If you saw it on an episode of Mad Men, don’t do it…

Sexual harassment can cost a business dearly in terms of lost productivity, staff turnover, recruitment costs, legal fees and court awarded damages. Two recent court cases have shown us that courts are now prepared to make increasingly large awards to compensate victims of sexual harassment.

Here we give you the tools to identify sexual harassment in the workplace, and provide the steps you need to take to prevent it.

The high cost of sexual harassment: A couple of cases

In the landmark 2014 decision of Richardson v Oracle Corporation Australia Pty Ltd and Tucker, Ms Richardson was awarded $18,000 as compensation for repeated sexual harassment by a male colleague. However, on appeal her compensation was significantly increased to $130,000. The court took the view that the higher amount more adequately reflected the changing community attitude toward sexual harassment at work.

In another 2014 decision of Vergara v Ewin, Ms Ewin was awarded $476,163 in compensation for repeated sexual harassment by a male colleague. The decision made headlines as one of the biggest sums awarded to a victim of sexual harassment on record in Australia.

Although these two cases represent some of the worst examples of sexual harassment in the workplace, they clearly show a shift in the willingness of the courts to award significant damages to victims. This upwards trend seems likely to continue.

So what is sexual harassment?

Although most of us could probably spot sexual harassment if we saw it, few of us know the legal definition of sexual harassment.

Under the Sex Discrimination Act 1984 (Cth) sexual harassment is broadly defined as behaviour that is unwelcome and sexual in nature that could reasonably cause offence, humiliation or intimidation to another person.

This broad definition means that an individual can be sexually harassed even if the unwelcome conduct is not directed at them and even if they were not actually offended, humiliated or intimidated.

It’s all about the context

Whether someone might have been offended, humiliated or intimidated will depend on the circumstances, including their sex, age, sexual orientation and the relationship between the victim and the perpetrator.

Whether sexual harassment has actually occurred will depend on who is involved and the type of workplace the conduct takes place in. So an off-colour joke may be sexual harassment if it is told in a mixed-gender corporate workplace, but arguably might not be if kept within a single-sex construction team.

When is sexual harassment unlawful?

Sexual harassment is unlawful when it takes place between workplace participants. A ‘workplace participant’ is not only an employee but also a contractor, labour hire worker, commission agent, volunteer or a partner within a partnership. In fact, the person who harassed Ms Ewin in Vergara v Ewin was actually a labour hire contractor, not even an employee.

The meaning of ‘workplace participants’ also extends to prospective employees, contractors and partners. This means that business owners need to be cautious about monitoring who they let into the workplace, even on a temporary or informal basis.

What can I do to minimise the risk of a claim?

As the cases of Ms Richardson and Ms Ewin show, businesses can be liable for sexual harassment by their workers and ordered to pay court awarded compensation (often large sums) to victims. Although there is no absolute way to prevent a claim for sexual harassment, the best defence is a good offence. This means that business owners need to be proactive in taking all reasonable steps to prevent sexual harassment from occurring.

As a starting point, all businesses should put in place a clear and comprehensive workplace policy which clearly states that sexual harassment is unlawful and sets out the consequences for perpetrators. However, having a sexual harassment policy on its own is not enough – it must also be widely communicated and enforced.

We also recommend that training sessions should be held as a “refresher” on the policy every six to twelve months, to ensure that new employees are acquainted with the policy and that existing employees are up-to-speed on it. Depending on the size of your business, implementing a regular training program or incorporating training into your workplace induction can be a very effective way to give a high level of training to your workers, especially new workers.

An aspect that many businesses fall over on is the enforcement of policies or punishment of workers who have perpetrated an offence. Many of the businesses who are made to pay large sums of money failed to take complaints seriously, or failed to discipline the perpetrator. These types of failures compound the distress and embarrassment already suffered by the victim, and can lead to more significant emotional and mental injury (and therefore greater financial compensation in the event of a claim).

We encourage all business owners to take any complaint seriously by formally recording it and making appropriate inquiries into the complaint in the workplace. We also urge businesses to be consistent in the disciplinary action they take against workers who perpetrate acts of sexual harassment. This is easiest to do when your workplace policy is clear on the consequences.

The important thing is that you make it clear to your workers that also help workers understand exactly what behaviour is and is not acceptable in the workplace – and that you make efforts to reinforce the message.

What to do if you receive a complaint of sexual harassment

Despite your best efforts, a business will never be immune from complaints of sexual harassment, which in each case must be handled sensitively.

Investigations should be carried out as quickly and fairly as possible. An external consultant may need to be engaged if there are doubts over the independence of the investigators or decision makers.

The victim and the accused person will likely need to be kept separate while the investigation takes place. This may include allowing one or both of them to perform their work duties from home if they prefer.

The accused person should be given an opportunity to respond formally to the complaint – in writing is usually preferable.

Like with all complaint handling procedures, businesses need to carefully document all meetings and all decisions made in relation to the complaint.

After a thorough investigation, appropriate disciplinary action should be taken against any perpetrator. This action will often be termination of employment, but for less serious behaviour may include training, education or redeployment.

Going forward, past complaints should be monitored to ensure that the decisions made or disciplinary action taken has been appropriate and sufficient. And above all, business owners must ensure that victims are protected against retaliation.

Although we have only focused on the main Commonwealth legislation dealing with sexual harassment, businesses also need to be aware that State-based sexual harassment legislation may also apply to them.

To find out more…

If you would like assistance preparing a sexual harassment policy or dealing with a sexual harassment complaint or claim, call us on 1300 654 590 or email us.


The information contained in this post is current at the date of editing – 26 July 2022.

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