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Sexual harassment: cases reveal extended liability

Published on February 27, 2014

The final months of 2013 witnessed a number of significant cases dealing with sexual harassment and bullying within the workplace.

Whilst it is disturbing that sexual harassment is obviously still occurring within Australian workplaces despite greater social condemnation of unacceptable behaviour, these cases and their decisions illustrate that Courts and tribunals are willing to hold employers vicariously liable for the unacceptable conduct engaged in by their employees, and to make orders against individual harassers, directors and independent contractors whose actions either constitute sexual harassment or otherwise contribute to such harassment taking place.

Employer failed to stop harassment

In November 2013, the Federal Circuit Court awarded a former employee of a take-away restaurant approximately $100,000 following an extended period of sexual harassment by her supervisor, which was not adequately addressed by the restaurant’s owner. The employee commenced her employment in July 2008 and shortly thereafter, was subjected to sustained sexual harassment by the supervisor who operated the restaurant on a day-to-day basis. The employee made numerous complaints to the restaurant owner as well as his family members, but was told that the restaurant was losing money, that the business required the supervisor, and that if she took the matter further, it would “end up ugly” for her. The employee was subsequently dismissed due to her continued complaints about the supervisor’s ongoing conduct. The employer sought to justify the dismissal on several grounds: its alleged concerns with her performance at the end of her probationary period, a downturn in business, and the employee’s “state of mind”.

In his decision, Federal Circuit Court Judge Rolf Driver found that the supervisor engaged in serious sexual harassment in contravention of section 28B of the Sex Discrimination Act 1984 (Cth), and that the employer was vicariously liable for his conduct due to its refusal to investigate or intervene in the harassment. Judge Driver also disregarded the alleged reasons for the employee’s dismissal, and held that the employer unlawfully victimised the employee by dismissing her after her repeated complaints of sexual harassment. Interestingly, Judge Driver did not consider the issue of whether the dismissal constituted sexual discrimination, on the basis that a finding of victimisation by reason of her complaints, had already been made. As the corporate employer had been placed into liquidation and deregistered before judgment, Judge Driver made the finding of vicarious liability against the owner of the restaurant personally. The owner was ordered to pay $75,000 in damages plus interest, with the supervisor ordered to pay an additional $24,300 plus interest.

Employer bungled investigation into complaint

In May 2013, the operator of a Gold Coast resort was found vicariously liable for a workplace injury sustained by an employee following the employee’s exposure to sexual harassment by a fellow worker and a subsequent ‘bungled’ investigation by the employer’s HR manager. The employee had made a complaint to the HR Manager alleging that she had been subject to repeated sexually explicit and intimidatory comments and conduct. In response to this complaint, the HR manager ‘investigated’ the allegations by requesting that the harasser provide a statutory declaration which was not challenged. The HR Manager also failed to interview witnesses, corroborate the employee’s allegations, or even put the full extent of the employee’s complaint to the harasser. The HR Manager failed to afford the employee procedural fairness, by depriving her of the opportunity to be interviewed by the investigator or allowing her to comment on the findings before the investigation had been finalised. The investigation subsequently concluded that the harasser’s allegations were unfounded.

This sexual harassment, together with the unjustified finding that no harassment took place, resulted in the employee sustaining a workplace injury and filing a WorkCover claim for permanent impairment. In a clear indictment of the HR Manager’s investigation, WorkCover’s investigation into the claim concluded that the harassment most certainly did take place, and that the harassment was the primary cause for the employee’s injury.

Although the Queensland Civil and Administrative Tribunal (‘QCAT’) Member did not agree with the employee’s claim that the employer sought to avoid a finding of sexual harassment, he found that the sexual harassment, discrimination and subsequent mismanagement of the complaint by the HR manager all contributed to the employee’s injury. The Member described the employer’s response as inept and unprofessional, and ordered it to pay the employee $35,490 in compensation for loss and damage. The harasser was additionally ordered to pay the employee $4,500.

Liability found against independent contractor

In December 2013, the Federal Court confirmed that laws relating to workplace sexual harassment need not be confined to unlawful conduct between employees, and that the concept of a workplace should not be defined narrowly. The Applicant in the proceeding was a female accountant who alleged that a male colleague verbally and sexually harassed her in contravention of section 28B of the Sex Discrimination Act 1984 (Cth), which prohibits sexual harassment in various employment settings. The harasser sought, unsuccessfully, to argue that no claim of sexual harassment could be made pursuant to that section, as he was an independent contractor rather than an employee, and sought to argue that ‘corridors and areas near lifts’ where the conduct had taken place, should not be considered part of a workplace.
In his decision, Justice Bromberg held that the non-employee status of the harasser was irrelevant, as the Act did not only prohibit sexual harassment between employees, but extended the prohibition to workplace harassment between of ‘workplace participants’, including volunteers and independent contractors. Justice Bromberg further held that the concept of a workplace should not be restricted to exclude associated common areas such as entrances, lifts, corridors, kitchens and toilets, and that any alternative interpretation would undermine the objective of the legislation.
Justice Bromberg ordered the harasser to pay $476,000 to the Applicant, comprising $356,000 for loss of past and future earning capacity, $10,000 for medical expenses, and general damages of $110,000.

Employer settles dispute, but harasser still liable

By contrast, in October 2013, an employer escaped liability for the extreme and sustained sexual harassment of one of its employees, following the employee’s claim in the QCAT. The female employee was employed by a private company providing traffic control services, and was required to work in close quarters with a male employee. Throughout the employee’s employment, the harasser made repeated vulgar comments and gestures toward the female employee, who originally sought to avoid further incident by disregarding the conduct or engaging in risqué banter. However, the conduct continued and increased in frequency and seriousness, leading the female employee to lodge a formal complaint against the harasser. The employer’s investigation established that the harassment had occurred, and it took immediate steps to transfer the harasser to a different workplace. The employer subsequently terminated the harasser’s employment on the basis of redundancy, although he was ultimately rehired on a casual basis.

The female employee, who had resigned at the time of her complaint, subsequently entered into a confidential Deed of Settlement with the employer during the conciliation stage of the proceedings and received an undisclosed settlement payment. This Deed resulted in the employer being released from liability, although the release did not extend to the harasser, against whom her QCAT claim was maintained. In its decision, the QCAT Member rejected the harasser’s defence that the female employee had engaged in similar banter and otherwise encouraged the conduct. The QCAT Member found that the conduct of the female employee was intended to move the conduct to a ‘brother/sister’ level and avoid the harassment getting out of hand, although it was conceded that this strategy did not work. The Member found that the harasser’s conduct was unacceptable as the comments were exceptionally explicit and inappropriate, and because they were not comments about sex in general but specifically aimed at the female employee. The Tribunal found that the harasser had engaged in serious sexual harassment of the female employee and ordered him to pay her $102,217 in compensation, less the compensation paid by her former employer and compensation received for permanent impairment. No orders were made against the employer.

Lessons to be learnt from the decisions

The above cases illustrate that Courts and Tribunals are perfectly willing to award significant amounts of compensation or damages to employees exposed to serious sexual harassment within the workplace. In circumstances where an employer shows apathy or an inability to appropriately handle allegations of serious sexual harassment, the employer may face significant legal exposure far in excess of the person engaging in the harassment. These cases also illustrate that orders to pay damages or compensation will not be limited to the employer or the employee(s) engaged in the conduct, as orders may extend to any person involved in the conduct, including independent contractors, directors or corporate officers.
In addition to the existing remedies available to employees who suffer sexual harassment, it is likely that the anti-bullying jurisdiction of the Fair Work Commission will be utilised by harassed employees seeking orders that the sexual bullying and harassment cease.
Accordingly, it is imperative that employers to take seriously any allegations of workplace harassment, as well as the need for managers and corporate officers to recognise such conduct. To minimise the risk of complaints, employers must implement and enforce policies that clearly define sexual harassment, and must ensure that all personnel (whether employees, independent contractors or volunteers) are fully aware of their rights and obligations within the workplace. These policies should be accompanied by active workplace training and refresher training (not merely during induction training), particularly in male-dominated workplaces or industries, or where employees are required to work in close quarters. Finally, Human Resources staff should be adequately trained and supported to handle the most serious and sensitive of complaints, and have the capacity to continually monitor the workplace for any unreported harassment that may give rise to liability for the employer.

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