Retail and Hospitality Sector

Lord Young of Acton Excerpts

Thursday 22nd January 2026 Lords Chamber

[Lord Young of Acton (Con)]

My Lords, I declare my interest as the director of the Free Speech Union. I congratulate the four new Members on their excellent speeches.

I draw the attention of your Lordships’ House to Section 21 of the Employment Rights Act, which extends the liability of employers for the harassment of their employees to third parties, and its impact on the hospitality sector. From October this year, employers will have a duty to protect their workers from third parties. I should make it clear that we are not talking about third-party sexual harassment, which they were already liable for, but third-party non-sexual harassment.

What does that mean for the hospitality sector? Employers will have to take “all reasonable steps”—those are the words in the Act—to protect their employees from harassment by customers. That might not sound too onerous, until you factor in that harassment includes indirect harassment, which has been defined by the employment tribunal as including overheard conversations, remarks, comments or jokes that an employee may find offensive or upsetting by virtue of their protected characteristics. It is for that reason that the Free Speech Union has been referring to Section 21 as the “banter ban”.

A couple of weeks ago, the Government quietly released a 40-page impact assessment about Section 21. It says that it is likely to cost the owners of small businesses £23.7 million to familiarise themselves with their new legal obligations, with ongoing costs of £124,000 a year for 10 years. The total cost during that period, it says, could be as high as £59 million. That is a woeful underestimate.

One of the assumptions in the impact assessment is that it will take business owners no more than half an hour to master their new duties under Section 21 of the Act. That is not the view of the Equality and Human Rights Commission, as set out in a briefing that it produced for your Lordships’ House when we were debating the Bill. The EHRC drew attention to the conflict between Clause 21, as it then was, and existing anti-discrimination provisions. It said that a third party may themselves be protected from discrimination while their conduct could simultaneously be considered harassment by an employee. That makes the legal balancing of rights and obligations difficult for employers to manage in practice.

I will give just one example of the kind of conflict that the EHRC has in mind and which hospitality businesses will now have to navigate. Should they prevent trans women customers from using the ladies’ lavatories? On the one hand, a female employee may have a claim for third-party harassment in the tribunal if she finds herself having to share the facilities with a biological male. On the other, a trans woman customer may have a claim for discrimination if the business owner, as a service provider, fails to discharge its duty under Section 29 of the Equality Act, which makes it unlawful for a service provider to discriminate against a person who is using, or seeking to use, its services.

This is precisely the issue that the Women and Equalities Minister has been wrestling with since the EHRC submitted its advice last October about how to revise the code of practice on services, public functions and associations covering, among other things, access to single-sex women’s spaces. We were told in this House only this week that the reason there has been such a delay in issuing this code of practice is that this is such a fiendishly complex area of law and it is essential that the Government get it right. Yet, if a Government Minister cannot master this area of the law in three months, with all the legal resources at her disposal, what hope do publicans have to get their heads around it in half an hour?

Section 21 of the Employment Rights Act imposes a new duty on small businesses in the hospitality sector that touches on an incredibly complicated area of law, with real financial risks if they get it wrong. For many publicans, the cost of the legal advice alone, let alone the compliance costs, will be the final straw. Remember that we are talking about just one section of the Employment Rights Act. Could the Minister, at the very least, give retail and hospitality businesses a 12-month reprieve before strangling them with this new profoundly unwelcome bit of red tape?