Why a generic harassment policy may not protect an employer

When an employer is responsible for what its staff do

Many businesses think of anti-discrimination law as something that applies to the person who behaved badly, not to the company. That is not how the law works. Under s 106 of the Sex Discrimination Act 1984 (Cth), when an employee sexually harasses or discriminates against someone in connection with their employment, the employer is treated as having done it too. This is called vicarious liability: legal responsibility for someone else's conduct.

There is one way out. The employer is not liable if it establishes that it took all reasonable steps to prevent the employee from doing acts of that kind. The burden is on the employer to prove this, not on the worker to disprove it.

The same structure appears in the other laws that cover harassment at work: s 527E of the Fair Work Act 2009 (Cth), s 161 of the Equal Opportunity Act 1984 (WA) and s 51BS of the Industrial Relations Act 1979 (WA).

The case that tested a big employer's policy

Richardson v Oracle Corporation Australia Pty Limited [2013] FCA 102, decided by Justice Buchanan of the Federal Court on 20 February 2013, is a leading case on this point. Ms Richardson, a consultant at Oracle, complained that a co-worker had made repeated inappropriate remarks and invitations to her. The Court found that he had sexually harassed her.

Oracle argued it had taken all reasonable steps. All employees received its Code of Ethics and Business Conduct, which said harassment would not be tolerated. Every two years employees had to complete online sexual harassment training, and the co-worker had done it about six months before the conduct began. Oracle also pointed to its investigation procedures and said there was no culture of harassment in its business.

Justice Buchanan did not accept every criticism of the training. He rejected the argument that online training was inadequate simply because it was not face to face. But he found that Oracle had not taken all reasonable steps. The global training package made no reference to the Australian law prohibiting sexual harassment, did not clearly say the conduct was unlawful, and did not say that an employer might also be liable.

In his view, telling staff in clear terms that harassment is against the law, and that the employer can be liable for it, adds something real to a statement that it breaches company policy. The omission of those "important and easily included" points was enough for Oracle's defence to fail. Oracle in fact introduced a new policy specific to Australia, with face-to-face training, in November 2008, around the time the harassment ended (though not in response to it).

What happened next

The trial judge awarded Ms Richardson $18,000 in general damages. On appeal, the Full Federal Court held that amount was manifestly inadequate and increased the judgment to $130,000, including $100,000 for general damages: Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82 (15 July 2014). The appeal did not disturb the finding that Oracle was vicariously liable. The appeal decision is often cited as having lifted the level of damages in sexual harassment cases.

The law now: a positive duty to prevent harassment

Since this article was first written, the law has moved further. Since 13 December 2022, s 47C of the Sex Discrimination Act has required employers to take reasonable and proportionate measures to eliminate, as far as possible, sex discrimination, sexual harassment, harassment on the ground of sex, hostile workplace environments and victimisation. The Australian Human Rights Commission has been able to enforce that duty since 12 December 2023.

Sexual harassment in connection with work has also been prohibited directly by the Fair Work Act since 6 March 2023. The result is that an employer can no longer wait for a complaint: it must act in advance, and what it has done will be examined closely if a claim is made.

What a policy needs to do

A generic, global or "catch-all" policy is a weak foundation. Policies and procedures dealing with appropriate behaviour, codes of conduct and complaints are more likely to help if they explain what prohibited conduct looks like, state plainly that it is unlawful, and say that the employer can be liable for it too.

They should also give people more than one way to report, including one that does not go through their manager, and be backed by training that staff actually complete. Complaints should be investigated promptly and fairly, with a proportionate response and protection for the person who complained. A policy that sits in a drawer, or one that is not followed when a complaint arrives, will not help much.

If you are an employee who has been harassed, the existence of a policy does not stop you making a claim. Time limits apply and differ by forum: generally 24 months for the Fair Work Commission, the Australian Human Rights Commission and the WAIRC, but 12 months for a complaint to the WA Equal Opportunity Commission. If you are an employer, it is worth having your policies and complaint processes reviewed against the current law.