Employer Liability for Sexual Harassment: October 2026 Changes - What Employers Must Do Now!

From October 2026, UK employers will face a significantly higher legal duty to prevent sexual harassment in the workplace. The Employment Rights Act 2025 introduces two major reforms:

• Employers must take all reasonable steps to prevent sexual harassment. This is a substantial uplift from the current “reasonable steps” standard.

• Employers will be directly liable for third‑party harassment (e.g., clients, customers, contractors, service users) where they fail to take all reasonable steps to prevent it.

These changes reflect a wider shift in UK employment law: harassment is no longer treated as an individual complaint but as an organisational risk that employers are legally required to proactively manage.

So…what’s changing in Oct 26?

1. “All Reasonable Steps” - A much higher legal bar

From October 2026, employers must show that they took all reasonable step available to prevent sexual harassment. This is a materially much tougher test to pass. Tribunals will ask:

“Could the employer reasonably have done more?”

If the answer is yes, the employer may be found liable.

2. Liability for Third‑Party Harassment

Employers will become liable for any harassment committed by:

• clients;

• customers;

• contractors;

• agency workers;

• Visitors to their business; and

• members of the public.

…if they cannot demonstrate that all reasonable steps were taken to prevent it.

This is a major shift for sectors with public‑facing roles, multi‑employer sites, or events/alcohol‑led environments, which can often be where the biggest risks lie.

3. Sexual Harassment as Whistleblowing - new employee protection

Since April 2026, sexual harassment disclosures automatically qualify as protected disclosures under whistleblowing law. This means that:

• workers are protected from detriment for raising concerns;

• NDAs cannot be used to silence disclosures; and

• employers must ensure whistleblowing channels are safe and trusted.

Why This Matters: Legal, Financial and Reputational Risk

Tribunal Compensation Uplifts

Where an employer fails to meet the new duty, tribunals may increase compensation awards by up to 25%.

Legal Fees and Management Time

Sexual harassment claims are among the most expensive and reputationally damaging tribunal cases. Whilst costs vary, employers typically face:

• £15,000–£50,000+ in legal fees for defending a harassment claim (inference based on typical UK tribunal defence costs);

• In addition to legal fees, compensation awards can exceed £50,000–£100,000 depending on injury to feelings, loss of earnings and aggravated damages;

• significant management down time, disruption to the business and internal and external reputational harm.

Vicarious Liability Exposure

Employers will be vicariously liable for harassment unless they can prove that they took all reasonable steps. This is a hugely demanding defence.

What Employers Must Do Now: Practical Measures

To meet the new legal standard, employers should implement a comprehensive, proactive and evidence‑based prevention framework.

1. Conduct Regular, Documented Risk Assessments

Tribunals will expect employers to identify and mitigate harassment risks, especially in:

• customer‑facing roles;

• lone‑working environments;

• social events or off‑site activities;

• multi‑employer sites;

• Alcohol‑fueled settings.

Risk assessments should be reviewed at least annually and always after any incident.

2. Strengthen Policies and Procedures

Policies must be:

• clear, fully accessible and regularly updated;

• Explicitly clear about zero tolerance to harassment of any kind;

• clear about third‑party harassment;

• supported by robust reporting routes (including anonymous reporting options).

3. Deliver High‑Quality, Regular Training

Training MUST be:

• mandatory for all employees;

• tailored to risk areas;

• refreshed regularly;

• evidence‑based and interactive.

Generic or one‑off training will not meet the “all reasonable steps” threshold.

4. Strengthen Reporting and Whistleblowing Channels

Given new whistleblowing protections, employers must ensure:

• safe, confidential reporting routes;

• clear and timely escalation processes;

• no retaliation for raising concerns;

• manager training on how to respond appropriately and compliantly. 

5. Manage Third‑Party Risk

Employers should:

• set clear behavioural expectations with clients and contractors and retain records of such;

• include anti‑harassment clauses in all contracts;

• provide employees with clear guidance on managing third‑party behaviour;

• take immediate action when issues arise.

6. Maintain a Strong Audit Trail

Tribunals will expect employers to evidence:

• policies;

• training attendance;

• risk assessments;

• communications to employees;

• actions taken in response to concerns.

Please remember….If it isn’t documented, it didn’t happen!

What This Means for Employers

The October 26 reforms significantly increase employer exposure. The legal test is no longer about doing “enough”, it’s about doing everything reasonably possible to prevent harassment.

Employers who fail to prepare face:

• higher tribunal compensation awards;

• increased legal costs;

• reputational damage;

• loss of employee trust;

• regulatory scrutiny (especially in regulated sectors).

Those who act now will be better protected, more compliant, and better placed to foster a safe, respectful workplace culture.

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