15 Apr 2021

No substantive changes for employers in upcoming sexual harassment reforms but work still needed to manage the risk

By Christy Miller and Beth McKenna

Although the Federal Government Response to the [email protected] Report brings no substantive changes to employer obligations or responsibilities for workplace sexual harassment, it's a good reminder to take immediate and appropriate action to address allegations.

Although the Australian Human Rights Commission's (AHRC) 55 Recommendations to prevent and address sexual harassment in Australian workplaces, published in the [email protected] Report on 29 January 2020, included a number of technical and substantive reforms, the recommendations agreed to by the Federal Government on 8 April 2021 involve minimal substantive legal changes.

Anti-discrimination, employment and work health and safety legislative schemes already impose various legal obligations on employers to prevent and address sexual harassment in the workplace. Employers must already ensure, so far as is reasonably practicable, that workers are not exposed to the risk of sexual harassment and properly investigate and respond to complaints. The AHRC recommendations agreed to by the Morrison Government do not impose any further obligations on employers.

Further, despite some commentary suggesting that the proposed reform will now provide a right to employers to terminate the employment of those found to have engaged in sexual harassment, it is important to understand this is not new, nor do these laws only mean that "from now" employers should act on allegations of sexual harassment. The ability to terminate has always been there, the obligation on employers to protect the health and safety of all employees has always been there. At most, employers should use this legislative "reform" as a warning that potentially regulators may become more involved in this space and it may signal to courts the need for higher compensation/penalties for these matters that may make it to final hearing.

What will (or won't) change for allegations of sexual harassment

The recommendations aim to improve the co-ordination, consistency and clarity between the anti-discrimination, employment and work health and safety legislative schemes. Although The Response is said to be about "creating a new culture of respectful behaviour in Australian workplaces", a number of the accepted recommendations merely clarify and confirm existing protections in Australian law.

For example, the Federal Government agreed with amendments to the Sex Discrimination Act 1984 (SDA), the Fair Work Act 2009 (FWA) and the Fair Work Regulations 2009 (FWR) to explicitly confirm that:

  • sexual harassment is considered "serious misconduct" under the FWR; and
  • sexual harassment can be conduct amounting to a valid reason for dismissing an employee under the FWA.

These are words only. The definition of serious misconduct has always been wide enough to capture sexual harassment and anyone believing proven sexual harassment did not provide a valid reason to terminate is misguided.

The Federal Government also agreed in principle, but may clarify, that "stop bullying" orders under the FWA apply to sexual harassment. "Stop bulling" orders demand cessation of repeated unreasonable behaviour that creates a risk to an employee's health and safety. Arguably, where sexual harassment forms part of a pattern of such behaviour, "stop bullying" orders already apply. Although the AHRC recommended the creation of an equivalent "stop sexual harassment" order, with the objective of capturing a broader range of conduct, the Government indicated a preference to merely clarify that existing "stop bullying" orders are available in the context of sexual harassment.

In any event, as the proposed legislative amendments have not yet been drafted and will not be introduced to Parliament until later this year and the opposition has not yet responded to the recommendations, at this stage, for employers, it's business as usual. But "business as usual" should always include investigating and managing complaints of sexual harassment, acting on proven allegations and monitoring the workplace for systemic concerns.

Possible future reforms: increased regulatory burden on employers, and possibly costs orders too

The Federal Government further noted for consideration the recommendation to impose a duty on employers under the SDA to take reasonable and proportionate measures to eliminate sexual harassment. Again, this duty already exists as, under the model WHS laws, employers must ensure that workers are not exposed to health and safety risks, including the risk of sexual harassment, so far as is reasonably practicable. Employers must also already ensure they are not vicariously liable for sexual harassment under the SDA. Certainly, this recommendation would duplicate the existing employer duty under WHS laws. However, given the regimes have different complaint and resolution processes, the recommendation could provide a more accessible, informal process for complainants. The impact for employers will then be an increased regulatory burden. A breach of the safety laws and a complaint to the relevant State Safety regulator may give rise to investigation, issuing of breach or non-compliance notices and potentially (but rarely) prosecution. Other avenues might include an investigation and findings by the workers compensation regulator if the complainant can point to a diagnosable medical condition arising from the sexual harassment.

If a duty to take reasonable and proportionate measures to eliminate sexual harassment was imposed on employers under the SDA, the dispute resolution process would enable complainants to have the matter investigated and conciliated through the AHRC. This would provide complainants with a more accessible, informal process and increase the opportunity for compensation.  

The Federal Government also noted a number of more substantive reforms for consideration which, if implemented, could increase consequences on an employer for non-compliance. For example, the AHRC recommended that the Australian Human Rights Commission Act 1986 be amended to change the default position from the unsuccessful party being responsible for costs to each party bearing its own costs. Costs would remain at the court's discretion and exceptions would apply. This is a double-edged sword for employers as it is unlikely they will be able to recoup costs and there remains a potential for cost orders to be made against them based on conduct/behaviour even if they are successful.

Doing the work to manage the risk of sexual harassment

Ultimately the Response might be a missed opportunity by the Government but employers need to take their cues on this one from the weight of public opinion – such conduct cannot be tolerated. That has always been the law. Business will need to determine their own initiatives to make real and substantial change in their workplace. There is no one size fits all policy that will do it. Monitoring, robust complaint-making systems, timely resolution and management of complaints followed by review, education and realignment of workplace expectations is the only way to do it. Real and measurable change in a workplace culture takes time and no one has a perfect solution to achieve this goal but we must all strive for this change. It just makes good business sense.

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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.