Safeguarding employees

A recent landmark federal court ruling could result in a spike in sexual harassment claims in the workplace, says Matthew Orr.

It is widely anticipated that sexual harassment claims against employers will rise in the wake of a recent federal court decision. In that case, the court ordered Oracle to pay a former employee $100,000 in damages for injuries of the kind that have previously attracted awards in the range of $12,000 to $20,000.

In Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82, the full court of the federal court departed significantly from the generally accepted range of damages for pain and suffering arising from sexual harassment. It held that that range had been fixed at a conservative level for too long, and that the nature and extent of injuries to the victim, Ms Richardson, and prevailing community standards demanded that the court take action.

FLAWED HARASSMENT POLICY

From the first time Richardson and her colleague met in person, she was subjected to a humiliating series of slurs, which alternated with sexual advances and effectively developed into a constant barrage of sexual harassment. The trial judge found that the colleague’s behaviour was cruel and calculated, but that he may not have fully appreciated the effect it was having on the victim.

As a result, Richardson suffered a chronic adjustment disorder with mixed features of anxiety and depression. The court held that Oracle was vicariously liable for the injuries caused by its employee to Richardson where it had not taken all reasonable steps to prevent his conduct. Critically, its anti-sexual harassment policy failed to state that sexual harassment was against the law.

The court was of the view that, in circumstances where Richardson’s injuries did not involve features of aggravation such as psychological trauma and resulting incapacity for work, her case fell within the range of $12,000 to $20,000 for general damages. She was awarded $18,000.

PAIN AND SUFFERING

On appeal, the full court of the federal court held that the damages awarded by the trial judge could not fairly be seen as reasonable compensation for Richardson’s pain and suffering.

It noted that general standards prevailing in the community meant that a higher value should be placed on the loss of enjoyment of life and the compensation for pain and suffering than in the past. Further, there was a significant disparity in damages for sexual harassment with other areas of the law – such as workplace bullying and harassment – that needed correcting.

The court determined that it could not continue to adhere to the previously accepted range of damages for sexual harassment cases, highlighting that an award of $18,000 was disproportionately low with regard to the loss and damage Richardson suffered. Her general damages were subsequently increased to $100,000.

What does this mean for employers?

It has long been considered that the reason many people do not formally pursue sexual harassment claims is because the cost and heartache associated with the court process outweighs the relatively insignificant damages that await a successful complainant.

However, as a result of this decision, it is likely that there will now be more sexual harassment claims making their way to court, as well as greater general damages for victims. This poses obvious risks for businesses.

In order to avoid sexual harassment claims – and the diversion of resources, negative publicity and bigger damages awards that come with them – employers should be taking steps to ensure that such unlawful behaviour does not occur in their workplaces. This means:

• Implementing a clear anti-sexual harassment policy which states that sexual harassment is unlawful and identifies the source of the relevant legal standard. The policy should also outline the organisation’s zero tolerance stance as well as setting out the rights and responsibilities of employees and the consequences that may result from inappropriate behaviour.
• Directing resources to training programs (including refresher courses) so that employees are aware of the practical operation of the policy.
• Providing employees with access to clear reporting systems.
• Investigating all claims of sexual harassment, regardless of how trivial they may seem.
• Taking appropriate and consistent disciplinary action if sexual harassment claims are substantiated.