From 30 October 2026, employers will be directly liable if an employee is harassed by a third party, such as a customer, supplier or member of the public, and the employer has not taken all reasonable steps to prevent it. The change comes from the Employment Rights Act 2025, which amends the Equality Act 2010, and liability can arise from the very first incident, with no need for a pattern of behaviour to have built up. In this article we explain what the new duty means and set out the practical steps you should be taking now.
What Is Changing
The duty is not limited to sexual harassment. It covers harassment related to age, disability, gender reassignment, race, religion or belief, sex and sexual orientation, as well as conduct of a sexual nature. General rudeness that has nothing to do with a protected characteristic will not create liability, however unpleasant it may be.
A third party is anyone other than the employer or a fellow employee, so customers, contractors, suppliers, visitors and staff of other businesses in shared premises are all included. The harassment must happen “in the course of employment”, which covers customer premises, home visits, business travel, training and work-related social events, whether in person, over the phone or online. In the motor trade, that might be a sales executive receiving racist or sexist comments on the forecourt, a technician harassed while carrying out mobile servicing at a customer’s home, or a service adviser taking abusive calls.
What “All Reasonable Steps” Means
This is a demanding standard. If a tribunal can identify even one reasonable step that was not taken, the employer may be liable, even if that step would not have prevented the incident in question. In Allay (UK) Ltd v Gehlen, an employer could not rely on training delivered several years earlier because it had gone stale and managers were not acting on racist comments. What is reasonable will depend on your size, your resources and the level of risk. You are not expected to take disproportionate steps, but you must be able to show that you considered the options and did everything that was reasonable for you. Dealing with a complaint after the event will not be enough on its own, as the duty is about prevention.
Acas gives a helpful contrast. A nightclub that listens to staff concerns and introduces extra door staff, alarms, code words and incident tracking is likely to have taken all reasonable steps, even if problems still occasionally arise. A convenience store that
tells late-shift workers that racist abuse from customers is part of the job, and threatens dismissal if they complain, is very unlikely to have done so and is also exposed to a victimisation claim. An incident on its own does not mean the duty has been breached.
Practical Tips
The starting point is a risk assessment aimed specifically at third parties. Map out which roles deal with which third parties, and where that contact happens. A good example would be someone who works on reception. Look back at past incidents and grievances, and ask staff directly where they feel exposed. A lack of complaints does not mean a lack of risk, particularly where staff worry about upsetting a valuable customer. The risks you identify should then feed into an action plan with named owners and deadlines.
Your harassment policy should be updated to deal expressly with third parties, explain how staff can report concerns, and confirm that anyone who raises a concern will be supported. Third parties should also be told what is expected of them, for example through notices in showrooms and reception areas, wording on your website and in order terms, and contract clauses requiring suppliers and contractors to meet your standards and cooperate with investigations. Some care is needed with individual self-employed contractors, as imposing training requirements on them could be used to argue that they are in fact workers.
Training should cover what harassment is, how to respond safely and how to report it, with extra training for managers on handling complaints about customers. Following Allay, a one-off e-learning module or a poster on the wall is unlikely to be enough, so training needs to be refreshed regularly and properly recorded.
When something does happen, take every report seriously and act promptly. That might mean warning the individual, restricting their access, raising it with their employer or reporting it to the police. The affected employee should not lose out as a result, for example through lost shifts, commission or a customer account, and brushing a complaint aside to protect an important customer will no longer be an option. Review your risk assessment after any incident, as it will be very hard to argue that all reasonable steps were taken if something similar happens again and nothing has changed.
Finally, keep a dated record of risk assessments, incidents, training and the reasons for your decisions, including why a particular step was not considered reasonable. Good records are the best way of showing a tribunal that there was nothing more you could reasonably have done.
Where to Start
If you have not yet started, as a minimum before 30 October you should appoint someone to lead on compliance, review your highest-risk roles, tell staff how to report concerns, use our updated harassment policy and brief managers on handling
complaints about customers. The full risk assessment, training and contract updates should follow shortly afterwards. A tribunal will look at the steps that had actually been taken at the time of the incident, so these should not be left to drift.
As always, this advice is general in nature and should be tailored to the circumstances of any individual case. As an RMI member, you have access to the RMI legal advice line, as well as a range of industry experts who can assist you. If you find yourself facing any of the issues outlined above, please contact us at any stage for advice and support as appropriate.
Motor Industry Legal Services
Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.