Australia: Human rights at the pub: The expanding scope of sexual harassment laws

Australian Labour, Employment and Workplace Safety Alert
Last Updated: 11 September 2014
Article by Nick Ruskin, Sam Jackson and Jessamy Kenny

Vergara v Ewin [2014] FCAFC 100

A recent decision of the Full Court of the Federal Court (Court) has significantly broadened the concept of what constitutes a 'workplace' by finding that a contractor sexually harassed an employee in various locations, including a pub and even on the footpath of a city street. The Court awarded significant compensation to the complainant.

Although this case involved proceedings against the perpetrator of the harassment and not the victim or perpetrator's employer, the potential for employers to be held vicariously liable for the conduct of their workers, in what might otherwise be considered their 'private' time, provides a timely reminder of the need to have comprehensive policies and training in place regarding sexual harassment and discrimination in the workplace. Such policies and training must now incorporate the extended definition of the workplace which may include a pub, a city street or perhaps even the home of a worker who uses social media or text messaging to engage in sexually harassing conduct.

The consequences of this decision are particularly significant in light of a recent decision of the Court that has established a higher benchmark for the award of damages in these types of cases ( see related article).

Background and First Instance Decision
Jemma Ewin was a chartered accountant employed by Living and Leisure Australia Ltd (LLA) as its Financial Controller. Claudio Vergara was engaged by LLA on a short term contract through a labour hire company. Mr. Vergara also worked in the finance team and was directly managed by Ms. Ewin.

At trial, Ms. Ewin alleged Mr. Vergara sexually harassed her in contravention of the Sex Discrimination Act 1984 (Cth) (Act) on at least the following four occasions in 2009.

  • On 13 May, Mr. Vergara urged Ms. Ewin to leave the office and go to the pub across the street with him. While at the Waterside Hotel in Melbourne's CBD, Mr. Vergara made sexually explicit comments to Ms. Ewin and proposed they commence an affair. As Ms. Ewin was leaving the pub walking up King Street, Mr. Vergara attempted to kiss her.
  • On 14 May, at a client's offices, Mr. Vergara sexually propositioned Ms. Ewin and made other sexually explicit statements.
  • On 15 May, while at work, Mr. Vergara again requested sexual favours from Ms. Ewin.
  • On the evening of 15 May, following an LLA function, Mr. Vergara had non-consensual sexual intercourse with Ms. Ewin and engaged in inappropriate and unwelcome kissing and touching in the corridor outside LLA's office.

At the trial, Justice Bromberg found that Mr. Vergara had sexually harassed Ms. Ewin on all four occasions and held that she ultimately left her employment with LLA because of the effect of Mr. Vergara's conduct had on her. The Court awarded Ms. Ewin AUD476,163 (to be reduced by the amount paid to Ms. Ewin in settlements achieved with LLA and Mr. Vergara's labour hire employer).

Mr. Vergara appealed the decision on a number of grounds, including that the King Street footpath and the pub did not constitute a workplace for the purposes of the Act.

When is the Pub Across the Street a Workplace?
For unlawful sexual harassment to have occurred, the Court had to be satisfied that the alleged conduct occurred at a place that was a 'workplace' of both Ms. Ewin and Mr. Vergara. A 'workplace' is defined in the Act to mean "a place at which a workplace participant works or otherwise carries out functions in connection with being a workplace participant".

Therefore, for Mr. Vergara's conduct on 13 May 2009 to be deemed unlawful sexual harassment, it was necessary for Ms. Ewin and Mr. Vergara to be working, or carrying out some other work function, at the pub and on King Street.

By a majority of two to one, the Court agreed the conduct of Mr. Vergara at the pub and on King Street on 13 May 2009 was carried out at the workplace. Justices North and Pagone stated that because Ms. Ewin and Mr. Vergara had moved to the Waterside Hotel "to deal with [the] incident of harassment" that had commenced at the offices of LLA, it was open to the trial judge to find that they were at the pub in furtherance of their workplace functions.

Amendments to the Act which came into effect in 2011, further expand the impact of this decision, including:

  • amendments making it clear sexual harassment can be conducted through technologies such as social media and text messages
  • an amendment to the definition of sexual harassment in the workplace to make it clear the alleged conduct can occur at a place that is a 'workplace' of either or both of the complainant and respondent.

When the above legislative amendments are considered in conjunction with the decision of the Court in this case, the potential ramifications for employers are significant.

Employers must be alert to the potential of unlawful conduct occurring outside the office, including by way of social media and text message. Further, employers must cover in their policies and training the potential for unlawful conduct, such as sexual harassment, to be carried out by visitors to their workplace, including clients and customers (provided they are a 'workplace participant').

Lessons for Employers
Although the employers in this case ultimately settled with Ms. Ewin before their matters were heard in court, there are a number of key lessons that employers can take away from this case.

An employer can be held legally responsible for acts of discrimination or sexual harassment engaged in by their employees or contractors. This concept is known as vicarious liability. An employer can avoid liability by establishing that it took reasonable steps to prevent the discriminatory or harassing conduct.

In order to prevent sexual harassment in the workplace, as well as avoid vicarious liability for a worker's behaviour, employers should:

  1. ensure appropriate and best practice sexual harassment and appropriate workplace conduct policies are in place
  2. implement training and educational programs on sexual harassment and appropriate workplace conduct, including both induction and regular refresher training
  3. ensure they adequately monitor and supervise the workplace to ensure compliance with policies.

It is particularly important to ensure that implementation of training and policies are adapted to the relevant workplace and to the particular needs of different employees within the workplace. Simply drafting a generic policy and filing it away on the company intranet is not sufficient to establish that reasonable steps have been taken to prevent unlawful conduct.

In addition, employers should ensure non-traditional workers, such as contractors and labour hire employees, are also required to undergo relevant and appropriate training and educational programs, so that these workers do not fall through the cracks.

This case is also significant when viewed in conjunction with the recent decision of the Court awarding significantly higher damages for non-economic loss in sexual harassment and discrimination cases than had previously been considered appropriate ( see related article).

The amount of non-economic damages awarded to Ms. Ewin in this case was substantial, with Mr. Vergara being ordered to pay AUD110,000 as a result of Ms. Ewin's pain, suffering and loss of amenities. However, this matter was heard prior to the recent decision of the Court, suggesting cases involving similar conduct engaged in by Mr. Vergara are likely to be subject to even higher awards of damages in the future.

Finally, employers are reminded that in dealing with the consequences of a complaint of sexual harassment, it is important to ensure the alleged victim is not in any way negatively affected by making the complaint, even if the treatment is well-meaning in its intention (for example, by moving the complainant to another team to keep them separate from their alleged harasser).

Not only could adverse treatment increase the damages payable by the employer in a sexual harassment claim, but employers could open themselves up to further claims, such as victimisation and general protections claims.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

K&L Gates has been awarded a 2012 EOWA Employer of Choice for Women citation acknowledging our commitment to workplace diversity.

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