Substantial increase in damages for sexual harassment

Workplace Directions

In a landmark decision which indicates that Australian courts are now likely to take a significantly different approach to awarding damages for sexual harassment, the Full Court of the Federal Court (Full Court) has increased the quantum of damages previously awarded to an employee who was sexually harassed by her co-worker from $18,000 to $130,000.

In February 2013, the Federal Court found that Ms Richardson’s employer, Oracle Corporation Australia Pty Ltd (Oracle), was vicariously liable for her colleague’s inappropriate behaviour because it failed to take all reasonable steps to prevent him from making (among other things) repeated humiliating and offensive comments towards her in the workplace.

Despite finding in favour of Ms Richardson, the Federal Court declined to award her damages for economic loss. It held that her decision to resign from her employment with Oracle and accept another role on a lesser salary was a decision which was not forced upon her, and which she made of her own volition.

Ms Richardson appealed to the Full Court on a number of grounds, the most fundamental of which was that the amount of general damages awarded to her was ‘manifestly inadequate’, and that she should have been entitled to damages for economic loss. Ms Richardson was successful on both of these grounds.

The Full Court held that the damages awarded to Ms Richardson failed to properly reflect current community standards, which importantly “place a higher value on the loss of enjoyment of life and the compensation of pain and suffering than in the past”.

Historically in Australia, victims of sexual harassment have typically been awarded damages within the range of $10,000 to $20,000.

By reference to several recent Australian decisions where significant awards of damages have been made in respect of personal injury or breach of contract claims[1], Justice Kenny noted that:

  • In the context of workplace bullying and harassment cases, awards of damages today place a significant value on the loss of enjoyment of life and the experience of pain and suffering
  • There appears to be no ‘in-principle difference between the compensable value of the pain and suffering and loss of enjoyment of life suffered by a victim of sexual harassment (in this case, in the workplace) and of a victim of (workplace) bullying and harassment lacking a sexual element’
  • Courts have tended to award substantially less amounts of damages in respect of sexual harassment claims than in respect of other claims resulting in personal loss or injury
  • This disparity indicates that ‘today an award for sexual harassment, though within the accepted range for such cases, may be manifestly inadequate as compensation for the damage suffered by the victim, judged by reference to prevailing community standards.’

Essentially, it was held that while the sum of $18,000 was consistent with past awards in similar sexual discrimination and harassment cases, community standards and expectations have progressed such that more significant awards of damages should now be considered appropriate.

This is a landmark decision which demonstrates the Federal Court’s willingness to apply a more generous approach to awarding damages in respect of sexual harassment cases in Australia, and importantly to align the quantum of those awards to the quantum of damages awarded in comparable cases (including for example, breach of contract claims).

Lessons for employers

This decision has the potential to result in Australian courts making orders for substantial sums in respect of damages for sexual harassment and discrimination in the future.

As such, the decision serves as an important reminder for employers to ensure their workplace policies (including but not limited to codes of conduct and any other workplace behaviour policies), procedures and training programs are up to date and properly implemented.

Employers should also seek to ensure that fair, defensible, and well documented workplace investigation procedures are implemented to ensure inappropriate workplace behaviour such as bullying or sexual harassment is appropriately identified and addressed.

Authored by Elizabeth Radley, Partner and Kaitlin Foxall, Lawyer, Newcastle.

 



[1] See for example: Swan v Monash Law Book Co-operative [2013] VSC 326; Nikolich v Goldman Sach JBWere Services Pty Limited [2006] FCA 784; and Walker v Citigroup Global Markets Australia Pty Ltd [2006] FCAFC 101; (2006) 233 ALR 687.


Related Articles

FWC considers micromanaging behaviour to be a valid reason for dismissal

Workplace Directions

Carroll v Karingal Inc [2016] FWC 3709 The Fair Work Commission (‘Commission’) recently held that a manager’s micromanaging behaviour of employees…

Continue reading

Soccer star’s discrimination claim kicked out

Workplace Directions

A recent decision of the New South Wales Civil and Administrative Tribunal (‘NCAT’) has dismissed the claim of a female football…

Continue reading

Reasonable management action or bullying?*

Workplace Directions

A recent decision of the Administrative Appeals Tribunal (Tribunal) may provide some guidance as to the meaning of ‘reasonable management action’.…

Continue reading