Getty ImagesThe University of Sussex has been fined £585,000 by the higher education regulator, the Office for Students (OfS), for failing to uphold freedom of speech.
It follows the case of Prof Kathleen Stock, who left the university in 2021 after being accused of transphobia for her views on sex and gender issues.
The OfS criticised the university's policy statement on Trans and Non-Binary equality, saying its requirement to "positively represent trans people" and an assertion that "transphobic propaganda [would] not be tolerated" could lead staff and students to "self-censor".
The University of Sussex described the judgement as an "unreasonably absolutist definition of free speech".
It warned that the ruling left institutions facing "opposing and irreconcilable duties" which rendered them "powerless to prevent abusive, bullying and harassing speech".
The OfS, it added, had pursued a "vindictive and unreasonable campaign" against it.
The OfS was given the power in January to issue fines where freedom of speech was not upheld at a university.
Arif Ahmed, the OfS director for freedom of speech and academic freedom, said the decision to fine the university had followed a thorough investigation.
It found, he said, that the policy had meant staff feared disciplinary action and Prof Stock had changed the way she taught her course as a result.
Mr Ahmed added that the OfS was "concerned that a chilling effect may have caused many more students and academics at the university to self-censor".
The regulator said the Trans and Non-Binary Equality Policy Statement issued by the University of Sussex was looked at in the context of existing legal duties on freedom of speech as well as the European Convention on Human Rights.
In its report, the OfS found four elements of the policy to be "concerning".
These included a requirement for course materials to "positively represent trans people and trans lives" and an assertion that "transphobic propaganda… [would] not be tolerated".
Eddie Keogh/Getty ImagesAnother part of the policy highlighted by the regulator said "transphobic abuse" would be a serious disciplinary offence for staff and students.
It also looked at the management and governance of the university around freedom of speech.
Prof Stock faced protests on the university campus after she published a book questioning whether gender identity was more "socially significant" than biological sex.
Posters were put up on the campus calling for her to be sacked, and students turned up with placards at an open day.
Prof Stock rejected accusations that she was transphobic and described the experience to the BBC as a "surreal anxiety dream".
She resigned from her university post in 2021 and was awarded an OBE for services to education.
The fine is the largest issued to a university and is likely to be seen as an intention to hold the line over the expression of legal views.
In a strongly worded statement, the University of Sussex said the regulator had been determined to make an example of its case and "entrench an extreme libertarian free speech position".
It added there had been no "substantive engagement" other than via written correspondence, and it accused the regulator of pursuing a "vindictive and unreasonable campaign".
The policy at the heart of the investigation had been adapted from a template, according to the university, and had since been changed.
