Can an Employer Be Liable if a Customer Harasses an Employee?
From 30 October 2026, employers can be liable for harassment of their staff by customers, clients and other third parties. Here’s what small businesses need to know.
From 30 October 2026, employers can be liable for harassment of their staff by customers, clients and other third parties. Here’s what small businesses need to know.
A customer makes an inappropriate comment to one of your employees.
Or perhaps a client repeatedly makes remarks about someone’s appearance. A member of the public uses racist language towards a member of staff. A contractor makes offensive jokes whenever they visit your workplace.
They’re not employed by you, so it’s not really an HR issue… is it?
Yes — it can be. From 30 October 2026, employers can be liable where an employee is harassed by a third party in the course of their employment and the employer has failed to take all reasonable steps to prevent it.
And for businesses where employees regularly deal with customers, clients or members of the public, this is an important change to understand.
Under changes introduced by the Employment Rights Act 2025, employers can be liable where an employee is harassed by a third party in the course of their employment and the employer has failed to take all reasonable steps to prevent it.
This means employers need to think beyond harassment between colleagues.
The people your employees interact with as part of their job matter too.
A third party is essentially someone who isn’t the employer or another employee.
Depending on your business, this could include:
Harassment doesn’t necessarily have to happen face-to-face either. Employees can experience inappropriate behaviour through telephone calls, emails, messages, social media or other online interactions.
For small businesses with customer-facing employees, this is particularly relevant.
Harassment under the Equality Act can include unwanted conduct related to certain protected characteristics where it has the purpose or effect of violating someone’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment.
The third-party provisions cover harassment related to protected characteristics covered by the Equality Act’s harassment provisions, including:
They also cover sexual harassment.
Harassment can take many forms.
It might be an inappropriate joke, sexual comments, racist language, repeated comments about someone’s appearance or behaviour that makes an employee feel intimidated or humiliated.
And it doesn’t necessarily need to have been intended to cause offence for it to amount to harassment.
This is where things can become difficult for small businesses.
Perhaps it’s a long-standing client.
Maybe they spend a lot of money with the business.
Or perhaps they’ve behaved like this before and everyone has simply accepted that:
“That’s just what they’re like.”
From an HR perspective, that’s a dangerous approach.
If an employee raises concerns about the behaviour of a customer or client, dismissing it because that person is commercially important isn’t going to demonstrate that you’ve taken the issue seriously.
Your responsibility towards your employees doesn’t disappear because the person causing the problem happens to be paying you.
There isn’t one checklist that every employer must follow.
What is reasonable will depend on things such as the size of your business, your industry, the work your employees carry out and the risks they’re likely to encounter.
A small office employing five people won’t necessarily need exactly the same measures as a busy nightclub, care service or large retail business.
But employers should be thinking proactively about the risks.
Reasonable steps might include:
The important shift is from simply reacting when something happens to thinking about how harassment could be prevented in the first place.
Take it seriously.
That doesn’t mean immediately banning every customer following an allegation without establishing what has happened.
It means listening to the employee, recording the concern, considering the circumstances and taking appropriate action.
Depending on what has happened, that could involve speaking to the customer, issuing a warning, changing working arrangements, putting additional safeguards in place or, in serious cases, refusing to continue dealing with that individual.
The appropriate response will depend on the circumstances.
But simply telling an employee to ignore it is unlikely to be a sensible approach.
There’s another important change happening on 30 October 2026.
Employers already have a legal duty to take reasonable steps to prevent sexual harassment of their employees.
From 30 October, this strengthens to a requirement to take all reasonable steps.
That means employers should be actively considering the risks within their own workplace rather than waiting until someone makes a complaint.
This includes risks created by third parties.
You don’t necessarily need complicated new procedures.
But you should check whether what you already have is good enough.
Start by asking yourself:
Who do my employees come into contact with through their work?
Then consider: could any of those interactions reasonably expose them to harassment?
From there, check:
And don’t forget to actually communicate your policy.
A beautifully written policy that nobody knows exists won’t do much to prevent harassment.
Customer complaints, disagreements or someone simply being rude won’t automatically amount to harassment under the Equality Act.
The aim isn’t to make employers responsible for every unpleasant interaction an employee ever has.
But where behaviour does amount to harassment, employers need to be able to demonstrate that they took all reasonable steps to prevent it.
For small employers, that means thinking about the risks before an incident happens — not trying to create a process after something has already gone wrong.
If your employees deal with customers, clients, contractors, service users or members of the public, now is a good time to review your arrangements.
You don’t necessarily need more paperwork.
You need the right processes — and managers who know what to do when something happens.
Crawford Consultancy can help small businesses review and update their harassment policies, assess existing HR processes and put practical measures in place ahead of the changes.
I provide practical HR, training and business support to small businesses across Central Scotland — including policies that actually cover third parties, and making sure managers know how to respond.
Crawford Consultancy — practical HR, payroll and business support for small businesses.
Book a free call Get in touchThis article provides general information for employers in Great Britain and isn’t a substitute for advice on individual circumstances.
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