Companies have been advised to be vigilant over so-called "homophobic banter" in the workplace.

The warning follows a legal case in which it was ruled that an employee who was not gay but who was the subject of such comments was not covered under current sexual orientation regulations.

About the case, Jean Sapeta, head of employment at Hempsons, said: "Current regulations did not protect the claimant … because ultimately the defendant was not gay, his friends and colleagues knew he was not gay, but he was just being called gay by his colleagues as a way of teasing him."

She added that employers should not allow such banter to go on unchecked.

Figures recently produced by the Church Urban Fund suggested that voluntary organisations in the UK could be breaking the law by failing to keep abreast of changes in employment legislation, with 40 per cent of faith-based projects having failed to respond to employment equality regulations.