THE Federal Court recently offered employers some useful advice on what is acceptable practice when investigating a sexual harassment complaint, and in handling the often difficult aftermath of a complaint of this nature, writes AMMA employment lawyer Amelia Peters.

In a decision handed down on 20 February 2013, Justice Buchanan ruled that a male sales representative (Mr Tucker) had sexually harassed a female consulting manager (Ms Richardson) over a period of approximately eight months.

The allegations involved a series of 11 separate comments made by Mr Tucker to Ms Richardson while they worked on a project team together.

The comments which included sexual advances and were often made in front of other colleagues and clients included:

  • So Rebecca, how do you think our marriage [in a past life] was? I bet the sex was hot’.
  • Gosh, it’s a good thing you didn’t come out because I think if I were drinking with you I would wind up in the corner with my arms around you kissing you.
  • I love your legs in that skirt. I’m going to be thinking about them wrapped around me all day long’.
  • I love it when you’re mean to me. It just makes me think how hot you would be in bed’.

Vicarious liability

Ms Richardson argued that as Mr Tucker’s employer, Oracle was vicariously liable for his unlawful conduct in sexually harassing Ms Richardson. Under the Sex Discrimination Act 1984 (Cth) an employer will ordinarily be held liable for the conduct of its employees unless it proves the elements of the exception to liability, namely that it took all reasonable steps to prevent Mr Tucker from sexual harassing Ms Richardson.

Set out in the following table are the factors relied on by Oracle in its attempt to establish the reasonable steps defence.

The table also sets out the criticisms of Oracle made by Ms Richardson’s counsel, as well as any guidance provided by the Federal Court in relation to the appropriateness (or otherwise) of Oracle’s handling of the matter.

Fact relied on by Oracle to discharge ‘reasonable steps’ defence

Criticisms made on behalf of Ms Richardson

Summary of the Federal Court’s comments

Effective investigative policies in place and an investigation was promptly commenced on receipt of Ms Richardson’s complaint

When Ms Richardson brought her concerns to the attention of her manager she was forced to make a formal complaint even though her preference was to have the matter handled ‘informally’.

 

Not clear what ‘informal’ handling of complaint involves. Not realistic for Ms Richardson to expect Oracle to ignore her complaint or for the complaint to be addressed without Mr Tucker knowing the allegations against him. In order for employers to respond effectively to workplace complaints, not realistic for complaints to be handled ‘informally’.

 

Ms Richardson was told by the investigator not to discuss her complaints against Mr Tucker with anyone.

 

This was ‘far from unreasonable’. Investigator wanted to maintain a high level of discretion and confidentiality which was in the interests of both Mr Tucker and Ms Richardson.

 

Ms Richardson was required to remain on the project team and in frequent email and telephone contact with Mr Tucker during the investigation.

No suggestion that Mr Tucker committed any further acts of sexual harassment during this period. However, these arrangements contributed to some extent to the psychological impact on Ms Richardson of Mr Tucker’s conduct. But this did not amount to a specific legal breach justifying compensation.

 

Oracle forwarded Mr Tucker’s written apology to Ms Richardson against her wishes.

Nothing unlawful in this conduct. Court accepted the evidence that Oracle saw the apology as sincere and thought there was no harm in providing it to Ms Richardson.

 

When the investigation was over Ms Richardson was demoted by her manager’s advice to her that she should not travel to the Melbourne office (where Mr Tucker was based) and had lost responsibility for Victorian projects.

Oracle’s primary motivation in issuing this direction was to protect Ms Richardson from further contact with Mr Tucker in accordance with her wishes. It did not constitute a demotion.

Mr Tucker received a first and final warning for his conduct (being the most serious sanction short of dismissal)

Mr Tucker should have been punished by withholding or reducing his commission or by giving him adverse performance reviews.

Evidence did not make out a persuasive case that these were appropriate steps to be taken in addition to a first and final warning.

 

None of the witnesses to the sexual harassment who had been interviewed and admitted witnessing the offending conduct were counselled in relation to their responsibilities to report sexual harassment, or sanctioned for not having done so.

Insufficient evidence to suggest that this action was appropriate in the circumstances. Not accepted as evidence that Oracle had no real commitment to the avoidance of sexual harassment.

All employees receive a copy of Oracle’s Code of Ethics and Business Conduct when they commence employment. The need to comply with the Code is referred to in contracts of employment.

Oracle’s Code of Ethics:

  1. 1.made no reference to the Australian legislation in relation to sexual harassment;
  2. 2.made no clear statement that such conduct was unlawful; and
  3. 3.made no statement that an employer might be vicariously liable.

Advice in clear terms that sexual harassment is against the law and identification of the source of the legal standard are important elements that must be included in an employer’s policies in addition to statements that sexual harassment is ‘against company policy’ and no matter how firmly the consequences are stated.

Omission of these important and easily included aspects from Oracle’s policies was sufficient indication that Oracle had not taken all reasonable steps to prevent sexual harassment.

Every two years employees required to complete online sexual harassment training (which Mr Tucker did approximately 6 months before the offending conduct

The Oracle training was a global package designed in the US which was applicable to Oracle employees worldwide and was purportedly based on ‘global standards’ of how to interact in the workplace. It was capable of manipulation because it used yes/no answers which could be readily revised such that it was possible to work though the course without any reasonable attention being paid to it.

There was no face to face sexual harassment training provided.

Serious inadequacies in Oracle’s training packages were acknowledged by its subsequent actions in introducing a new Australia-specific ‘Workplace Diversity Policy’ and face to face training.

While the Judge accepted the matters which Oracle drew to his attention provided some support for its ‘reasonable steps’ defence, he ultimately found that the defence was not made out due to the inadequacies of Oracle’s training package and Code of Conduct. This resulted in a finding of vicarious liability against Oracle, arising out of Ms Tucker’s sexual harassment of Ms Richardson.

The Court accepted that Mr Tucker’s conduct caused Ms Richardson to suffer a psychological injury and ordered damages in the amount of $18,000 for non-economic loss to be payable by Oracle. This was significantly less than the $90,000 Ms Richardson originally claimed.

Implications for employers

Although Justice Buchanan broadly approved of the way Oracle handled Ms Richardson’s sexual harassment complaint and dismissed many of the criticisms levelled at Oracle by her counsel, he was still not prepared to find that Oracle had established the ‘reasonable steps’ defence. This decision underscores the fact that the reasonable steps test is a difficult one for employers to meet.

The decision also gives employers some useful guidance on how to handle sexual harassment investigations and the difficult aftermath of these types of allegations. As a result of this decision, employers should review their sexual harassment policies to ensure that they include the 3 statements (outlined above) required by the Federal Court.

To read the decision, please click here.

Please contact AMMA’s Legal Services team on (03) 9614 4777 for further advice on discrimination matters.