This.
'Legitimate reasons' is always relevant when it comes to safeguarding.
Example: A worker in a nursery is a transwoman. They keep helping enthusatically with the girls when they go to the toilet but is very inattentive to the boys. Another worker notices this and goes to a line manager in good faith to express concern. The line manager phobes her off as unimportant so the second worker reports it to an outside agency disclosing that the worker is trans. Should the nursery owner (the line manager's boss) sack the second worker for transphobia and breaching GDPR or recognise that they are acting in good faith because of a legitimate concern that the second worker had and congratulate them for their due diligence?
Some might argue that the transwoman is being looked at with unfair suspicion in this situation and 'being harassed' - but the problem is they are still male and thus still present a risk to the girls. There wouldn't be the same concerns present if the nursery policy was single sex to begin with. Its effectively putting a member of staff in an inappropriate position which leaves them vulnerable to legitimate concerns being raised. You would tell a male member of nursery staff to stay out of the girls toilets for exactly the same reason. Thus, you are treating all male members of staff in a similar way (and therefore not discriminating).
As soon as you replace sex with gender, you effectively put both service users AND staff at risk because you CAN NOT protect the interests of either party. It is just inappropriate. Thats not discriminatory.
Staff being unable to ask these type of questions AHEAD of a potential problem IS a massive failure. A staff member asking legitimate questions to clarify how you navigate these issues is acting in good faith and is following due diligence because the whole point is that the first line to stop harm is through a good prevention policy.
How this has EVER got to this stage with this case, is beyond my comprehension, because if its found that you can't ask legitimate safeguarding questions in good faith even if it raises privacy issues you have a ticking time bomb on your hands because you create a legal loophole you can drive a truck through for abusers.