Court throws out executive’s $6 million sexual harassment claim against EnergyAustralia

The Federal Court has dismissed a former EnergyAustralia employee’s $6 million adverse action claim against the company. The claim accused EnergyAustralia of harbouring a culture of sexual harassment so bad the human resources director had to actively monitor the managing director for anything inappropriate.

Kate Shea, the former head of corporate and government affairs at TRUenergy – now EnergyAustralia – claimed she was sacked from her almost $500,000 a year position because she had complained of sexual harassment by the company’s former chief financial officer, Kevin Holmes, on a work trip to Hong Kong. 

The claim was based on an incident following a night at a Hong Kong bar where Shea claims Holmes stroked her hair, neck and thighs in an “unwelcome sexual advance”, but Holmes claimed he put his arm around or touched Shea’s back or neck in a “consoling manner” after Shea confided to him details of her husband’s serious illness.

Shea was later made redundant and she claimed this was a result of her complaint about Holmes’ behaviour, but Justice Julie Dodds-Streeton found “no reasonable basis” for Shea’s allegations and found Shea was not an “impressive, persuasive or reliable witness”.

In contrast, Holmes was “credible and dignified” and chief executive Richard McIndoe was “impressive, conscientious and credible”. 

Shea sought reinstatement of her position but Justice Dodds-Streeton found the trust and confidence necessary to the employment relationship between Shea and EnergyAustralia had broken down and could not be sufficiently restored.

Rachel Cosentino, practice group leader at law firm Slater & Gordon, told SmartCompany under the Fair Work Act, Shea needed to establish that the unlawful reason for her termination was a substantial and operative reason.

“Shea’s claim was the reason for her dismissal was that she made a complaint, but it is not every communication to an employer that will constitute a complaint for the purposes of the Act,”   Cosentino says.

“That was essentially the problem that Shea had.”                           

Cosentino says the lesson for businesses is to ensure they have grievance procedures in place in case an employee does make a complaint or believes they have been wrongfully made redundant. 

“It’s always important for businesses to keep the lines of communication open with employees,” she says.

“Communication needs to be transparent about decisions which are made that affect employees, they need to be objectively justified.”

EnergyAustralia said in a statement it was pleased with the Federal Court decision which validated its view that the business “acted with integrity and respect” at all times during Shea’s redundancy.

“It has been extremely disappointing to hear and read the claims made about individuals and our culture, all of which the court has today dismissed,” the statement said. 

“We have a robust Code of Conduct in place so every employee knows what is expected of them and the processes and channels available to them. We are focused on putting this behind us.”