12 Aug 2010

Trade Practices Act: a new path for sexual harassment claims?

All corporations and organisations in Australia should be paying attention to the David Jones sexual harassment case, because, if it succeeds, there will be a new, and quicker, path for making claims of sexual harassment.

The claims being made by Kristy Fraser-Kirk are based on alleged breaches of the Trade Practices Act (TPA) - that is, as "misleading or deceptive" conduct.

While it is too early to make any comment on the strength or merits of her allegations, they do have broader implications for other organisations. In particular they could affect the way that your organisation expresses its policies on inappropriate or unsafe or illegal behaviour in the workplace, and presents them to your employees.

What is at the heart of the claim in the DJs case?

The claims allege that misleading or deceptive representations were made in Kristy Fraser-Kirk's initial employment interview about the work culture and employment conditions that she could expect if she accepted an offer to work at David Jones. Written policies and other statements were allegedly made in that interview or at that time that:

  • David Jones and its Board Management were committed to "providing a safe and healthy workplace";
  • David Jones "did not tolerate harassment, discrimination or bullying in the workplace"; and that
  • David Jones was committed to the values and behaviours described in its "Code of Ethics and Conduct".

Why is this innovative?

The usual path to the Federal Court for claims of breaches of the Sex Discrimination Act is via the Australian Human Rights Commission, which attempts to conciliate the matter. Only if conciliation doesn't resolve the matter can a complainant apply to the Federal Court.

By pleading her case as a TPA claim, Fraser-Kirk has circumvented the procedure outlined above, thereby bringing her case to court more quickly than if she had taken the usual path for sexual harassment claims.

She hasn't however excluded completely the possibility of bringing traditional claims; she has indicated in her TPA claim that she will also pursue a claim in the Australian Human Rights Commission (which could then be joined to her TPA proceedings), and reserved the right to claim adverse action was taken against her in breach of the General Protections provisions in the Fair Work Act 2009.

Policies concerned with harassment or illegal behaviour - a representation? Of what?

The TPA case alleges that for David Jones to make these statements and distribute these policies was "misleading or deceptive" conduct in trade or commerce or in conjunction with the offer of employment, because of the subsequent alleged conduct.

In effect, Fraser-Kirk's claim is based on the idea that these policies and procedures are to be understood by employees and others as a statement or representation - in effect a guarantee - that such conduct will not occur and not be tolerated within the organisation, and not merely as aspirational statements.

But don’t the representations need to be made "in trade or commerce"?

There are conflicting views as to whether representations made in the course of negotiations with a prospective employee are "in trade or commerce".

However, Fraser-Kirk has also alleged breaches of section 53B of the TPA which says that a corporation shall not, in relation to employment that is or may be offered by the corporation engage in conduct that is liable to mislead persons seeking the employment as to the availability, nature, terms or conditions of, or any other matter relating to, the employment. Section 53B may be relevant to the extent it relates to allegations about the conditions of Fraser-Kirk's proposed employment at David Jones.

Failure to correct the media - can silence be misleading?

It is alleged that during a press conference, David Jones, through members of the Board of Directors, made representations to the effect that the incident involving Fraser-Kirk had been a single event and that David Jones had previously had no reason to question the conduct of McInnes.

Fraser-Kirk is claiming that not only were these representations misleading and deceptive, the Board of Directors' failure to correct them (and subsequent misleading representations made by the media) was also misleading and deceptive.

Silence or a "failure to correct" may amount to a breach of the TPA if, in all of the circumstances constituted by the acts, omissions, statements or silence, there has been conduct likely to mislead or deceive. However, there must be either a duty to disclose relevant facts, or the circumstances are such that a reasonable expectation exists that a relevant fact would be disclosed if it existed.

This claim is highly novel as there is no precedent for the proposition that it is reasonable to expect a corporation to correct all misleading or deceptive statements made about it or its employees in the media.

So what does this mean for employers?

Although this method of claiming damages for sexual harassment is innovative, and thus untried, it should be taken seriously.

First, instead of taking the slow road through the Australian Human Rights Commission, complainants would be able to speed up things by going via the TPA simultaneously in the Federal Court.

Secondly, this raises a question for any corporation or organisation which has put in place compliance and other policies designed to prevent inappropriate or unsafe or illegal behaviour in the workplace.

Are these policies and procedures to be understood by employees and others as a statement or representation - in effect a guarantee - that such conduct will not occur and not be tolerated within the organisation? Or are they aspirational statements only?

If Ms Fraser-Kirk succeeds, all organisations would need to review their policies and how they are presented to employees and prospective employees.

For the time being all employers should, as always, be careful what they say and take sexual harassment prevention and compliance seriously.



Related Knowledge

Get in Touch

Get in touch information is loading


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.