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​Sexual Harassment and Vicarious Liability 

​Legal case - sexual harassment

Published: 15 September 2015

Good policies are essential if you want to avoid vicarious liability for your employees’ bad behaviour. 

Recent large awards of damages for sexual harassment serve as a reminder that employers must take “all reasonable steps” to prevent inappropriate workplace behaviour if they want to avoid being found vicariously liable. The Oracle case [Richardson v Oracle Corporation Australia Pty Limited [2013] FCA 359 19/4/13); Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82] stressed the importance of good policies and procedures.

image of documents and policies
In that case, the company was found vicariously liable for an employees’ sexually harassing conduct because it failed to state in its policies that sexual harassment was unlawful.  A Manager had alleged that she was subjected to humiliating and sexually harassing comments from a Sales Representative. 

She was awarded $18,000 compensation for physical and psychological consequences of sexual harassment. The court found the company’s policies made no reference to:

  • sexual conduct being unlawful,
  • Oracle may be vicariously liable for an employee’s conduct,
  • relevant federal, state, territory anti-discrimination laws that apply
  • employees may be held individually or jointly liable for their sexually harassing behaviours
The Federal Court of Appeal later held the compensation was unfair and unreasonable and that community standards place a ‘higher value to compensation for pain and suffering’ as a result of sexual harassment.  The award of general damages was increased to $100,000 with an additional $30,000 for economic loss.​​

What should employers do?

The decision is an important reminder for employers to review and update policies and train staff.  The best method of managing risks is through prevention.  An employer can benefit by consulting with the employees in the development and/or update of policies to clearly outline a zero tolerance stance and that harassment is unlawful. There should also be resources directed to regular training programs (on induction and refresher) to ensure employees are aware of the legislation and company reporting systems.  

The Anti-Discrimination Board of NSW provides a free review of workplace policies when on-site training is booked through the Board.  It works with employers in all industries to provide customised induction and ongoing training programmes.

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