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Courts say business can be held responsible for third party racial harassment

Employers in the public sector – and possibly beyond – now face being held legally liable for failing to protect their staff from repetitive racial harassment, following legal developments at home and in Europe, says Paul McQuade. In the recent case of Sheffield City Council versus G Norouzi, the Employment Appeal Tribunal (EAT) decided that the local authority had failed to protect its employee from sustained racial harassment in the workplace by a non-employee.

While previously the law did not hold employers liable for third-party harassment, G Norouzi successfully argued that as a public sector employer the council was bound by the EU Race Directive, which conferred liability on employers that know of a continuing course of offensive conduct but do nothing to safeguard an employee from it.

Norouzi was employed as a residential social care worker by Sheffield City Council and based at a children's home for troubled young people. He was subjected to harassment by a girl who lived at the home and made a series of offensive comments about the claimant's Iranian origins and also mimicked his accent. This behaviour continued for a period of two years, before the claimant went off sick and commenced legal proceedings.

The EAT decided that management had been aware of the sustained campaign of harassment but had failed to investigate it properly, did not challenge the child regarding her behaviour and allowed the behaviour to become normalised. The local authority failed in its arguments that it could not be held liable for the racial harassment, as its inaction had neither caused nor created the hostile environment experienced by the claimant.

In addition, the council's submission that the mocking of the claimant's accent did not amount to racial harassment was given short shrift by the EAT, which decided that the mocking of a racial characteristic (such as an accent) was analogous with overt racial abuse.

This significant decision confirms that public sector employers can now be held liable for racial harassment committed by non-employees. Since October 2010, the new Equality Act had in fact changed the law to extend third party liability to all employers (where the employer was aware of harassment on at least two previous occasions).

However, in January this year, the Coalition Government outlined its view that the statutory provision was an "unworkable requirement" and that businesses could not "prevent persistent harassment of their staff by third parties, as they have no direct control over it". Stating that it would consult with a view to amending the 2010 Act, the Government further argued that the provision costs the UK business community a total of £300,000 per annum.

Should the Government strike down the third party provisions of the 2010 Act, then public sector employees would be left reliant upon the EAT judgment in Norouzi to argue that domestic legislation does not comply with the Race Directive. Yet the decision of the European Court of Justice (ECJ) in Kucukdevici v Swedex GmbH & Co KG may also provide comfort to workers outside the public sector.

In that German case, the ECJ ruled that national courts are required to set aside provisions of national law that conflict with the general principle of non-discrimination in EU law – even in cases involving private individuals. It could therefore be open to employees beyond the public sector to rely on the discrimination directives where, they will argue, national law does not implement them adequately. Third party harassment is likely to be the battleground over which the application of the principle of non-discrimination is fought.

Paul McQuade is a senior solicitor at Scottish law firm, Brodies