Two recent judgments of the Full Federal Court and Federal Circuit Court have resulted in awards of significant damages to employees in cases involving claims of sexual harassment, discrimination and adverse action.
The prevailing trend in recent times has been for courts to adopt a cautious approach when fixing damages in such cases, typically awarding between $12,000 and $20,000. However, a full Federal Court has awarded an employee $130,000 in damages and the Federal Circuit Court awarded an employee over $235,000 in damages and penalties, marking a significant shift away from low awards of damages.
Richardson v Oracle Corporation Australia Pty Ltd 1
In Richardson the Full Fed eral Court increased Ms. Richardson's original award of damages from $18,000 to $130,000.
Ms Richardson alleged that between April 2008 and December 2008 she was subjected to multiple incidents of unlawful sexual harassment by her colleague while working at Oracle. Ms Richardson's case was that her colleague had subjected her to "a humiliating series of slurs, alternating with sexual advances, from [the colleague] which built into a more or less constant barrage of sexual harassment." The alleged incidents of sexual harassment included:
- making comments regarding he and Ms Richardson having a sexual relationship and "being married" in their past lives, such as stating "so, how do you think our marriage was? I bet the sex was hot" and telling a colleague he and Ms Richardson had a "really hot love/hate thing going on";
- repeatedly propositioning Ms Richardson to begin a sexual relationship with him, including inviting her to "go away for a dirty weekend"; texting and calling her outside of work hours to invite her to meet himat social events; and asking Ms Richardson to "sneak off to a corner" with him;
- making sexually suggestive comments regarding Ms Richardson's appearance, such as "I love your legs in that skirt. I'm going to be thinking about them wrapped around me all day long"; and
- behaving in a sexualised manner towards Ms Richardson in front of their colleagues, such as imputing sexual connotations to comments made to Ms Richardson – for example, when a colleague commented "I'll give it to her", the colleague would say "you will give it to her" in a suggestive manner.
Ms Richardson complained to her direct manager in November 2008, and the matter was escalated to Oracle's Australia and New Zealand Director of Human Resources shortly after. Ms Richardson eventually resigned.
Initially, his Honour Justice Buchanan held that Ms. Richardson had been sexually harassed, that Oracle had contravened section 28B of the Sex Discrimination Act 1984 (Cth)(SD Act) and that Oracle was vicariously liable for the conduct of the colleague who sexual harassed Ms. Richardson. Consequently, Justice Buchanan awarded Ms Richardson general damages of $18,000 in compensation of the distress and embarrassment she had suffered as a result of the sexual harassment.
Ms. Richardson appealed Justice Buchanan's judgment arguing, among other things, that the award of damages was manifestly inadequate.
A full Federal Court agreed that the order of $18,000 was manifestly inadequate and should be replaced with an award of $130,000, comprising of $100,000 in general damages and $30,000 in economic loss. Significantly, the Court relied on prevailing community standards and the beneficial nature of discrimination legislation to substantially increase the damages award, noting that the previously accepted range of damages in sexual harassment cases would not be determinative.
Sagona v R & C Piccoli 2
Similarly, in the Federal Circuit Court judgment of Sagona, a breach of the Fair Work Act 2009 (Cth) (FW Act) adverse action provisions led to the award of $174,097 in compensation and a further $61,000 in penalties.
Ms Sagona successfully claimed that Piccoli Photography took adverse action against her because of her pregnancy, gender and family responsibilities. Ms Sagona had been employed as a photographer and salesperson at Piccoli Photography for 12 years and was being groomed by the Company's owners to take over the business. However, when Ms Sagona informed Piccoli Photography that she was pregnant and intended to take maternity leave, Piccoli Photography took adverse action against her which ultimately led to her resignation. Examples of the adverse action included comments such as it was "not a good look" for customers to see a pregnant woman working, that it would make the Piccoli Photography look like "slave drivers" and Ms Sagona look "desperate" for working when she was noticeably pregnant.
In awarding Ms Sagona $164,097 compensation for economic loss and $10,000 in respect of general damages for distress, hurt and humiliation, her Honour took into account the abusive nature of the adverse treatment, Ms Sagona's length of service and the income Ms Sagona would have expected to earn had she assumed responsibility for the day to day running of the business as planned. On consideration of the deliberateness of the conduct and the lack of contrition exhibited by Piccoli Photography her Honour also awarded a total of $61,000 in penalties ($45,000 from Piccoli Photography, and $8,000 each from the Directors).
Implications
The previous low range of damages for matters involving sexual harassment and discrimination can no longer be relied upon. Rather, it appears that Courts, based on changed community standards and the beneficial nature of legislation enshrining protections against discrimination and harassment are far more willing to award substantial damages for such claims. Further, Sagona indicates that employers may be subject to high monetary penalties in relation to breaches of the "civil penalty" provisions of the FW Act.
Accordingly, businesses should take steps to minimise their exposure to such claims by:
- review and understand their obligations under relevant legislation, such as the FW Act and human rights legislation like the SD Act;
- reinforcing the need for appropriately drafted and compliant contracts and workplace policies, especially those in relation to discrimination, harassment and workplace grievances; and
- confirming that staff members are trained and aware of policies and their obligations within those policies.
Businesses need to be aware of the vicarious liability which may be imposed against employers where they have failed to take "all reasonable steps" to prevent the unlawful conduct.
Footnotes
1 [2014] FCAFC 82
2 [2014] FCCA 875
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