Are you liable? Sexual harassment in the workplace

by Geraldine Dann and Lauren Sharp

Two recent cases in New South Wales and Queensland have highlighted that employers may be vicariously liable for sexual harassment of their employees if they do not take reasonable steps to prevent such behaviour in the workplace.

The first case concerns a recent decision of the NSW Administrative Decisions Tribunal (ADT) which found a licensed club (Club) vicariously liable for the sexual harassment of a female bartender by a male colleague.

The complainant had been sexually harassed on three separate occasions including touching her and making comments about her breasts. Following the third incident, the complainant made a formal complaint to her supervisors who reported it to senior management. On the following day, management sought advice from the relevant industry body and met with the harasser who admitted the allegations and was dismissed immediately.

Following this, management directed that an annual notice be distributed to staff emphasising the Club's non-toleration of sexual harassment and its equal opportunity and OHS policies. The Club also arranged and paid for the complainant to receive counselling, and initiated an injury management plan to assist her.

Under section 53(1) of the Anti-Discrimination Act 1977 (NSW) (AD Act), an act done by an employee in contravention of the AD Act will be deemed to have also been done by the employer unless the employer did not expressly or impliedly authorise the employee to commit the act. Pursuant to section 53(3), the employer will not be liable if it took all reasonable steps to prevent the contravention (the New South Wales legislation is almost identical to other State legislation in this respect).

The Club's knowledge
The ADT found that although senior management had not received any formal or informal reports in relation to the harasser's conduct, there was a 'body of knowledge' about his 'usual conduct' toward female staff members among middle management. As a consequence, the Club was held to have had prior knowledge of the harasser's conduct regardless of the fact that senior management may have had no actual knowledge of his behaviour.

Lack of authorisation
The ADT found that by developing, distributing and showing commitment to its sexual harassment and discrimination policies, the Club did not expressly or directly authorise the harasser's conduct.

However, the Club's inactivity was found to constitute implicit authorisation. In particular, the managers who had prior knowledge of the harasser's conduct had failed to recognise his behaviour as potentially unlawful, or implement appropriate monitoring strategies to ascertain whether staff felt humiliated, intimidated or offended. This inaction permitted the harasser to continue conducting himself 'as usual'.

The fact that the Club had acted quickly and appropriately following the formal complaint did not in itself establish non-authorisation. While the Club's action after the making of the formal complaint was relevant, the Club was also required to establish that it did not authorise the harasser's conduct before it occurred.

According to the ADT, an employer's obligation to prevent discrimination, harassment or victimisation does not begin at the time that a formal complaint is made. Where an employer has been made informally aware of conduct, the fact that it took appropriate and commensurate action after a formal complaint is made will not be sufficient to avoid a finding of vicarious liability.

Did the Club take all reasonable steps?
The ADT held that under section 53(3), it is not enough that the employer 'take reasonable steps' but must rather take 'all reasonable steps' in order to avoid liability.

The Club was found to have taken all reasonable steps to prevent the harasser from re-offending once the formal complaint had been made. However, the Club's actions before the harassment occurred were considered to be also (if not primarily) pivotal to this issue.

In this regard, the ADT acknowledged that certain managers had recorded reports about the harasser before the formal complaint was made and that the Club was expressly committed to its non-discrimination policies and procedures. However, attempts to promulgate these policies by way of induction seminars and the distribution of an Employee Handbook did not satisfy the 'reasonable steps' requirement. Furthermore, the Club's various documentation did not make the reporting procedure perfectly clear and inconsistencies existed. Managers also had insufficient training in relation to the AD Act and sexual harassment generally.

The complainant was awarded $15,000 for pain and suffering in relation to the traumatic neurosis, adjustment disorder and anxiety disorder she had suffered as a result of her experience.

In the second recent decision dealing with this issue, the Queensland Anti-Discrimination (AD Tribunal) found an employer vicariously liable for the sexual harassment of an employee by his work colleagues. Only having an 'open door' complaints policy in place was not enough for the employer to show it had taken reasonable steps to protect their employees.

The facts
The complainant commenced employment at Watkins Steel Pty Ltd (Watkins Steel) as an apprentice boilermaker. He worked for the employer for approximately seven years. The employee left his employment and then brought a claim for sexual harassment against his former work colleagues and his employer. He claimed the harassment caused him to leave and to suffer a depressive illness.

The complainant alleged that two of his colleagues had harassed him by:
  • asking him his sexual preference;

  • implying he was a paedophile;

  • telling other employees of Watkins Steel that he 'often had sex with little boys';

  • telling him that he often frequented gay bars;

  • describing him in front of his work colleagues as a gerbil; and

  • taking hold of him and simulating acts of sexual intercourse with an explicit commentary.
The employees denied such conduct had occurred to their knowledge. They described the workplace as 'jovial'.

Watkins Steel argued that they had no knowledge of this conduct and that it had never been made aware of the conduct by the complainant. They argued they took reasonable steps to prevent the employees from contravening the Anti-Discrimination Act 1991 (Qld) (AD Act) by maintaining an 'open door' complaints policy.

The complainant was described as having the following: a vulnerable disposition, learning difficulties, had been sexually abused as a child and had disclosed that to his parents during the term of his employment at Watkins Steel. He also had a dependency on alcohol and he had financial pressures due to the collapse of his parent's business.

The decision
The AD Tribunal found that the remarks of a sexual nature were made with sexual connotations for the purposes of section 119(c) of the AD Act. It was held to be irrelevant whether or not the comments were intended as jokes as the so-called jokes were ones with sexual connotations relating to the complainant.

In addition, the harassment continued despite an awareness of one of the employees that it caused offence to the complainant.

Relevantly, Watkins Steel was held vicariously liable. The AD Tribunal found that Watkins Steel did not take any steps to prevent the employees from contravening the AD Act. The AD Tribunal found that Watkins Steel had no policy to identify and prevent harassment occurring other than the general 'open door' policy.

The AD Tribunal refused to draw any adverse conclusion from the fact that the complainant had failed to complain to persons in authority at Watkins Steel. It accepted that he might not have discussed the continuing ridicule because of misplaced bravado about his capacity to deal with the offensive conduct.

The AD Tribunal concluded that despite the vulnerable disposition of the complaint that on the balance of probabilities based on the medical evidence, it was the misconduct to which the employee was exposed to at his workplace that led to his depressive illness. Had he not been harassed then he may have been able to continue in his employment and be capable of dealing with other problems in his life.

The AD Tribunal awarded loss of earnings of $9,600 for past loss, $10,400 for hurt, humiliation and distress and $6,000 for legal costs.

The two employees were each ordered to individually pay $13,000 to the complainant, with Watkins Steel jointly liable with each employee for a total of $26,000.

Implications for employers
These cases reinforce that employers should take care to ensure that:
  • managers have the ability to recognise unlawful behaviour and take appropriate action in response to it;

  • appropriate procedures and prevention mechanisms are in place before an incident occurs;

  • discrimination and harassment policies and procedures are properly, effectively and regularly disseminated to employees and, where necessary, training conducted;

  • clear and consistent reporting procedures are documented;

  • managers receive adequate training and understand that obligations under the relevant legislation/State;

  • an 'open door' policy or sympathetic management approach alone will not protect an employer from being vicariously liable under the AD Act
    a failure of an employee to complain to management will not protect an employer from being vicariously liable under the relevant legislation.



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