14 Mar 2013

Employer's global sexual harassment policy fails to pass muster

by Stuart Pill, Leigh Howard

A global policy that did not address specific Australian requirements meant an employer did not take all reasonable steps to prevent sexual harassment

The Federal Court has clarified what information is essential content for employment policies in Richardson v Oracle [2013] FCA 102 – and it's quite possible yours is missing it, especially if you are part of a multinational group.

While Richardson concerned a sexual harassment policy, it is a useful guide more generally to employers and what they ought to consider when drafting employment policies. Following the ruling, it would be prudent to ensure that your employment polices address the requirements identified by the Court. In particular, multinational employers with global policy frameworks must consider the ruling carefully.

A failure to review policies to ensure compliance with the principles in Richardson might risk a future finding of vicarious liability under the Sex Discrimination Act or other anti‑discrimination laws.

Ms Richardson's sexual harassment complaint

Ms Richardson was found by the Court to have been subjected to a pattern of unwanted sexual advances and humiliating slurs over the course of several months. The employer first became aware of this behaviour when she sought to make an "informal" complaint. The employer promptly investigated, which eventually led to the duties of both employees being separated so that they would not have to work together in the future. A final written warning was given to the perpetrator of the conduct.

Dissatisfied with this outcome, Ms Richardson resigned and commenced proceedings against the perpetrator and the employer under the Sex Discrimination Act 1984 (Cth). She argued that the employer was vicariously liable. This was confirmed by the Court, who ordered that the employer pay the victim $18,000 by way of compensation.

How can employers be vicariously liable under the Sex Discrimination Act?

An employer can be held vicariously liable for sexual harassment committed by an employee if:

  • the conduct is "in connection with" the employee's employment; and
  • the employer failed to take "all reasonable steps" to prevent the conduct from occurring.

How can an employer take "all reasonable steps"?

How an employer takes all reasonable steps depends on a range of  factors, most notably the size and sophistication of the employer. Example steps include:

  • preparing and promoting a written policy on workplace discrimination and harassment;
  • training staff to identify and prevent workplace discrimination and harassment;
  • establishing an effective internal complaints procedure;
  • treating all complaints seriously and investigating them promptly;
  • appointing trained harassment contact officers; and
  • ensuring that appropriate action is taken to address and resolve complaints.

In Richardson, the victim argued that the employer's investigation, training program and written policy were all deficient. The Court did not accept that the investigation or training program were deficient, but held that the policy was.

Why was the sexual harassment policy insufficient?

As part of taking "reasonable steps", the employer had implemented a global sexual harassment policy applicable across its global enterprise. Every two years, it also required its employees to complete attendant online sexual harassment training. Both the policy and training module were designed overseas and were based on "global standards" of how to appropriately act in the workplace. As a consequence, they were not adapted to the specific legislative requirements applicable to Australian workplaces.

It was for this reason that the Court ultimately concluded that the employer failed to take all reasonable steps.

What should a sexual harassment policy contain?

The Court considered that a sexual harassment policy should, at a minimum:

  • state that conduct amounting to sexual harassment is unlawful;
  • outline the legal foundation in Australia that outlaws such conduct; and
  • indicate that the employer might be vicariously liable for such conduct.

The Draft Human Rights and Anti-Discrimination Bill

Employers should also be aware of the proposed changes set out in the Human Rights and Anti‑Discrimination Bill 2012 (Cth). The Bill seeks to consolidate all anti‑discrimination laws into one statute, and importantly, proposes to alter how an employer can be vicariously liable. Instead of requiring "all reasonable steps", the Bill proposes that employers must show that they took "reasonable precautions and exercised due diligence" [emphasis added]. While uncertain, it appears that the proposed change is a more onerous standard and will require employers to consider a range of proactive steps beyond having a sufficient policy which is disseminated and implemented. The scope of these new proactive steps is likely to be the subject of guidance from the Australian Human Rights Commission.

We are closely monitoring the progress of the Bill and we'll explore its impact in future editions of Insights if it passes Parliament.

Clayton Utz regularly reviews employment policies for clients to ensure they meet best practice. We also conduct investigation training for HR professionals.

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