Australia: Employers beware: Sexual harassment damages exceed $330,000 in recent VCAT ruling

In Collins v Smith (Human Rights) [2015] VCAT 1992 (23 December 2015), the Victorian Civil and Administrative Tribunal (VCAT) awarded the complainant in a sexual harassment case over $330,000 in damages. The decision continues the shift in approach to assessment of damages for sexual harassment contraventions which was affirmed in Richardson v Oracle Corporation Australia Pty Ltd and Tucker1 (Oracle). It also reminds employers of the need to take proactive steps to ensure a bullying/harassment-free workplace.

FACTS AND FINDINGS OF VCAT

In her initial decision in Collins v Smith,2 Judge Jenkins of VCAT found that the respondent – an owner/manager of a licensed post office branch in Geelong West – had breached sections 92 and 93 of the Equal Opportunity Act 2010 (Vic) (EO Act) through conduct he engaged in towards a female employee over a three-month period. The manager's conduct included repeated attempts to kiss and embrace Ms Collins, and touching her inappropriately; the sending of incessant text and phone messages containing further sexual advances; a demand for sexual favours in return for enabling her to work Saturday shifts; and likening her to a Lamborghini that he could not drive (so he would not want it any more).

Judge Jenkins rejected the manager's arguments that Ms Collins had enjoyed and encouraged his behaviour, or that she should have protested about it more vigorously. In any event, the manager's conduct eventually caused her to resign from the job (despite her need for it financially). Having found that numerous instances of sexual harassment in breach of the EO Act had occurred,3 Judge Jenkins indicated that she would hear further from the parties on the issue of the compensation payable to Ms Collins.

VCAT'S DECISION ON COMPENSATION

There were two principal issues which Judge Jenkins had to determine in assessing the amount of compensation to be awarded under section 125 of the EO Act:

(1) Interaction between the EO Act and Workers' Compensation Legislation

Judge Jenkins was "satisfied that the opinions of [Ms Collins'] treating health practitioners and medico-legal experts are consistent with a nexus between the alleged sexual harassment and consequent psychological trauma".4

However, the respondent argued that relevant provisions of Victorian workers' compensation legislation5 had the effect of limiting the amount of compensation which VCAT could award under the EO Act, because the personal injury suffered by Ms Collins arose out of or in the course of her employment.

Judge Jenkins rejected this line of argument, determining that the limits imposed by the workers' compensation statutes do not apply to an action for damages for physical or mental injury under the EO Act. The Judge endorsed the applicant's argument that "beneficial legislation, such as the [EO Act], is to be interpreted beneficially in order to give effect to its objects"; and that any tension between the two legislative sources was to be resolved in favour of the specific provisions of the EO Act (rather than those of a general nature in the workers' compensation laws).6

(2) Assessment of Damages

In considering the appropriate level of general damages to be awarded to Ms Collins, Judge Jenkins traced through the development of the case law culminating in the Full Federal Court decision in Oracle. The Judge concluded that:

Having regard to the objects set out in the [EO Act], it is incumbent upon the Tribunal to have particular regard to the need to eliminate sexual harassment, to the greatest possible extent, in the workplace; and to encourage the identification and elimination of sexual harassment.7

The significance of the Oracle decision (in which an initial damages award was increased from $18,000, to $130,000 on appeal) included its recognition: "that community attitudes regarding the impact of sexual harassment [have] changed, in particular that the adverse consequences ... can extend to loss of employment and career; severe psychological illness; and relationship breakdown".8

Judge Jenkins held that, while Oracle was decided under federal anti-discrimination legislation, the same analysis applies under the EO Act. As a result, where the evidence supports a causal connection between the harassing conduct and the damage suffered by the complainant, VCAT need only be satisfied that the conduct is one of the reasons for any loss (rather than being the sole or dominant reason).9

Applying these principles, Judge Jenkins found that Ms Collins' circumstances:

... reflect a particularly vulnerable employee. Her trust and confidence in the Respondent and their pre-existing positive working relationship, was shattered by [his] initial sexual advance and propositioning. Although shocked, embarrassed and humiliated, her response to the Respondent was measured and designed to facilitate a prompt return to a professional working relationship. The harassment could have ended at this early stage and the Applicant may have been satisfied with a simple apology. In my view, the Applicant took all reasonable steps available to her to make her position known and dissuade the Respondent from further harassment. In the circumstances, although the Applicant ostensibly voluntarily resigned, she clearly did so in circumstances where she was effectively forced out by the Respondent's behaviour. There is no question that she loved her job, was good at it and would have chosen to remain in her position, but for the harassment.10

This led to the awarding of general damages in the amount of $180,000. In addition, Ms Collins was awarded aggravated damages of $20,000; another $120,000 for past and future loss of earnings and superannuation; and $12,280 for out of pocket expenses – making a total damages amount of $332,280.11

The aggravated damages were awarded for reasons including the prolonged period over which the unlawful conduct occurred; the fact that it happened mostly within a confined office environment (in which the perpetrator was Ms Collins' supervisor, so she had no other avenue of complaint); and the manager's persistence in the face of her increasing distress.12

LESSONS FOR EMPLOYERS

Judge Jenkins' decision in Collins v Smith reiterates the new approach to calculation of compensation in sexual harassment cases, illustrated most clearly by the Oracle decision, which places increased emphasis on the effects of the harassing conduct on victims.

The decision therefore highlights once again the importance of employers implementing policies and training to ensure that all staff – including managers – are aware of required standards in relation to workplace conduct. As well as contributing to an optimal workplace culture, this will assist employers in avoiding findings of vicarious liability in instances where sexual harassment is found to have occurred.

Finally, in relation to the finding in Collins on the interaction between Victorian equal opportunity and workers' compensation legislation, employers in other jurisdictions should consider the terms of applicable state/territory laws as these may lead to a different conclusion regarding whether personal injury damages are compensable in sexual harassment cases.

Footnotes

1 [2014] FCAFC 82 (15 July 2014). See: http://www.corrs.com.au/publications/corrs-in-brief/the-oracle-decision-full-federal-court-raises-the-bar-for-damages-in-sexual-harassment-cases/

2(Human Rights) [2015] VCAT 1029 (10 July 2015).

3 Ibid at [380]-[381]. However, Ms Collins' further complaints of victimisation (under sections 103-104 of the EO Act) and failure to eliminate discrimination/sexual harassment (under section 15) were dismissed.

4 [2015] VCAT 1029 at [169].

5 Accident Compensation Act 1985 (Vic), sections 134AA-134AB; and/or Workplace Injury Rehabilitation and Compensation Act 2014 (Vic), sections 326-327.

6[2015] VCAT 1029 at [50]-[51].

7 Ibid at [177].

8Ibid at [148].

9 Ibid at [15], [149].

10 Ibid at [178].

11 Ibid at [218].

12 Ibid at [184].

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.

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