Sexual Harassment a Costly Mistake

Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82 (15 July 2014)

A chilling warning about the costs of sexual harassment has been delivered by the federal court in the form of increased damages to a former employee. An appeal against an earlier judgment has significantly increased the award of damages from $18,000 to $130,000.

The case involved harassment of a female manager by a colleague. The original court decision found no fault with the company’s handling of the complaint (and this was not challenged in the appeal). The company took the manager’s complaint seriously and investigated it thoroughly.

However the original court found vicarious liability because the court did not consider the company did all it could to prevent sexual harassment. The court was critical of the company’s policy and staff training about sexual harassment, highlighting that the company policy did not state unequivocally that sexual harassment “is against the law”.

The full bench was asked to consider the original decision on $18,000 damages and determine if it was adequate in all the circumstances. Citing the relative newness of the jurisdiction, the appeal bench said awards for damages in sexual harassment cases had not kept pace with prevailing community standards and attitudes. Damages awards had tended to be stuck in the period when the legislation was first afoot, and needed to be revisited.

The massive 700% increase in the damages on appeal sends a clear message to employers to seriously review all their policies and training around this issue. This was a case of vicarious liability – the employer was not complicit or generally negligent in dealing with the manager’s complaint. If damages of this level are awarded in those circumstances, should an employer have no policy or awareness protocols in place, or be blasé about a complaint, it has to be assumed the federal court will deal harshly with that employer.