Australia: Preventing the HR hangover: vicarious liability and the office Christmas party

Last Updated: 13 November 2018
Article by Rachel Drew and Rose Sanderson

Most Read Contributor in Australia, December 2018

The damaging aftermath of work functions can be numerous: workers' compensation claims, bullying claims, dismissal claims, sexual harassment claims and discrimination complaints. For this reason, the months of December and January can be a busy time for employment lawyers.

When examining workplace sexual harassment in the last five years, the Australian Human Rights Commission 2018 survey on sexual harassment found that almost two in five women (39 per cent) and just over one in four men (26 per cent) have experienced sexual harassment. In the last 12 months alone 23 per cent of women in the workforce have experienced some form of workplace sexual harassment compared with 16 per cent of men in the workforce.

The risk of sexual harassment, as well as other forms of nasties such as discrimination complaints and workplace injuries can increase over the silly season.

In an attempt to minimise the likelihood of inappropriate behaviour occurring, employers should focus on having up-to-date workplace behavioural policies with respect to harassment, discrimination and bullying as well as offering employee's regular training on the policies.

With respect to company policies and procedures, it is essential to make available to all employees the most current version of the document. In an attempt to minimise the likelihood of inappropriate behaviour arising, employers are encouraged to hold training seminars for employees every 12 months if not more regularly.

Another measure available to employers in an effort to minimise inappropriate behaviour occurring in the workplace is encouraging employees to speak out. After an incident is reported, it is integral that the company have policies and procedures in place to swiftly and properly handle complaints relating to inappropriate workplace behaviour as soon as they are brought to the employer's attention. This will demonstrate the organisations commitment to combatting inappropriate behaviour in the workplace, including at work related events.

When can an employer be held vicariously liable?

Vicarious liability arises in the workplace when an employer is responsible for actions of the employee which are committed in the course of employment.

If an employee becomes ill or injured as a result of a work-related function, your company could be directly liable under the workers' compensation regime. Similarly, in some circumstances your company could be held directly liable for discriminatory conduct.

In most cases of sexual harassment, and in some discrimination cases, it will be argued that the employer is 'vicariously liable' for the conduct of an employee towards someone else.

Typical end-of-year function issues

Research shows that post-party sexual harassment complaints sky rocket compared to other times of the year. Post-party complaints include unwelcome touching, suggestive and inappropriate comments and jokes, inappropriate secret Santa gifts, unsubtle proposals and invasive personal questions.

Comments alone can constitute discriminatory or sexually harassing conduct.

For example, in the case of Murugesu v Australia Post & Anor, Australia Post was held to be vicariously liable for the racially discriminatory conduct of one of its managers towards a sub-contractor.

The sub-contractor lodged a complaint against the employee and Australia Post under the Racial Discrimination Act 1975 (Cth), claiming that the manager had, over a period of several years taunted him with racial slurs.

The Court ultimately accepted the claims of racial discrimination and ordered Australia Post and the manager to pay the worker a total of $40,000 in loss and damage.

Reasonable steps

An employer will not automatically be liable for the act of an employee or agent where it is found to be in connection, or in the course of employment. If an employer can establish that it has taken 'reasonable steps' to ensure its employee's do not engage in unlawful conduct, a defence is raised.

In the case of Newchurch v Centreprise Resource Group Pty Ltd, Centreprise's principal consultant made racially discriminatory comments about Ms Newchurch, including saying to her 'blacks rely too much on welfare and Government handouts', Aboriginal people were 'taking liberties and stretching out the hours to get money', 'these days (blacks) are used to lying and cheating the system to get money without wanting to work an honest day in their life' as well as comments making distinction between 'urbanised and westernised' indigenous people and those that were still 'traditional people out of the bush'. Throughout her employment, Centreprise's principal referred to Aboriginal people as 'blacks'.

The employer sought to rely on the 'reasonable steps' defence.

The Commission found that the above comments did in fact constitute racial discrimination. The Commissioner found that the employer was vicariously liable, rejecting the reasonable steps defence stating that the defence cannot be made out simply by relying on existence of policies prohibiting the offending conduct. The Commission stated that the employer must ensure policies are communicated effectively and provide training and advice for taking action when the policies are breached. Compensation was awarded.

How can employers take reasonable steps to prevent inappropriate conduct?

For most companies, taking reasonable steps to prevent discriminatory or harassing conduct will involve:

  • having the correct infrastructure for preventing discrimination and harassment, including implementing written anti-discrimination and harassment policies and a workplace culture where appropriate behaviours are modelled from the top down
  • providing induction and refresher training to employees on these policies as well as drawing employee's attention to any amendments in the policy
  • encouraging employees to 'speak out' so in the event of a complaint, the appropriate steps are taken to swiftly and properly investigate the complaint and ensuing disciplinary action outcomes enforced, where appropriate or necessary.

Sexual harassment or discrimination policies should clearly state that the relevant conduct is against the law, as well as being unacceptable behaviour from the perspective of the employer.

In addition to providing employees with copies of current company policies and procedures and ongoing training, the employer could remind staff of the appropriate and expected standards of behaviour during the festive period.

A reasonable example of a step an employer can take is to send a simple email to all employee's gently reminding them that the end-of-year party, though not occurring at a work premises or during work hours, is still a work function. In addition, directing employee's attention to the company's policies and procedures ahead of the event and reminding them of what the appropriate and expected behaviour is.

If you would like the benefit of Holding Redlich's experience in order to:

  • implement or review your anti-discrimination/harassment policies
  • develop and/or deliver induction or refresher training to employees on these policies; or
  • investigate a complaint of discrimination or sexual harassment

please contact our Workplace Relations & Safety team.

Key takeaways for your business

  • employers can be held liable for the actions of their employees
  • company policies and procedures apply not only at work but also work related events, including end-of-year functions
  • have up to date and easily accessible copies of company policies and procedures
  • have a precise complaints policy and procedure for dealing with complaints swiftly and in the appropriate manner
  • have clear consequences for inappropriate behaviour at work and work-related events
  • in the lead up to a work event, remind employees of the behaviour expected of them.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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