Mitigating the risk of sexual harassment

As Richardson v Oracle has just shown, a policy alone isn’t always enough to prevent serious human and financial consequences

In February 2013, in the matter of Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82, Oracle Corporation Australia Pty Ltd was held to be vicariously liable for an employee sexually harassing another employee, Ms Richardson, over seven months.

Oracle was ordered to pay $18,000 in damages to Ms Richardson as compensation for breaching s 28B(2) of the Sex Discrimination Act 1984 (Cth). However, Ms Richardson appealed the decision on the grounds that, among other things, the damages were inadequate.

In the July 2014 appeal ruling, Oracle was again held to be liable for sexual harassment by an employee and damages were increased to $130,000. In addition, Oracle was required to pay the costs of the appeal.

The court found that the trial judge had erred in not finding that, due to the unlawful conduct of Oracle’s employee, Ms Richardson suffered not only psychological injury, but also economic loss and a diminished sexual relationship.

The court didn’t find against Oracle because of the manner in which it conducted its investigation into the matter, but rather because it was vicariously liable for the unlawful conduct of its employee.

Despite following the protocols the company had put in place to protect itself from this kind of situation, it was unable to shield itself from the cost of psychological and physical damage suffered by Ms Richardson.

How can you protect your company?

Oracle failed to show that it took all reasonable steps to prevent its employee from sexually harassing the appellant, and was therefore vicariously liable under s 106 of the Sex Discrimination Act 1984 (Cth).

In particular, it had provided no clear communication stating that sexual harassment was against the law, nor had it identified the Australian source of the relevant legal standards or brought it to the attention of the employee that sexual harassment was against company policy.

So make sure you have a uniform Sexual Harassment at Work policy that makes it very clear that sexual harassment is an unacceptable form of behaviour that will not be tolerated under any circumstances.

A second imprortant step is to make sure your procedures and policies are in line with current Australian legislative standards, and to cite those standards. While Oracle did have a global online sexual harassment training package that employees were required to complete every two years, it didn’t mention the Australian legislative foundation for the prohibition of sexual harassment, nor did it mention specifically that such conduct was against the law.

It’s also important to think carefully about the structure of your workplace so as to not hinder or discriminate against any staff.

In Ms Richardson’s case, for example, during the investigation Oracle had allowed her to keep working on a project via phone and email with the employee who was eventually found to have sexually harassed her. This led Ms Richardson to allege that she was suffering from a chronic psychological disorder. She further claimed that her significant distress caused changes in her demeanour and physical condition.

Had Oracle considered the structure of the workplace and project more critically, Ms Richardson may not have suffered as much and Oracle may have been better able to defend the claim of vicarious liability.

Conclusions to be drawn

The most important issue to come out of this case is that community standards are becoming an increasingly important feature of compensation in the context of damages for personal injury.

The appeal judge noted that the community may place a higher value on the loss of enjoyment of life and the compensation of pain and suffering than in the past, and that damages awarded by the court should reflect that.

She was of the view that the amount awarded to Ms Richardson by the trial judge was disproportionately low, judged relative to prevailing community standards.

The community has generally gained a deeper appreciation of the experience of hurt and humiliation that the victims of sexual harassment face, and being aware of this could minimise your risk.

In summary, our advice to employers is:

  • Review your policies and procedures.
  • Seek assistance from DW Fox Tucker to ensure they reflect current Australian Legislative Standards.
  • If faced with an allegation of sexual harassment in your organisation, think critically about how to manage your business requirements while at the same time ensuring the alleged victim is protected from ongoing harm
  • Talk to your insurance broker about appropriate management liability insurance products that may assist in meeting the costs of such claims.

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 article, or what it means for you, your business or your clients' businesses, please feel free to contact us.

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