Could a sexual harassment claim bring down your organisation? Recent decisions say yes.

30 January 2017

Following on from the landmark sexual harassment decision in 2014, there has been a spate of recent decisions that highlight a significant increase in the amount of compensation being awarded against employers. These decisions represent a new and fairer approach by the courts in compensating survivors of workplace sexual harassment, and an increased need for you to make sure that your organisation is doing everything it can to reduce the risks of sexual harassment. Ignore the problem, and you could face crippling fines that most organisations will not be able to deal with.

The landmark decision that started it all

Back in 2014, the Full Federal Court (“FCAFC”) did something unusual in workplace sexual harassment cases. It appropriately compensated the victim.

In Richardson v Oracle Corporation Australia Pty Ltd (2013), the Federal Court at first instance found that an employee (“Ms Richardson”) was sexually harassed at work and awarded her $18,000 in compensation for pain, suffering and loss of enjoyment of life. Ms Richardson appealed the decision on the basis that the compensation amount was unfair.

The FCAFC upheld the appeal, finding that the damages awarded to her were “manifestly inadequate” and that they did not reflect “generally prevailing community standards”.

Accordingly, the FCAFC awarded Ms Richardson an additional $70,000 in compensation (making it $100,000 in total).

Why is the Oracle decision so important?

We touched on it earlier, but the reason why this decision is so important is that it was the first of its kind.

According to Australian Human Rights Commission’s survey in 2012, over one in ten Australians have witnessed sexual harassment in the workplace in the last five years. It is a shockingly widespread issue, and one in which the consequences can be incredibly damaging.

However, up until the Oracle decision in 2014, compensation for victims of sexual harassment (i.e. those that have suffered horribly and that should be commended for coming forward) was relatively low (i.e. between $12,000 to $20,000).

The second (and arguably the biggest) reason why the decision was so fundamental, is that it has paved the way for far larger amounts of compensation to be awarded to victims of workplace sexual harassment and discrimination.

Recent decisions

We will now take you through three recent decisions to showcase just how far the compensation ceiling has been shattered:

  • In Collins v Smith (Human Rights) [2015], an employee was sexually harassed during a four month period in 2013. The specific allegations were horrific, and included the manager kissing her to “test the waters”, telling her directly that “I want to have sex with you”, and offering her “everything in my wallet” if she “let me massage your thighs for 15 minutes”. The employee gave evidence that the harassment caused her to have severe mood and anxiety symptoms and major depressive episodes. She was also diagnosed with post-traumatic stress disorder (“PTSD”). Accordingly, the Victorian Civil and Administrative Tribunal (“VCAT”) found the employer vicariously liable for the harassment and ordered it to pay $332,280 in compensation (plus the employee’s legal costs);
  • In Matthews v Winslow Constructors (Vic) Pty Ltd [2015], an employee was sexually harassed by employees and contractors of the employer during a one and a half year period from 2008 to 2010. The specific allegations were incredibly graphic, and included Ms Matthews being told by a colleague that “I am going to follow you home, rip your clothes off and rape you”, and Ms Collins being subject to physical sexual harassment. Accordingly, the VCAT found that the employer was vicariously liable and ordered it to pay $1,360,027 in compensation (comprised of $380,000 in general damages, $283,942 for economic loss, and $696,085 for her future loss of earning capacity).
  • In STU v JKL (Qld) Pty Ltd and Ors [2017], an employee was sexually harassed one night in 2010. The specific allegations involved the night-caretaker coming into the employee’s room completely naked at 5am and touching her without consent. When asked to get out, the night-manager allegedly said “this can be our little secret”. In this case, the Queensland Civil and Administrative Tribunal found that the employer was vicariously liable and ordered it to pay $300,000 in compensation.

What can you do to prevent a claim?

As you can see from the above, compensation for sexual harassment claims has skyrocketed, and therefore the risk to the organisation has also gone up.

In order to create this safe workplace (and prevent claims from occurring), we recommend that you:

  • develop and implement an effective (and compliant) discrimination, bullying and harassment policy (also called an equal opportunity policy);
  • train your staff, contractors and volunteers on discrimination, bullying and harassment (and carry out refresher training every 12 months); and
  • ensure that your insurance policy covers sexual harassment claims.

The case for a proactive approach

There are obvious benefits to your organisation in being proactive in this space besides from the avoidance of hefty fines and compensation orders. For example, creating a workplace where your employees feel safe from discrimination, bullying, harassment and victimisation will:

  • increase employee health and wellbeing;
  • reduce the number of workers’ compensation claims you receive (i.e. we often see mental illnesses being caused or triggered by unsafe workplace practices such as bullying);
  • increase employee retention; and
  • make it easier to recruit new employees (because you will have a reputation for being a great place to work).

How Moores can help?

Moores have a team of skilled workplace relations lawyers that can help you:

  • draft (or review existing) policies and procedures;
  • conduct an audit of your workforce and provide strategic advice on creating a safe, respectful and inclusive workplace;
  • carry out tailored training sessions; and
  • provide advice when/if a sexual harassment claim hits your desk. We can also come into your office to quickly and effectively investigate an allegation of sexual harassment and then provide practical solutions for resolving the matter.

Another benefit is that with our use of Moores Agreed Pricing, you will be left with certainty about how much our assistance will cost up front.

Next steps

If you would like to speak with us further, please don’t hesitate to contact our Principals, Skye Rose or Catherine Brooks, on (03) 9843 2100 or by email to srose@moores.com.au or cbrooks@moores.com.au.