Understanding the Proposed Section 124A and its Impact on Employers

24th Sep 2024

Author: Mohammed Balal

Sexual harassment continues to be a significant challenge in workplaces across the UK, despite the protections set out by the Equality Act 2010. This Act offers vital safeguards, including protections against sexual harassment, and outlines the remedies available to those affected.

However, the proposed introduction of section 124A seeks to enhance these protections further by enabling tribunals to award a “compensation uplift” where employers have failed to take reasonable steps to prevent harassment. In this blog, Mohammed Balal, Employment Law Solicitor, examines the key provisions of Section 124A and what this means for employers.

To explore the background to these changes, see Mohammed’s article Navigating the New Employer Duty to Prevent Sexual Harassment: A Guide for Employers and HR Professionals which breaks down  the new Worker Protection (Amendment of Equality Act 2010) Act 2023 focusing on preventing sexual harassment in the workplace.  In this Mohammed explains what constitutes Sexual Harassment.

Key Provisions of Section 124A

The existing Section 124 of the Equality Act allows tribunals to award compensation to individuals who suffer harassment. However, current legislation does not directly penalise employers who fail to take proactive steps to prevent harassment in the workplace.

The proposed section 124A seeks to rectify this by imposing an additional financial penalty – known as a compensation uplift – on employers who have breached the new section 40A, which required them to take reasonable steps to prevent harassment.

The keys aspects of Section 124A are as follows:

1. Applicability:

Section 124A applies where an employment tribunal has found an employer in breach of Section 40 of the Equality Act, which covers the harassment of employees. This specifically includes sexual harassment, as defined in Section 26(2), and situations where compensation has already been awarded under Section 124.

2. The Duty to Prevent Harassment:

Under the proposed Section 40A(1), employers are required to take “reasonable steps” to prevent harassment in the workplace. This could include implementing effective anti-harassment policies, conducting training, and fostering a safe and inclusive work environment.

3. Compensation Uplift:

If the tribunal finds that the employer has failed to meet their duty section 40A(1), it may award a compensation uplift, which is an additional financial penalty on top of the compensation already awarded under section 124. This uplift can be as high as 25% of the total compensation awarded under Section 124.

4. The Extent of the Employer’s Breach

The tribunal will consider the seriousness of the employer’s failure to prevent harassment when determining the amount of the compensation uplift.  Factors such as whether the employer has implemented appropriate policies or conducted staff training may influence the tribunal’s decision.

Rationale Behind the Proposed Amendment

The introduction of Section 124A serves two main purposes:

1. Promoting Employer Accountability:

By introducing a financial penalty, the law incentivises employers to take proactive steps in preventing workplace harassment. This encourages employers to adopt effective policies and practices to create a safe working environment.

2. Enhancing Remedies for Victims:

For individuals who have experienced harassment, the compensation uplift provides a more meaningful remedy by addressing not only the harassment itself but also the employer’s failure to prevent it.

Implications for Employers

The proposed section 124A has significant implications for employers, particularly in terms of compliance and liability. Employers will need to take steps to ensure they are meeting their obligations under the new section 40A to avoid the risk of a compensation uplift being imposed.

Key considerations for employers include:

Implementation of Preventative Measures: Employers must implement effective anti-harassment policies, provide regular staff training on sexual harassment, and establish clear reporting mechanisms. Regular reviews of these measures will be necessary to ensure their adequacy and effectiveness.

Risk of Financial Penalties: Employers who fail to take reasonable steps to prevent harassment could face a 25% uplift on any compensation awarded, which may be substantial in cases where the underlying compensation amount is significant. This could increase the financial and reputational risks associated with sexual harassment claims.

Defence against Claims: Employers who can demonstrate that they took reasonable steps to prevent harassment will be better positioned to defend themselves against claims for a compensation uplift. Proactive compliance with section 40A will be key in minimising exposure to such claims.

Implications for Employment Tribunals

The introduction of section 124A provides tribunals with a new tool to ensure that employers are held accountable for their inaction in preventing sexual harassment. Tribunals will need to assess not only whether harassment has occurred but also the adequacy of the employer’s preventative measures.

Key considerations for tribunals include:

Assessment of Reasonable Steps: Tribunals will need to evaluate what constitutes “reasonable steps” in the context of section 40A. This will likely involve a detailed inquiry into the employer’s policies, training, and response to complaints.

Discretion in Awarding Uplifts: While the uplift is capped at 25% of the compensation awarded under section 124, tribunals will have discretion to award less than this maximum depending on the seriousness of the employer’s breach. The flexibility built into the compensation uplift allows tribunals to tailor awards based on the facts of each case.

As these changes are implemented, it will be important to monitor how employment tribunals interpret and apply the provisions of section 124A, particularly in determining what constitutes “reasonable steps” and in assessing the appropriate level of compensation uplift in individual cases.

Recommendations for Employers

Employers will need to take proactive steps to ensure compliance with section 40A, or risk facing substantial financial penalties. This legislative change emphasises the importance of fostering a safe and respectful work environment, and places the onus squarely on employers to take action to prevent sexual harassment.

To ensure compliance and minimise the risk of liability, employers should:

• Conduct a thorough review of existing anti-harassment policies and procedures.
• Provide regular training on sexual harassment prevention for all staff.
• Establish clear reporting channels and support mechanisms for victims of harassment.
• Regularly audit workplace culture and practices to identify potential risks.

Ensure Your Workplace Is Prepared for the New Regulations

The proposed amendments signal a shift in how tribunals assess employer liability, particularly regarding the duty to prevent harassment. It is crucial that businesses not only update their policies but also embed these within their company culture through training, clear reporting channels, and ongoing reviews.

At Butcher & Barlow, we are here to help. Our Employment Law Team offers expert advice tailored to your organisation’s needs, ensuring you stay ahead of the legal landscape.

Contact us today to discuss how we can assist you in implementing effective anti-harassment policies and minimising your exposure to legal risks.