Explained: What the passing of the Respect at Work laws in the Senate means for employers

The much anticipated Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Bill 2022 (Respect at Work Bill) was passed with amendments by the Senate on Friday, quite symbolically, on UN Women International Day for the Elimination of Violence Against Women.

The Respect at Work Bill implements seven of the 55 recommendations of the Respect@Work Report, primarily through amendments to the Sex Discrimination Act 1984 (Cth) and the Australian Human Rights Commission Act 1986 (Cth) (AHRC Act).

The ‘cornerstone’ of the Respect at Work Bill is the inclusion of a positive duty for employers and persons conducting a business or undertaking (PCBUs) to prevent workplace sex discrimination, harassment and victimisation.

The amendments proposed by Senator Jacqui Lambie (and agreed to by both the government and opposition in the Senate) require a review of the bill to ensure it operates as intended, with Senator Lambie stating on Friday: “I’m a huge supporter of the Australian Human Rights Commission. They do a lot of work on a shoestring budget and with this bill they will need to do more.”

The government reached an agreement with the Greens and Senator Lambie to remove the cost neutrality provisions in the bill subject to review by the Attorney-General.

Attorney-General Mark Dreyfus and Minister for Women Katy Gallagher said in a statement issued this morning that the government will move amendments to the bill to remove the cost neutrality provisions after concerns raised by multiple stakeholders about the cost provisions detrimentally affecting claimants. The review is expected to be completed by May.

The Respect at Work Bill ultimately passed through the Senate with minor amendments. These amendments will need to go back before the House of Representatives, most likely next week, before the bill is formally passed by both Houses.

Detailed analysis of the Respect at Work Bill

Positive duty to prevent workplace sex discrimination, harassment and victimisation

The Respect at Work Bill inserts a new provision in the Sex Discrimination Act 1984 (Cth) (Sex Discrimination Act) to introduce a positive duty on all employers and PCBUs to take ‘reasonable and proportionate measures’ to eliminate unlawful sex discrimination, including sexual harassment, as far as possible.

‘Reasonable and proportionate measures’ may involve implementing policies and procedures, collecting and monitoring data, providing appropriate support to workers and employees, and delivering training and education on a regular basis.

Practically, what ‘reasonable and proportionate measures’ are will vary between duty holders in accordance with their particular circumstances, including:

(a)   The size and nature of the business;

(b)   Resources available; and

(c)   Practicability and costs of any steps.

The positive duty is said to shift the focus to prevention, and the responsibility from those who experience discrimination and harassment to those who are best placed to prevent it — namely employers and other PCBUs (eg, principals who engage contractors).

The positive duty is intended to align with section 106 of the SD Act, which relates to the vicarious liability of employers for unlawful acts done by their employees or agents. Under the current section 106, an employer is not liable for the unlawful conduct of their employees or agents if they have taken ‘all reasonable steps’ to prevent their employees from engaging in the conduct. The new positive duty will convert this into a proactive rather than reactive obligation.

The positive duty is also intended to operate concurrently with the existing duties in the model WHS laws, which require employers and PCBUs to provide a safe working environment for workers, so far as is reasonably practicable. There has been some critical commentary regarding the nuanced differences between the legislative terms ‘as far as reasonably practicable’ and ‘as far as possible’ and how this will play out in practice.

Amendment to Sex Discrimination Act: Hostile workplace environments on the grounds of sex

The bill inserts a new provision in the Sex Discrimination Act to prohibit conduct that subjects another person to a workplace environment that is hostile on the grounds of sex.

A reasonable person test would apply in determining whether someone has been subjected to a hostile environment on the grounds of sex (among other things). Specifically, there is a requirement that a reasonable person would have anticipated the possibility of the conduct being offensive, intimidating or humiliating to another person by reason of their sex, or characteristics that generally appertain or are imputed to persons of their sex.

There is a broad range of factors to be considered when determining whether such conduct is unlawful, including:

(a)   The seriousness of the conduct;

(b)   Whether the conduct was continuous or repetitive;

(c)   The role, influence or authority of the person engaging in the conduct; and

(d)   Any other relevant circumstance.

The Respect@Work Report found that sexual harassment risks increase where a workplace environment is sexually charged or hostile, even if the specific conduct is not directed at a particular person. This amendment aims to mitigate adverse impacts on people of one sex caused by hostile work environments. Examples of such conduct within the Respect@Work Report include displaying obscene or pornographic materials, general sexual banter, or innuendo and offensive jokes.

The amendment is intended to align with other provisions in the SD Act by using existing terms and concepts, such as ‘offensive, intimidating or humiliating’ and the reasonable person test. This would enable existing case law to be considered when interpreting and applying the new provision.

AHRC compliance and enforcement functions 

The bill amends the AHRC Act to enable the commission to monitor, assess and enforce compliance with the new positive duty in the Sex Discrimination Act.

The compliance and enforcement functions include powers to:

(a)   Conduct inquiries into a person’s compliance with the positive duty and provide recommendations to achieve compliance;

(b)   Issue a compliance notice specifying the action that a person must take, or refrain from taking, to address their non-compliance;

(c)   Apply to the federal courts for an order to direct compliance with a compliance notice; and

(d)   Enter into enforceable undertakings.

The commission would be able to initiate an inquiry into a person’s compliance with the positive duty if it ‘reasonably suspects’ that a person is not complying.

These compliance functions would only commence 12 months after the bill passes, to allow employers to understand their obligations regarding the positive duty and make changes as necessary.

The AHRC will also be able to inquire into “any matter that may relate to systemic unlawful discrimination, or suspected systemic unlawful discrimination”. Systemic unlawful discrimination is defined as “unlawful discrimination that affects a group of people and is continuous, repetitive or forms a pattern”.

Appropriate enforcement mechanisms are aimed at easing the burden on individuals by enabling the commission to initiate action to address unlawful discrimination, rather than relying on individuals to make complaints.

The commission can ‘reasonably suspect’ non-compliance (and accordingly initiate an inquiry) based on a range of information, including information or advice provided by other agencies or regulators, information disclosed by impacted individuals, as well as media reporting.

Employers should accordingly be conscious of their exposure to inquiries based on individual and public reporting of sex-based workplace issues.

Representative actions

The bill would also amend AHRC Act to enable representative actions to proceed to court.

Representative actions were previously limited to being run within the Australian Human Rights Commission, but now representative bodies, such as unions, will be able to carry such applications into the federal courts.

Costs protections in the AHRC Act (not agreed upon & removed from Bill)

The Respect@Work Bill initially proposed to insert costs protections into the AHRC Act, to provide greater certainty in relation to the legal costs of proceedings. However, this amendment has been referred to the Attorney-General for review, as an agreement was not reached regarding the proposed ‘cost neutrality’ approach. The relevant amendments have been removed from the Respect@Work Bill so as to not hold up the passing of the remainder of the bill. The current costs position will continue to apply until an agreement is reached. The ‘cost neutrality’ approach would provide that, as a default position, each party would bear their own costs in an unlawful discrimination proceeding.

In the proposed amendment, the courts would retain discretion to depart from this default position and make cost orders where they consider it just. In considering whether to depart from the default position, courts would have to have regard to a number of factors, including the financial circumstances of each of the parties to the proceedings and whether any party to the proceedings has been wholly unsuccessful in the proceedings.

The Respect@Work Inquiry heard that the risk of adverse cost orders acts as a notable disincentive to applicants considering whether to pursue their sexual harassment matters in the federal courts.

The current practice, in which costs follow the event (despite a broad judicial discretion to award costs in any manner seen fit), means that applicants may be liable for their own costs, as well as those of the other party, if they are unsuccessful. This may deter applicants from initiating court proceedings and creates access to justice concerns, particularly for vulnerable members of the community.

The Greens are expected to keep up pressure on the government to ensure that ‘no one is priced out of standing up for their rights at work’. However as there has been pushback from other political groups, the final form of any amendments will be seen in a separate tranche of reform. The review of this section is expected to be completed by May 2023.

Work health and safety laws

Sexual harassment and associated issues also fall under the category of ‘psychosocial hazards’ in work health and safety laws, at both a federal and state level. This is a reflection of the need for sexual harassment and associated issues to be considered as a safety risk by employers.

I refer to our recent article on sexual harassment reporting under workplace health and safety laws here.

SafeWork Australia has amended the Model WHS Regulations to specify:

(a)     A psychosocial hazard is a hazard that:

(i)      Arises from, or relates to the design or management of work, a work environment, plant at a workplace or workplace interactions; and

(ii)     May cause psychological harm, whether or not it may also cause physical harm;

(b)     A psychological risk is a risk to the health or safety of a worker or other person arising from a psychosocial hazard; and

(c)     A PCBU must manage psychosocial risks in accordance with Part 3.1 (other than regulation 36 regarding the hierarchy of controls).

SafeWork has also recently issued the ‘Managing psychosocial hazards at work — Code of Practice’, which provides some guidance as to managing sexual harassment risks from a psychosocial hazard perspective.

States and Territories have already, or propose to, implement changes reflective of these amendments to the model laws. For example, NSW has adopted these changes from 1 October 2022 and Queensland expects to adopt similar changes in April next year.

Fair Work Act changes on the horizon

The Secure Jobs, Better Pay Bill 2022relevantly proposes to amend the Fair Work Act 2009 (Cth) (FW Act) to enable a new avenue for applicants to seek redress through the Fair Work Commission.

While sexual harassment can be captured within existing provisions of the FW Act, it was found to not be clearly understood by both potential applicants and duty holders. These amendments are aimed at providing greater clarity to the law and an available dispute resolution mechanism under the FW Act, by creating a separate Part 3-5A to deal with sexual harassment specifically. Pursuit of a claim under the FW Act may have cost benefits to applicants, particularly in light of the proposed increase to the small claims limit from $20,000 to $100,000 under the Secure Jobs, Better Pay Bill 2022.

The bill proposes to expressly prohibit sexual harassment within the FW Act.

A new Part 3-5A will be inserted which will:

(a)   Expand the application of the FW Act in relation to sexual harassment to ‘workers’ rather than just ‘employees’;

(b)   Impose a pecuniary penalty for sexual harassment; and

(c)   Create vicarious liability for sexual harassment under the terms of the FW Act. Importantly, this will be not only for direct employers, but PCBUs such as principals.

It would be accompanied by a new dispute resolution process, allowing the commission to deal with disputes. Where a dispute cannot be resolved through conciliation/mediation/arbitration, and the parties agree, the commission would be able to settle the dispute and make orders, including for compensation.

However harassed persons will be unable to take the dispute to court under the FW Act provisions, unless it is not exclusively about sexual harassment and certain requirements are met. Sexual harassment claims in courts will largely remain within the purview of anti-discrimination law.

The current ‘stop sexual harassment order’ jurisdiction of the FW Act would be merged into the new prohibition.

The serious contravention regime would not apply.

The ‘stop orders’ regime was implemented by the Morrison government in 2021, so remains relatively new. Its transition into, and combination with, broader duties and potential penalties in the FW Act is a clear signal for employers to properly attend to harassment, discrimination and victimisation risks within their workforces.

The imposition of a pecuniary penalty is significant, as under existing anti-discrimination legislation the primary remedy available is damages. Employers may now be exposed to pecuniary penalties separate to substantiated injuries or damage. The maximum penalty a court could order would be 60 penalty units. This is consistent with the maximum penalty that currently applies under the FW Act in relation to analogous conduct, for example, discriminatory adverse action.

Generally, the new Part 3-5A is intended to operate concurrently with State and Territory laws that deal with sexual harassment. Workers would have the choice to pursue their dispute through the Fair Work Commission, the Australian Human Rights Commission or applicable state and territory anti-discrimination processes. The FW Act will however prevent multiple penalties being imposed on a party in relation to the same conduct being pursued under multiple pieces of legislation. There are however some exceptions to this, including a proposed section allowing WHS civil proceedings to operate concurrently with stop sexual harassment applications or orders (consistent with the current stop sexual harassment order framework).

The bill also proposes to amend the FW Act to include in the list of protected attributes:

(a)     Gender identity;

(b)     Intersex status; and

(c)     Breastfeeding.

This would flow through to several parts of the FW Act, including provisions dealing with discriminatory terms in agreements and awards and the general protections.

What’s next? It’s time for employers to get their houses in order

With current WHS obligations, the passage of the Respect at Work Bill imminent and the Fair Work changes on the horizon, employers are encouraged to take proactive steps to start amending policies and procedures and training their boards and leadership teams to ensure they are ready to address these. As many of the recommended changes to ensure compliance with the law reflect best practice, employers are encouraged to consider their obligations together with their values and objectives and move beyond compliance to the creation of healthy, inclusive and respectful workplaces.

This article first appeared on LinkedIn.