Employer ordered to pay $150,000 to employee who was sexually harrassed at work

In a recent decision of the Victorian Civil and Administrative Tribunal (VCAT), an employer has been ordered to pay $150,000 in general damages to a former employee for failing to take reasonable precautions to prevent her from being sexually harassed in the workplace.

In the case, an employee was found to have contravened section 93 of the Equal Opportunity Act 2010 (Vic) (EO Act) by sexually harassing the applicant, who was another person employed by his employer.

The applicant claimed the employer was vicariously liable for the employee’s unlawful conduct by reason of section 109 of the EO Act. That section provides that, if a person in the course of their employment contravenes s 93 of the EO Act, then both the person and the employer must be taken to have contravened the EO Act.

The applicant had been employed as a beauty therapist from January 2018 in the employer’s male grooming business until her resignation on November 30, 2018. The applicant alleged that she had been sexually harassed throughout the course of her employment and that this ultimately culminated in two incidents on the aforementioned date. Those two incidents were the subject of separate criminal proceedings in which the offending employee admitted to engaging in the unlawful conduct.

The employer sought to rely on section 110 of the EO Act, which provides that an employer will not be vicariously liable for a contravention if it can prove, on the balance of probabilities, that it took “reasonable precautions” to prevent the employee from contravening the EO Act.

In particular, the employer argued that it was not aware of the unlawful conduct (save for the November 30 2018 incidents) until the applicant commenced proceedings in 2020, despite the applicant making two complaints during her employment.

The employer conceded that the applicant first complained in April/May 2018, but argued that the complaint was only that the offending employee spoke to her in a manner that made her feel belittled and inferior and it dealt with that complaint immediately.

It also argued that after the second complaint in July/August 2018, which was that the offending employee was frequently and deliberately brushing up against her in the reception area, the employer directed the offending employee to avoid physical contact with the applicant and to respect her as a fellow employee.

However, VCAT did not accept these arguments noting a text message from the sole director sent to the applicant immediately after the November 30, 2018 incidents. The text message, in part, read:

“Not once did I think it’s funny how [the offending employee] was inappropriately touching you. I did ask you each time you brought it to my attention if it was bothering you so that I can address the issue with him.”

Based on the above, the VCAT was of the view that the employer was aware, or at least accepted, that the applicant had been sexually harassed from at least the date of the applicant’s first complaint and its responses were “manifestly inadequate”.

The VCAT noted that the employer could have investigated the complaint, warned the offending employee or commenced disciplinary action against the offending employee and also provided training to the offending employee about sexual harassment. Instead, the employer “turned a blind eye” to what it had already accepted was sexual harassment.

The employer also argued that it had an employee handbook that was available to employees electronically and was also emailed to new employees, which contained an anti-discrimination and Equal opportunity policy with a specific section on sexual harassment as well as a complaint handling procedure.

The sole director gave evidence that she had emailed the handbook to the offending employee in December 2017 and further, that she held a staff meeting in 2018 which was attended by the offending employee in which she discussed the handbook. However, she was unable to produce the email as it had been sent from an email account that had been deactivated in 2020 nor could she provide any evidence of the meeting.

VCAT did not accept these arguments either, noting that the first version of the handbook was dated 1 January 2018 and it therefore could not have been possible for the employer to have emailed the Handbook to the offending employee in December 2017. This was particularly so in circumstances where the employer was unable to produce the email.

While VCAT accepted that there may have been a staff meeting to discuss the Handbook(which may have occurred before or after the first complaint), it was of the view that the training could only have been in a rudimentary manner noting the sole director’s own evidence that she had only “flicked through” the handbook herself.

VCAT was not satisfied that the employer had taken “reasonable precautions” in the circumstances, which could have included:

• Ensuring that the offending employee and other employees received, read and had a sound understanding of the sexual harassment and related policies in the employee handbook, such as by having them take a short questionnaire;
• Conducting regular (but not necessarily frequent) refresher training meetings on the employee handbook; and
• Given the employer had CCTV footage available, it could have monitored the workplace to ensure compliance.

It considered that, had the employer implemented such reasonable precautions, it would have been likely that the incidents on November 30, 2018 would have never occurred.

Based on the above, VCAT found that the employer was vicariously liable for the offending employee’s conduct and ordered the employer to pay the employee $150,000 in general damages. In doing so, it noted that this amount was far from excessive as it represented less than $70 per day in compensation over a six-year period (being the period that the applicant had been and will likely continue to be suffering and dealing with the effects of the sexual harassment).

Lessons for employers

This decision is a stark reminder for employers of the potential consequences for failing to take reasonable steps to prevent sexual harassment in the workplace.

It is clear from this decision that such steps should include, at the very least, ensuring that:

• There is an anti-harassment and anti-discrimination policy in place and that all employees have received, read and understand the contents of that policy;
• Training is regularly conducted in relation to the policy and a record is kept of such training; and
• Compliance with the policy is monitored as far as reasonably practicable.

Most importantly, it is critical that employers have a clear process in place to ensure that complaints of harassment and discrimination are taken seriously and investigated promptly.

This article was first published by Workplace Law. Information provided in this blog is not legal advice and should not be relied upon as such.