Sexual Harassment Just Got Much More Expensive!

In a recent appeal decision – Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82 – the Full Bench of the Federal Court awarded significant damages for pain and suffering / non-economic loss to a worker who had been sexually harassed in her employment.

In February 2013 the Federal Court at first instance had found that Ms Richardson, an employee of Oracle Corporation Australia Pty Ltd (“Oracle”) had been sexually harassed by another employee, and that Oracle was vicariously liable for that harassment.   The Court awarded Ms Richardson $18,000 in general damages (that is, for “pain and suffering” / injury to feelings / non-economic loss).  This sum was well within the range of general damages that had – in the past – been awarded in similar cases.

Although Ms Richardson had also sought damages for economic loss suffered after she resigned from her position at Oracle, the Court at first instance declined to award such damages because, it found, Ms Richardson’s resignation was not related to the harassment.

Ms Richardson appealed, arguing that the award of general damages was insufficient, and did not reflect community standards.

In a decision published on 17 July 2014, the Full Bench of the Federal Court upheld Ms Richardson’s appeal and awarded her, in total, damages of $130,000 (around 7 times the award at first instance).  The total damages were constituted of:

  • $100,000 for general damages (”pain and suffering” / injury to feelings /  non-economic loss); and
  • $30,000 for economic loss (having disagreed with the decision at first instance that the resignation was not related to the sexual harassment).

In increasing the award of general damages, Justice Kenny of the Full Bench noted that there was a growing appreciation within the community of the “experience of hurt and humiliation that victims of sexual harassment experience and the value of loss of enjoyment of life occasioned by mental illness or distress caused by such conduct”.

Lessons for Employers

This case represents a “turning point” in sexual harassment and discrimination litigation.  Previously, damages paid in such cases have generally been modest (with a few notable exceptions, such as in Poniatowska v Hickinbotham [2009] FCA 680, in which the applicant was awarded $90,000.00 for general damages) and, as the Full Bench noted in this case, somewhat “out of step” with the awards of damages made in personal injury cases.

In future, successful litigants in sexual harassment or discrimination cases who have suffered psychiatric injury as a result of the harassment or discrimination can expect to receive much more generous damages.

Sexual harassment legislation provides a “defence” to claims against an employer in relation to sexual harassment committed by a staff member or agent.  In such circumstances, an employer will not be vicariously liable for sexual harassment committed by employees or agents if it can show that it has taken “all reasonable steps” to prevent the employee or agent from sexually harassing the complainant.

Such “reasonable steps” would include (but not necessarily be limited to):

  • Having appropriate policies in place;
  • Educating and training staff and others about those policies (including regular “refresher” training);
  • Educating and training staff and others about relevant laws relating to sexual harassment and discrimination;
  • Updating and enforcing the policies;
  • Taking seriously any complaints of sexual harassment,  investigating such complaints promptly and thoroughly,  and taking appropriate action against perpetrators if complaints are substantiated; and
  • In a more general sense, taking action to establish and maintain a workplace culture in which harassment, bullying and discrimination are not tolerated.

This case should serve as a warning to employers to ensure that they are taking all reasonable steps to prevent sexual harassment and discrimination in their workplaces.  A failure to do so might not only cause serious damage to the welfare of staff, but could also lead to serious financial implications.

DW Fox Tucker’s Workplace Relations team can assist with the preparation and implementation of appropriate policies and procedures and training relating to sexual harassment and discrimination, and legal advice and representation should a claim be made against you.

For more information, please contact:
Ben Duggan

Ben Duggan
Director
p.  +61 8 8124 1881
e.  Email me

This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.

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