Can employees be harassed on the basis of perceived (rather than actual) sexual orientation?

Yes. The Employment Equality (Sexual Orientation) Regulations 2003 protect all employees from sexual orientation harassment, regardless of their actual sexual orientation.

An employee does not have to be of that perceived sexual orientation to prove harassment has occurred, or to bring a complaint to an employment tribunal. Any employee who has found the conduct of other employees towards them has created an intimidating, hostile, degrading, humiliating or offensive environment, irrespective of the individual's personal sexual orientation, is entitled to bring a harassment claim.