How employers can manage risk of sexual harassment claims

  • Employers can be held vicariously liable for the sexual harassment committed by employees or contractors.
  • Large sums of money have been awarded and send the clear message that sexual harassment must be eliminated from the workplace
  • Senior executives and board members must be educated about the legal and reputational risks of sexual harassment and the need for vigilant compliance.

workplace harassment

Sexual harassment claims continue to be a significant corporate governance risk for employers. Along with reputational damage, employers can be held vicariously liable for acts of sexual harassment committed by employees and be faced with having to pay substantial damages, unless employers have taken all reasonable preventative steps.

Sexual harassment payouts on the rise since Richardson v Oracle

In Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82, the Full Court of the Federal Court awarded $130,000 in damages to a female employee for sexual harassment, finding the employer vicariously liable for the actions of one of its male employees. Comments made by the harasser included:

‘Gosh, Rebecca, you and I fight so much ... I think we must have been married in our last life’

‘So, Rebecca, how do you think our marriage was? I bet the sex was hot’

‘We should go away for a dirty weekend sometime’

‘I love your legs in that skirt. I'm going to be thinking about them wrapped around me all day long’

The damages awarded in Oracle are no longer the high watermark. In Collins v Smith [2015] VCAT 1992, the Victorian Civil and Administrative Tribunal almost tripled the amount in Oracle, awarding a complainant over $330,000 in damages for sexual harassment.

A few months ago in the Queensland decision of STU v JKL (QLD) [2016] QCAT 505, a woman was awarded $313,000 in damages due to sexual harassment by a contractor in the workplace causing her to suffer post-traumatic stress disorder. The employer had taken no steps at all to prevent sexual harassment from occurring. The judicial officer hearing the case said (at [76]) if steps had been taken to educate the workforce the employer may not have been liable for paying the compensation:

If the [employer] had taken steps to inform its workers of their legal obligations and to provide the education and training necessary to ensure compliance, then it may have avoided responsibility for the unlawful acts of its worker.

Sexual harassment needs to be eliminated from the workforce

There is absolutely no doubt judges are willing to award large sums of money to employees subject to proven sexual harassment at work in order to send the message that sexual harassment must be eliminated from the workplace. It is therefore essential that employers make sexual harassment training and compliance a mandatory component of corporate governance practices this year and into the future.

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