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28 Aug 2009

Federal Court orders employer pay employee $466,000 for sexual harassment

by Joe Catanzariti

This case demonstrates the importance of taking complaints of harassment seriously and appropriately investigating and handling such complaints.

In Poniatowska v Hickinbotham [2009] FCA 680 the Federal Court ordered that $466,000 be paid by an employer to a former employee in damages for unlawful discrimination.

Ms Poniatowska was employed as a building consultant by Employment Services Australia (ESA) to sell house and land packages on behalf of Hickinbotham Homes Pty Ltd. Ms Poniatowska made a range of complaints alleging that she had been subjected to sexual harassment in the workplace. She was then issued a number of formal warning notices and ultimately terminated for "unsatisfactory performance".

The sexual harassment alleged by Ms Poniatowska was comprised of a number of incidents, including that:

  • the Chairman of Hickinbotham Group had told her that she had "two good assets" while staring at her breasts;
  • she had received a number of inappropriate emails from a co-worker - Mr Flynn - suggesting that they embark upon a sexual relationship;
  • when Ms Poniatowska reported this to her team leader Ms Sharrad, Ms Sharrad had remarked "what do you expect with a face like yours?";
  • Ms Poniatowska was rostered to work with another employee -Mr Lotito -that she specifically asked not to work with and Mr Lotito subsequently sent her a pornographic MMS message and numerous telephone invitations for sex;
  • Ms Sharrad had requested that Ms Poniatowska enter into a sexual relationship to advance a deal being conducted by Hickinbotham Group; and
  • that the Managing Director had kissed her on the mouth at a work function.

Decision

Justice Mansfield of the Federal Court found that the majority of incidents alleged by Ms Poniatowska had taken place. Although he did not uphold the allegations in relation to harassment by the Chairman or Managing Director and did not accept that Ms Sharrad had requested that Ms Poniatowska enter into a sexual relationship to advance a deal being conducted by Hickinbotham Group, he found that Mr Flynn and Mr Lotito had harassed Ms Poniatowska in the manner alleged and that the company had not adequately responded to these incidents.

The Court also held that the termination of Ms Poniatowska was in fact related to the incidents described above, rather than the quality of her performance.

Importantly, Justice Mansfield drew attention to the absence of appropriate workplace policies for dealing with the harassment and noted that Ms Poniatowska was not treated like a victim but was instead penalised. She was treated less favourably than a man would have been treated in the same circumstances and then dismissed. Justice Mansfield held that this constituted unlawful discrimination.

Relief

Justice Mansfield awarded Ms Poniatowska a total of $466,000 to compensate for the unlawful discrimination. This amount factored in sums for:

  • pain and suffering;
  • lost earning capacity (both past and in the future);
  • interest; and
  • medical expenses (relating to the severe depression and anxiety that Ms Poniatowska had developed as a result of the harassment).

Justice Mansfield also gave ESA leave to apply for some of the costs to be paid by the various employees involved in the unlawful discrimination.

Solicitors for ESA have confirmed that ESA intends to appeal the decision.

Lessons

This case demonstrates the importance of taking complaints of harassment seriously and appropriately investigating and handling such complaints. Employers need to have policies in place which specify appropriate workplace conduct and must discipline employees that engage in any inappropriate conduct. The case also illuminates the need for staff in leadership positions to be adequately trained to manage these situations. Justice Mansfield was particularly critical of the manner in which Ms Sharrad responded to Ms Poniatowska when she reported various instances of sexual harassment.

Further, employers must be careful if they intend to terminate for poor performance an employee who has made complaints of this nature. Any termination must be genuinely related to performance concerns. It is not enough to simply send the employee official warning letters. There must be clear reasons to substantiate that termination, otherwise the termination may be viewed as another form of discrimination against the victim of alleged harassment.

This article was written when Joe was a partner at Clayton Utz and does not necessarily reflect his views as Vice-President of the Fair Work Commission.

Thanks to Rita Bhattacharya for her help in writing this article.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.