Who is Liable for Workplace Discrimination?

Managing a workforce requires more than just oversight of daily operations; it demands a rigorous understanding of the legal frameworks that protect your people. Workplace discrimination liability under the Equality Act 2010 can be costly—both financially and reputationally—making compliance a top priority for HR Directors and CPOs.

While many organisations have robust Equality, Diversity, and Inclusion (EDI) policies, there are opportunities for misunderstandings about who is protected and liable under the Equality Act 2010 (EqA 2010). Is an employer liable for a contractor’s actions? Can an employee be personally sued for harassment? Understanding these liabilities is essential for mitigating risk and fostering a safe, compliant workplace.

Here, I break down the complex liability structures within the EqA 2010, offering data-driven insights to help you optimise your compliance strategies and protect your organisation.

Who Does the Law Protect?

The scope of protection under Part 5 of the EqA 2010 is far broader than the traditional definition of “employees”. For HR leaders managing complex organisational structures, it is vital to recognise that protection extends to a wide range of individuals within the work ecosystem.

Employees and Job Applicants

The most obvious category includes current employees. However, protection starts before employment begins, impacting Job applicants by protecting them against discrimination, shaping the terms of the offer, or not offering them the job at all.

Crucially, since January 2024, Section 60A of the EqA 2010 has explicitly prohibited discriminatory statements made in connection with recruitment decisions, even when no specific “victim” is present. Effectively, it means a public statement suggesting a discriminatory hiring policy can be unlawful in itself.

Beyond the Payroll: Contractors and Partners

Modern enterprises often rely on a flexible workforce. The EqA 2010 protects:

• Contract Workers: Individuals employed by another person (like an agency) but supplied to a principal (the end-user).
• Partners and LLP Members: Partners in a firm and members of Limited Liability Partnerships have protection against expulsion and other detrimental treatment.
• Office Holders: Such as company directors or clergy, who may not be employees but are still protected.

Former Employees

Liability does not end when an employee leaves. Section 108 of the EqA 2010 prohibits discrimination or harassment that “arises out of and is closely connected to” the previous employment relationship. It is particularly relevant for post-employment references. Providing a negative reference or refusing to provide one based on a protected characteristic can lead to a successful claim against your organisation.

Categories of Liability: Who is on the Hook?

Under the EqA 2010, liability extends beyond the organisation as a corporate entity. It can extend to individual employees and agents, creating a complex web of accountability.

Employer Liability (Vicarious Liability)

The default position under Section 109 is that an employer is liable for “anything done” by an employee in the course of their employment. It is known as vicarious liability.

Importantly, “in the course of employment” is interpreted broadly. It is not limited to acts authorised by the employer. Liability can extend to social gatherings as an extension of the workplace, such as a Christmas party or immediate post-work drinks. However, there are limits; a chance meeting between colleagues at a supermarket or a private social event is unlikely to be covered.

The “Reasonable Steps” Defence

There is a critical defence available to employers. If you can demonstrate that you took “all reasonable steps” to prevent the discrimination from occurring, you may avoid liability. It requires more than just having a policy in a handbook. You must prove:

• Regular, effective training was provided (and refreshed).
• Policies actively implemented and understood by staff.
• Complaints were dealt with effectively.

Tribunals look for evidence of effective prevention. “Stale” training—training delivered years ago without refreshers—will not suffice.

Personal Liability of Employees

Section 110 of the EqA 2010 makes individual employees personally liable for their own discriminatory acts committed in the course of employment. It applies even if the employer successfully uses the “reasonable steps” defence.

Meaning a claimant can sue both the company and the individual harasser. In practice, claimants often target the employer because of its “deeper pockets,” but naming an individual respondent is a common strategy to apply pressure during litigation.

Liability for Agents

Employers can also be liable for the acts of their agents (e.g., recruitment agencies or consultants) if those agents act with the employer’s authority. This authority can be expressed or implied.

Case Law Analysis: Defining Agency and Liability

Recent case law has clarified—and sometimes complicated—the boundaries of liability, particularly regarding agents.

Unite the Union v Nailard 2018

This case highlighted that liability extends to elected officials within an organisation. The Court of Appeal held that elected workplace union officials were agents of the union. Consequently, the union was liable for the officials’ harassment of a union employee. The court ruled that the officials acted within their authority, even though they harassed a colleague rather than a third party.

Anderson v CAE Crewing Services Ltd 2024

This recent EAT decision emphasised that “common law principles govern agency” in discrimination law. The tribunal had originally decided that aviation medical examiners were not agents because they were independent contractors. The EAT overturned this, stating that an independent contractor can be an agent. The key test is whether the individual is acting on behalf of the principal pursuant to authority vested by them.

This distinction is crucial for HR Directors. Just because a worker is an “independent contractor” on paper does not automatically shield the organisation from liability for their discriminatory conduct if they are acting on your behalf.

Employer Responsibilities: Mitigating Risk

To navigate this liability landscape effectively, HR leaders must move beyond tick-box compliance and integrate robust prevention strategies into their operational data flows.

1. Audit Your “Extended” Workforce

Do not limit your EDI focus to direct employees. Review your contracts with agencies and third-party providers. Ensure they are aware of your equality policies. Under Section 109, you can be liable for the actions of agents acting with your authority. Clearly defining expectations in service-level agreements (SLAs) is a proactive step.

2. Revitalise Training with Data

Use your HR analytics to identify hotspots. Are certain departments seeing higher grievance rates? Is turnover higher among specific protected groups?

• Targeted Training: Instead of generic annual modules, use data to deploy specific training where it is needed most.
• Refresh Regularly: As seen in Allay (UK) Ltd v Gehlen, “stale” training renders the reasonable steps defence useless. Track training completion rates in your HR dashboard and set automated reminders for refreshers.

3. Implement Rigorous Offboarding

Since liability extends to former employees, offboarding processes must be standardised and documented. Ensure that reference policies are consistent and that any refusal to provide a reference based on objective, documented performance data, not subjective opinion, which could be discriminatory.

4. Monitor Recruitment Algorithms

With the rise of AI in recruitment, ensure your “arrangements” for deciding whom to hire are free of bias. If you use automated filtering tools, you must audit them to ensure they do not indirectly discriminate against protected groups. Section 39 liability applies to the arrangements made for recruitment, which includes the software you use.

Building a Compliant, Inclusive Future

Workplace discrimination liability is broad, encompassing employees, contractors, agents, and recruitment processes. For HR Directors in large organisations, the risk is not just the act of discrimination itself, but the failure to prevent it.

By leveraging data-driven insights to monitor culture, ensuring training is current and effective, and understanding the legal reach of your “extended” workforce, you can build a robust defence against liability. More importantly, you cultivate an environment where high performance and inclusivity go hand in hand.

Compliance is not a static goal; it is an ongoing process of monitoring, adjusting, and improving. Ensure your HR systems can handle this complexity to protect both your people and your organisation.

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