which can lead to an employee feeling uncomfortable or intimidated; and
• ensure complaints are thoroughly investigated, and where necessary, appropriate action is taken and documented. 

How can we help?

Our experienced team of employment lawyers and equality, diversity and inclusion specialists can work with you to identify risk areas, transform your workplace culture, and mitigate the risks. This includes:

• the steps your organisation should be taking to prevent sexual harassment in the workplace;
• how to comply with your regulatory requirements;
• what you must do to comply with EHRC guidance;
• what your legal obligations are in relation to harassment by third parties;
• whether you are required to protect workers and contractors as well as employees;
• what your risk assessment should look like; and
• how you can foster a culture in which victims are empowered to speak up.