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Posted: Tue 22nd Sep 2026
8 min read
British businesses are preparing for what employment lawyers are calling the most significant shift in workplace harassment law in a generation.
From 30 October, a customer swearing at a shop assistant, a client making inappropriate remarks to an apprentice on site, or online abuse directed at staff will no longer be simply an unpleasant afternoon. It will be grounds for an unlimited compensation claim against the employer.
The Employment Rights Act 2025 introduces sweeping changes to harassment liability that reach every business with staff, from sole traders with one part-time employee to multinational corporations.
The reforms, which arrive in two stages this autumn, place an unprecedented legal burden on employers to police the behaviour not just of their own staff, but of everyone their workers encounter through their job.
"A policy that sits in a drawer will not meet the test," warns Acas, the government's workplace advisory service.
The regulator is clear that businesses will be judged on what they can demonstrate they have actively done, not what they claim they would do if an incident occurred.
The most far-reaching change takes effect on 30 October, when employers become liable for third-party harassment of their workers unless they can prove they took "all reasonable steps" to prevent it.
Third parties include customers, clients, suppliers, contractors, delivery drivers, and members of the public. Harassment online carries the same weight as incidents in person.
On the same date, the existing duty to prevent sexual harassment of staff rises from "reasonable steps" to "all reasonable steps". Legal experts suggest the seemingly modest addition of one word represents a substantial tightening of the test employers must meet.
The law reaches businesses of all sizes, but the steps required will be judged proportionately. As the Acas guidance on third-party harassment explains:
"The steps you take will likely depend on your organisation, and your sector."
A five-person café will be held to the standard of a five-person café, not a retail chain with a dedicated HR department.
Yet proportionality offers no escape from preparation.
Acas provides an example of what fails the test: a convenience store owner who tells staff that abuse from shoplifters is "part of the job". By contrast, a nightclub owner who agrees on a code word with staff, installs an alarm system, and maintains an incident log would pass it.
For small businesses, the guidance translates into concrete actions that must be completed before the October deadline.
Employers need to map every category of person their staff encounter through work, then document both the risks each group presents and the measures taken against them.
A shop might add a notice at the till making clear that abuse of staff will not be tolerated.
A tradesperson could include a clause in the terms customers sign stating that harassment of employees will result in termination of service. A salon might agree on a discreet code word for staff to use when they need a colleague's intervention.
Crucially, businesses must establish clear reporting procedures and designate who receives reports. Every incident must be logged, along with the employer's response. The documentation itself becomes evidence that reasonable steps were taken.
Employment policies on bullying and harassment require updating to explicitly cover third parties and incorporate the phrase "all reasonable steps".
Lawyers advise that businesses should also record any preventive measure they considered but decided was not reasonable for an organisation of their size, with a written explanation. "That note matters if a claim comes," according to guidance issued for small firms.
Bracton, a legal information service, notes that this represents "a positive, anticipatory duty" rather than a reactive one. Employers cannot wait for a complaint to materialise before acting. The steps must already be in place.
A second change, effective from 1 October, extends the window for bringing most employment tribunal claims from three months to six months. The new limit applies where the event complained about occurs on or after 1 October.
The practical effect is that businesses will wait twice as long to know whether a dismissal, a failed grievance, or a contentious resignation has ended or will resurface as legal action.
As memories fade and people move on, contemporaneous written records become the primary evidence.
Employers are advised to document conversations, warnings, the reasoning behind decisions, and copies of messages at the time they occur, then retain them for at least six months after an employee leaves.
Where a dispute is already developing, records should be kept longer.
From 30 October, employers must provide workers with a written statement informing them of their right to join a trade union.
The government has indicated that the precise content and timing will be set through regulations, with template language expected.
Trade unions also gain a legal right to request access to workplaces from the same date. However, the Central Arbitration Committee can only impose access on employers with 21 or more workers, a threshold that includes linked companies.
The majority of small businesses fall below this level and retain discretion over access.
From 1 January 2027, unfair dismissal protection will begin after six months in a job rather than two years, and the cap on compensation will be removed.
Businesses that currently use probation periods as an informal assessment stage will need to implement proper performance management processes. This will also apply to anyone who was employed after 1 July 2026.
For hospitality businesses, additional changes loom. The government is consulting until 29 September on a revised tipping code.
By the end of the year, employers in the sector will need to consult staff before setting or changing any tipping policy.
List everyone your staff encounter through work
Document the risks and your preventive measures for each group
Establish clear incident reporting procedures
Update your harassment policy to cover third parties
Record decisions about measures you considered unreasonable, with explanations
Start keeping detailed notes of workplace conversations and decisions
Free e-learning on bullying and harassment is available through Acas, which also provides worked examples written specifically for small firms on its third-party harassment guidance page.
The government's employment changes hub will publish final guidance and template documents as regulations are confirmed.
