Company Ordered To Pay More Than $100,000 For Sexual Harassment By Worker

Full Federal Court Sets New Benchmark

The Oracle decision in the Full Court of the Federal Court in July 2014 concerned complaints by an employee Rebecca Richardson, that she had been sexually harassed by a fellow employee on a regular basis over a period of some months.  In the court below, a single Judge of the Federal Court had awarded damages against Oracle of $18,000 for non economic loss (i.e. for pain and suffering).

In the appeal in the Full Federal Court, the court said that the generally accepted range of damages in these types of cases had been in the range of $12,000 to $20,000. However, the Full Federal Court concluded that the Court had to take into account changes in prevailing community standards and the greater understanding these days of the impact that sexual harassment can have on victims.  Accordingly, the Full Federal Court declined to order an amount of damages within the previously accepted range and instead ordered damages for non economic loss of $100,000 (plus further damages for loss of salary).

Given the seniority of the court making this decision, it is highly likely that it will provide a new benchmark for all future claims for damages for sexual harassment – 5 times greater than the previous level of damages.

What must employers do?

For companies to avoid liability for sexual harassment committed by their workers, they need to prove to a court that they took all reasonable steps to prevent the employee engaging in sexual harassment.  A review of the case law shows that companies will need to address at least the following matters to demonstrate that they have taken all reasonable steps:

  • Have an adequate Sexual Harassment Policy in place and ensure employees are aware of their obligations.
  • Have effective investigation policies in place to ensure that sexual harassment complaints are properly investigated.
  • Apply punishments to employees who sexually harass that are appropriate having regard to the outcome of the investigation.

Larger employers would also need to provide sexual harassment training to employees.

So where did Oracle go wrong?

While Oracle had a Sexual Harassment Policy, the Trial Judge found that it was inadequate, and that to be effective a Sexual Harassment Policy must:

  • State in clear terms that sexual harassment is against the law;
  • Identify the legislation which makes sexual harassment illegal; and
  • Make it clear that the employer might also be liable for sexual harassment by an employee.

In this case, Oracle’s Sexual Harassment Policy did not cover any of these three points.  The case also illustrates that it is important to include in a Sexual Harassment Policy a statement to the effect that a breach of the policy might, depending on the circumstances, result in the termination of an employee who breaches it.

Paul Hesse heads our employment law department and is able to help businesses who want to get their Sexual Harassment Policies right and avoid potential liability.