31 March 2008

Comment: the Sex Discrimination Act 1975 (Amendment) Regulations 2008 SI 2008/656

This statutory instrument ("SI"), which comes into force on 6 April 2008, has provoked journalists at the Daily Mail to state that "Bar managers and store owners face large-scale compensation claims if their customers ogle their barmaids, waitresses or check-out staff. New sex discrimination laws also mean that landlords who allow loud sexist jokes or banter among drinkers could be taken before a tribunal." This is not necessarily an exaggeration. The Mail also states that the regulations were made by a single judge, when in fact they were made by Barbara Follett by authority of the Lord Privy Seal. The Daily Mail should note that judges do not perform the task of giving legislative effect to SIs - rather the opposite, when an SI comes under the scrutiny of public law. In fairness to the Mail, it is probably referring to the case of the Equal Opportunities Commission v Secretary of State for Trade and Industry [2007] EWHC 483 (Admin). It was this case which led to the new SI. The judge, Mr Justice Burton, did not say that employers should be vicariously liable for for sexual harassment - in fact quite the opposite (at paragraph 40 of the official transcript). It was also accepted by counsel for the Commission that the European directives did not impose upon employers a vicarious liability for sexual harassment.

The notes to the SI state that it implements (in part) Council Directive 2002/73/EC of 23rd September 2002 which itself amends the EC Equal Treatment Directive (76/207/EEC). The SI performs this implementation by amendment of the Sex Discrimination Act 1975 in numerous ways. As stated neither Directive makes any reference to any duty of employers to prevent third-party harassment of employees. The basic difference as to harassment is that the 2002 Directive provides a more detailed definition. The extension of that definition by the UK government to impose liability for third-party harassment appears not to be dictated by Europe - rather the oft noted and curiously masochistic (or sadistic) "gold-plating" of EU Directives by the UK executive (whichever party it may be).

The commented provision of the new amendment is as follows:-
'Liability of employers for failing to protect employees from third party harassment

4. In the 1975 Act, after section 6(2A)(7) (unlawful harassment) insert—

“(2B) For the purposes of subsection (2A), the circumstances in which an employer is to be treated as subjecting a woman to harassment shall include those where—

(a) a third party subjects the woman to harassment in the course of her employment, and
(b) the employer has failed to take such steps as would have been reasonably practicable to prevent the third party from doing so.

(2C) Subsection (2B) does not apply unless the employer knows that the woman has been subject to harassment in the course of her employment on at least two other occasions by a third party.

(2D) In subsections (2B) and (2C), “third party” means a person other than—

(a) the employer, or
(b) a person whom the employer employs,
and for the purposes of those subsections it is immaterial whether the third party is the same or a different person on each occasion.”'
The modifed part of the 1975 Act presently reads as follows:-
'2) It is unlawful for a person, in the case of a woman employed by him at an establishment in Great Britain, to discriminate against her—
(a) in the way he affords her access to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, or by refusing or deliberately omitting to afford her access to them, or
(b) by dismissing her, or subjecting her to any other detriment.
. . .
(2A) It is unlawful for an employer, in relation to employment by him at an establishment in Great Britain, to subject to harassment—
(a) a woman whom he employs, or
(b) a woman who has applied to him for employment.'
So in summary the new law extends the existing provision [section 6(2A)] (harassment by employer of female employee) to harassment by third parties. Liability is made out only if the employer has failed to take such steps as would have been reasonably practicable to prevent the third party harassment and the employer knows that the woman has been subject to harassment in the course of her employment on at least two other occasions by a third party. So though it is correct that the new law imposes a duty on employers to prevent harassment, that duty is apparently narrow and does not arise at all unless the employer knows of two previous instances involving the same employee.

How is this going to work in reality? Many cases of third-party harassment (eg in a call-centre) may not be known to an employer unless the employee raises the matter. In practice, problems are likely to arise when the same female employee has made two complaints of third-party harassment to her employer. In practical terms, that creates a problem for the employer, which then finds itself at the beginning of its new statutory duty to take "reasonably practicable steps" to prevent a repetition.

It should be noted that the prerequisite two instances of third-party harassment may, as far the new law is concerned, come from any two third parties. A particular urgency arises when the same third party is reponsible for the same two instances. In those circumstances, an employer may have to think with particularly care as to how to deal with eg one particularly lecherous customer. Given that, in this scenario the employer already knows of the previous two instances, the employer must be alert to the fact that, the next time, it may attract liability. In the event of a claim for harassment, in issue would be whether it had taken "reasonably practicable steps" and if so what.

In cases where the previous two instances were by different third parties, it may be practically difficult for the employer to do anything at all. In the example of a call-centre, or any job involving contact with many different members of the public, the employer is not likely to have any meaningful control over the problem - the problem being the general public. It is often the case that employers, in particular big ones, have a policy that no member of staff should serve an abusive customer. Such a policy may, in itself, be sufficient.

At present there is of course no case-law on the new provisions. The courts are of course in a position to interpret the provisions such as to increase or decrease their commercial impact. The new law does not require the employee, but could and arguably should have required her, to have made two prior complaints - as the law is drawn it is enough that the employer "knows" of two instances, whether or not brought to its express attention. And does that mean constructive or actual knowledge? In a call-centre where the calls are recorded, an employer would have constructive notice of every single conversation.

And perhaps, like numerous well-meaning laws to protect employees, does the concern it may cause to employers in fact undermine employees? What of the pub landlord who has a member of staff who makes two complaints of harassment, thereby (deliberately or not) bringing him to the edge of liability? If he feels the problem is essentially beyond his control, is he perhaps more likely to look for an opportunity to sack the complainant? Is he supposed to take legal advice on whether the complaints of harassment are valid and, if so, what he should do about it? That would at least create the expensive absurdity of a lawyer advising (and even then with equivocal or excessive caution) a publican how to run a pub.

Employers should note that my reference to complaints by an employee relate to concerns about evidence of knowledge of the employer. But, as stated, the employee has no duty to complain and the Employment Appeal Tribunal ("EAT") has already found knowledge on the part of an employer which permitted, or did not actively prevent, the downloading of pornography by male workers with the result that the female claimant suffered sexual discrimination even though she made no complaint to her employer at the time: see Moonsar v Fiveways Express Transport Limited UKEAT/0476/04/TM (one report is available here, the official transcript is here). That case, although not fully argued (the employer not attending the appeal), was followed in Spencer v Primetime Recruitment Ltd [2006] UKEAT 0445/05_0203 so there is no doubt that it represents the current orthodoxy of the EAT: if an employer knows about it, the employer has to act whether or not anyone complains at the time. The employment tribunals expect employers to be mind-readers with perfect knowledge of everything that happens in their businesses. Flattery, perhaps, though flattery most businesses could do without.

Given the cases of Moonsar and Spencer, it seems very likely that the employment tribunals will place on employers the burden of having Orwellian "correct procedures" to prevent harassment by third parties in cases of "obvious" harassment. From the perspective of employers, one does indeed have to be extremely cautious when aware of sexual harassment. Then employers are, without doubt, under a positive duty to take "reasonably practicable steps" to prevent it. Pace the Daily Mail, for anyone who wishes to criticize the new law, I would respectfully suggest that it is the UK government and not the EU Directive which is instrumental in this extension of liability. My own suspicion is that the new costs to be imposed on business vastly exceed the official estimates.

It is possible to be very clear about how this has become law: it was not required by Europe; the Equal Opportunities Commission accepted that in argument in its case against the Secretary of State for Trade and Industry; the High Court did not require it. So it is incorrect to blame Europe or the judges. In essence, this aspect of the new law is something which the Commission wanted and the government has given.

For the avoidance of doubt, these are initial thoughts on the new law and I do not accept liability for any reliance thereon by third parties. That will remain the case unless and until the government forces me to do otherwise, by statutory instrument or howsoever. In any event, the said thoughts are as much political as legal. If you think you need specific advice, you should get some.

Executive summary

The new Regulations, to the extent that they impose liability on employers for acts of third parties, are nothing to do with the EU or the judiciary, everything to with the Equal Opportunities Commission/the UK government. The provisions are very likely to cause legal and commercial (ie expensive) problems for employers.

(c) A McGuinness 2008


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Reported and Transcribed Cases

Free Grammar School of John Lyon v Mayhew [1996] EWCA Civ 1192 (CA)

Panton v Sanctuary Music Productions [1997] UKEAT 681_97_1610

Cadogan v Loder Dyer [1998] EWCA Civ 1285 (CA)

Angel v Stainton & Anor [2006] EWHC 637 (QB)

El Bishlawi v Minrealm [2007] EWHC 2587 (Ch)

City Law 16 January 2008 - Re Minrealm Ltd [2007] EWHC 3078 (Ch)

Company Law Memo Jan 2008 - Re Minrealm Ltd [2007] EWHC 3078 (Ch)

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