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Sexual harassment and your small business. What to do if one of your staff member complains about being harassed at work
- Sexual harassment is unwanted behaviour that intimidates or causes someone to be offended or to feel violated in any way.
- In the UK, the same sexual harassment legislation applies to every size of businesses, big or small, as it all falls under the heading of discrimination.
- Extra laws are coming in under the Employment Rights Act 2025. As of April 6, 2026, sexual harassment became a ‘qualifying disclosure’ under whistleblowing law. This means that complainants have protection from detriment and unfair dismissal.
- From October 30, 2026, employers must take ‘all reasonable steps’ rather than the current ‘reasonable steps’. On top of that, employers will be liable for harassment from third parties (including customers and clients), unless they have taken reasonable steps to prevent it.
- Reduce the instance of harassment by doing a workplace risk assessment, updating policies, providing regular training and making sure managers know how to respond to sexual harassment concerns.
A 2025 Unite survey found that 25 per cent of women and almost three-quarters (68 per cent) of LGBT workers have been sexually assaulted at work. Of who that experienced assault, 75 per cent never reported it to their employer.
With these employment tribunal cases on the rise, it’s high time to address sexual harassment in the workplace.
>See also: Sexual harassment: #MeToo and Time’s up encourage workers to speak out
What is the law on sexual harassment in the workplace?
In the UK, the same sexual harassment legislation applies to every size of businesses, big or small, as it all falls under the heading of discrimination.
Extra laws are coming in under the Employment Rights Act 2025. As of April 6, 2026, sexual harassment became a ‘qualifying disclosure’ under whistleblowing law. This means that complainants have protection from detriment and unfair dismissal.
From October 30, 2026, employers must take ‘all reasonable steps’ rather than the current ‘reasonable steps’. On top of that, employers will be liable for harassment from third parties (including customers and clients), unless they have taken reasonable steps to prevent it.
And discrimination is something the law takes very seriously indeed. A badly handled discrimination case could you leave you, as a small business, tens of thousands of pounds out of pocket. It could also cause you serious reputational damage.
Laura Ranaghan, HR consultant at Citrus HR, says: “The content of the policy that deals with sexual harassment at large companies such as M&S will be the same sort of process that you will need to follow in your own small business even though they have the advantage of large HR departments with which to handle complaints.”
So, what is the right way for any small business to handle an allegation of sexual harassment?
>See also: The Harvey Weinstein sexual harassment case – What can we learn?
What is sexual harassment?
Sexual harassment is unwanted behaviour that intimidates or causes someone to be offended or to feel violated in any way. There are the more easily recognisable examples of unwanted physical contact or more serious assault. However, It doesn’t always have to be physical contact — it could be lewd jokes or circulating pornographic images in a group chat, or making comments about a person’s appearance for example.
It could also be as seemingly innocuous as repeatedly asking a colleague to go out for an unwanted drink after work or what could be construed as light-hearted laddish banter or a joke in bad taste. A sales rep who thinks he’s being funny by being flirtatious can be intimidating and frightening to a female staff member.
However, all this is very much on a case-by-case basis as it isn’t possible to create a list of conduct to give to staff that covers everything that is potentially harassment and everything that is not. What one person defines as unwanted attention or finds offensive could be acceptable to someone else.
One of the difficulties that can happen in a workplace is where someone complains that they feel harassed by a colleague and the colleague says that didn’t realise that their behaviour was offensive or unwanted. Even if the person complained about didn’t intend to harass, the emphasis remains on the person who feels harassed and how it’s left them feeling and not what was intended.
How do I prevent sexual harassment?
Prevention is always best, so let’s revisit the term ‘all reasonable steps’. Emma Gross, employment law partner at Spencer West LLP, said that small business owners should be taking a proactive approach rather than a reactive approach, and putting appropriate measures in place.
Workplace-specific risk assessment
Consider the sector you’re in and the type of work your employees do. Their work might involve lone travel and overnight stays, for example. Remember to consider more risky scenarios such as work social events, lone working and situation involving alcohol and power imbalances. As you’re going to be liable for third-party harassment unless you take reasonable steps, assess situations with clients and customers, too.
Update your anti-harassment policies and reporting procedures
Update your anti-harassment policies to reflect the new laws and the findings from your risk assessment. Give your reporting procedures document a polish to include the change in whistleblowing law.
Provide regular and meaningful training
Ensure that your staff know what sexual harassment is and what behaviour should be avoided. Remind them of the procedure for reporting sexual harassment and the protection they have against unfair treatment and dismissal.
Ensure managers know how to identify and respond to concerns
Of course, managers should make sure their staff understand sexual harassment and how to report it. It may be helpful for managers to know what signs to look out for, such as calling in sick more often or developing nervous habits, and when to arrange a one-to-one with the colleague they’re concerned about.
“A policy sitting unread in a handbook will not be enough. Employers should be able to demonstrate the practical steps they have taken, keep those measures under review and foster a culture in which employees feel able to raise concerns without fear of retaliation,” Gross told Small Business.
See also: How to prevent sexual harassment in a small business
If somebody raises a complaint, what’s the first thing I should do?
If someone raises a sexual harassment complaint, they have the option of it being handled either informally in the first instance or formally through a grievance procedure anti bullying and harassment procedure if you have one.
This grievance procedure should be known to you or you can consult standard documentation at workplace dispute resolution service ACAS.
First, establish whether they or not they want to have it dealt with formally or informally. Regardless of the answer, you will have to investigate.
Karen Falconer HR knowledge manager at HR Solutions, says: “I would always advise the employee who’s alleged the harassment what it is that you’re going to do, your approach and what the timescale will be .”
- Take any complaint seriously, no matter how inconsequential you may regard it. Have a private conversation with your upset staff member.
- Next, check if you have an existing anti-harassment or bullying or sexual harassment policy in place. You can find a useful guide to sexual harassment from the dispute resolution service Acas here
- Take a contemporaneous note of the conversation you’re having with your harassed employee for your future reference
- Ask if they want to raise a formal complaint and put everything in writing?
Do I need to speak to the person who’s the subject of the complaint?
Yes, you do. You need to hear their version of events as well.
Once you have gathered enough information, you must have a meeting with the person accused of the harassment as soon as possible – ideally the same day – especially if what has been alleged is gross misconduct. You may need to place them on immediate suspension (or an appropriate alternative).
On the other hand, the alleged perpetrator may be completely justified in saying that it’s all been a misunderstanding once you have investigated what has happened.
“There’s room for reasonableness in the eyes of a layperson when it comes to sexual harassment,” says Falconer.
Ideally, you want the two people involved to patch things up between them and not let things escalate any further. Obviously, this is only appropriate where allegations are not serious enough to be potential gross misconduct.
What if the person being complained about is key to my business?
That’s irrelevant. You must put aside work performance or seniority. By ignoring the Equality Act 2010, you become both liable and vicariously liable for discrimination claims which can be for unlimited amounts. Plus there could be financial penalties on top for injury to feelings.
What if I don’t believe a version of events?
Regardless of whether the person who made the complaint has asked you to treat it formally you have the option to escalate matters to a disciplinary hearing yourself if you believe that the conduct meets that threshold. You would need to let the person know that this is what you were going to do.
What happens if it escalates to a formal complaint?
If there was no room for an informal resolution you need to deal with the complaint formally. You escalate it to follow your grievance policy or anti bullying and harassment policy You would need to invite the person who is complaining and the person who the complaint is raised about to a formal meeting. It is usual to give 48 hours’ notice and the right to bring a trade union rep or work colleague. You will need to take notes of these meetings and carry out any further investigations with any witnesses before you reach your conclusions. The person who made the complaint will have a right of appeal against the decision if they are not happy with it.
The staff member could still appeal to a higher authority within your organisation ideally who has not been involved before or this is the moment where you look for external support through an external HR advisor. Remember, the external HR adviser could go against whatever you decide at the end of your internal investigation, if you’ve handled things badly.
“We do indeed do that, as unpopular as it is sometimes,” Falconer says.
This higher authority’s outcome however will be final.
What happens if the complainant is still unhappy?
Although it is the end of the road internally, the staff member could still seek external support.
For the most part, employees can only lodge employment tribunal claims once they have been with a firm for over two years. But that is not the case with discrimination.
Again, they could go to Acas, which gives impartial advice on employment matters and whether procedure has not been followed. Acas could then recommend that they go for early conciliation.
What is early conciliation?
This is a step that was brought in a few years ago prior to somebody going to an employment tribunal.
Designed to reduce the amount of cases going to industrial tribunal, early conciliation is a free way for employees to settle outside of a formal hearing. Acas will provide a conciliator who contacts you.
“Because the employee is saying they want to settle outside of tribunal – because if it’s got this far, the questions to consider are do you believe they have a case and how much are you willing to pay?” says Falconer.
What kind of fines could I face for mishandling sexual harassment?
There is no upper limit technically because sexual harassment comes under discrimination law, where there is no cap on compensation for loss of earnings
The harassed staff member who feels their allegation has been badly handled could either resign and then make a claim for constructive dismissal and for sex discrimination. Or they could carry on working for and still make a claim for sex discrimination.
An employment tribunal could make a separate award for loss of earnings plus the tribunal can award injury to feelings costing anywhere over £45,000 up to £900,000 depending on the seriousness of the distress caused.
