Employers may be responsible, at least indirectly, for the racial harassment of their employees by third parties, according to a recent decision of the EAT in Gravell v London Borough of Bexley.

This represents a potentially significant turnaround in the law. Ever since the House of Lords’ decision in Pearce v Governing Body of Mayfield Secondary School in 2003 it had been thought that employers could not be held liable for the discriminatory acts of third parties such as customers and clients unless it could be demonstrated that the employer too had discriminated – normally very difficult to show in practice.

Ms Gravell, who is white and British, worked for the London Borough of Bexley (LBB) in its Housing Department. She brought a complaint of harassment under the Race Relations Act 1976 alleging that she had been forced to listen to racist comments made by LBB’s customers. She claimed that LBB had a policy in place which said that its staff should ignore racist comments from customers and should not challenge them, though LBB denied this, and that she was upset by the comments even though they were not addressed to or about her. At a pre-hearing review LBB sought to dismiss Ms Gravell’s complaint, claiming that in light of Pearce LBB could not be held liable for the discriminatory acts of its customers. Ms Gravell, however, argued that this case was irrelevant, as it had been decided prior to the introduction of a specific and freestanding definition of harassment into the Race Relations Act 1976 in 2003. The Act as amended now provides that a person subjects another to harassment where “on grounds of race or ethnic or national origins he engages in unwanted conduct which has the purpose or effect of violating that other person’s dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment for him”. Ms Gravell claimed that this definition was wide enough to make LBB liable for the discriminatory acts of its customers.

The Tribunal Chairman dismissed Ms Gravell’s arguments, saying that it was highly unlikely that a claim against the employer in respect of comments made by third parties could succeed. The EAT disagreed. It said that there was “considerable scope” for arguing that LBB’s alleged policy of not allowing its staff to challenge racist comments had had the effect of creating an offensive environment for Ms Gravell which could, if established on the facts, constitute racial harassment under the Act. It therefore reinstated her claim and referred the matter to a different Tribunal to consider whether on full investigation the facts supported the existence of a no-challenge policy.

In reaching this conclusion the EAT has arguably gone further than was intended by the legislators when they introduced the statutory definition of harassment. If its approach is adopted it means that going forward employers are more likely to be held responsible for discriminatory acts carried out by third parties. They therefore need to ensure that any clients, customers or visitors are aware of their obligations not to harass members of staff and to be alive to any potential incidents of harassment.

The scope for misunderstanding and abuse here is significant since it seems to extend the employer’s role into relations between third parties. The words which offended Ms Gravell were not said to her and yet she was still able to make them the subject of a harassment claim. If employee X is upset by racist language used by third party Y to third party Z in X’s presence (language which perhaps does not upset Z at all), is it really for X to intervene? Is the employer not entitled to require X to stay out of matters which do not on their face concern him or her and where the taking of active steps to control the language of third parties may be commercially inappropriate? And if X does challenge Y genuinely but on the facts inappropriately, this development suggests that disciplinary action against X as a result could well constitute victimisation or a detriment under the whistleblowing provisions. One can see good arguments for the putting in place of a policy like that alleged, as a minimum where the racist terms are not addressed to the employee doing the complaining.

The case leads on to the question of what the employer has to do to protect itself. Is “simply” notifying customers enough (“simply”, because the likelihood of a notice forbidding racist, sexist, homophobic etc language in the public areas of the Housing Department of a London Borough being in any way respected seems marginal at best)? Or is it necessary to allow employees to take matters into their own hands as well, for fear that otherwise it will be accused of allowing a hostile etc working environment to develop by default or the failure to take all reasonable steps to prevent it? Practical reality should dictate that this is beyond the requirements of the law, but Gravell sadly leaves the question unanswered. The racial harassment provisions are not the only ones that have been the subject of judicial scrutiny recently. Earlier this year the EOC brought proceedings in the High Court claiming that the Sex Discrimination Act 1975 (SDA) failed to implement properly the European Equal Treatment Directive by not requiring employers to take steps to prevent harassment by third parties. In the course of the hearing the Government conceded that although the harassment provisions might be interpreted so as to give protection to employees in these circumstance, the current definition of sexual harassment (whereby a claimant has to show that any harassment was “on the ground of her sex”) would make it difficult, if not impossible, for employers to be held liable for the actions of third parties.

As a result of these proceedings, the Government has said that it will amend the SDA to make it clear that an employer can be held liable for harassment if it fails to take action to protect an employee in the workplace where it is aware that s/he is being subjected to persistent acts of sexual harassment by a customer or client. This would seem to suggest that one-off incidents of harassment may not be caught, though it is not clear yet whether this means persistent acts by customers generally, or by particular individuals. It also said that if there is evidence of harassment under the other discrimination provisions (which Gravell clearly suggests to be the case) it may use the proposed Single Equality Bill to make similar provision to deal with it.

The EAT’s comments in Gravell together with the Government’s talk of reform to the SDA means that we are looking at a return to the position as set out in Burton v de Vere Hotels Ltd (the infamous case involving two black waitresses who were subjected to a series of racially offensive remarks by the late Bernard Manning at a dinner). This made it clear that an employer could be held liable for the discriminatory acts of third parties if it permitted the harassment to occur in circumstances where it could have controlled whether or not it happened.