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Six Figure Payout Landmark Ruling Alters Harassment Compensation Landscape

Tuesday, 22 July 2014

Six Figure Payout Landmark Ruling Alters Harassment Compensation Landscape

 From a post by hrdaily: 

Employers now face a much bigger threat of six-figure payouts for workplace sexual harassment, after a landmark Federal Court decision. In awarding $130,000 to a former Oracle employee, the court has ruled community standards demand much higher compensation payments. Previously, most awards for victims of sexual harassment who suffer psychological injury fell in the range of $12,000 to $18,000. 

Damon King, senior associate in industrial and employment law at Hopgood Ganim, says employers that simply pay lip service to sexual harassment policies are now at far greater risk. "Employers more than ever, and indeed directors and boards of companies, need to be very alive to this issue, and not to pay it lip service in terms of merely having a policy in writing which is not proactively implemented," 

King told HR Daily. "That will involve the necessary training initially, and refresher training on a regular basis and indeed auditing compliance with it, and ensuring that just because someone might be a high-performing employee, you cannot sweep any type of behaviour like this under the carpet." 

The case centred on the experience of a former Oracle manager who was sexually harassed over a period of six months by a company sales consultant. The harassment took place on 11 separate occasions, sometimes in the presence of co-workers and external client representatives, and consisted of humiliating verbal advances and comments. These included comments such as "I love your legs in that skirt. I'm going to be thinking about them wrapped around me all day long". 

The employee developed an adjustment disorder with features of anxiety and depression as a result of the harassment, and took about 12 months to recover. Oracle was held liable for the sales consultant's conduct and ordered to pay $18,000 compensation (click here for detailed coverage of the original case). 

On appeal, however, the full court of the Federal Court of Australia ruled the general damages awarded at trial were "manifestly inadequate". Oracle unsuccessfully argued that awards for these types of cases were generally $12,000 to $20,000, and occasionally $90,000 for more egregious cases. 

But the court observed "...that continued adherence in sex discrimination cases, including sexual harassment cases, to a 'range' of damages awards that has not absorbed the increases evident in awards in other fields of litigation has resulted in an award in [the worker's] case that, judged by prevailing community standards, is disproportionately low having regard to the loss and damage she suffered". The employee was awarded $100,000 in damages with an additional $30,000 added for economic loss.

  

A new approach to damages

King says judges have previously taken a conservative approach to compensating victims of this type of behaviour, typically awarding $12,000 to $20,000 for pain and suffering associated with sexual harassment. "There have been more exceptional cases recently where larger awards of $90,000 and $100,000 were made," King says. "But those cases involved situations where the ladies who were harassed where physically impaired substantially as a result of the trauma, and couldn't work for a number of years."

 This was not the case with the former Oracle employee, King notes. Medical evidence found she recovered from the trauma of the harassment within about 12 months of leaving, and found alternative employment within that year as well. But the Court found this type of behaviour and the trauma associated with it should be more properly compensated, as community standards have shifted, King says. "That is undoubtedly going to have a flow-through effect with these types of complaints," he says. "That's because generally it's a no-cost jurisdiction, and firms when they advise victims of complaints of this behaviour have to work out whether it's commercially worthwhile to take it through to the final hearing or resolve it at an early stage." 

Now with the ability to pursue higher damages payouts, both for economic and non-economic loss, the cases will have more momentum to reach court. "At conciliation hearings at the initial stage early on, you will find alleged victims of this type of behaviour will have much higher expectations in terms of reaching commercial settlement," King says. "Employers are going to have to dig a lot deeper into their wallets in respect to complaints, whether they are meritorious or non-meritorious." 

There could also be a flow-on effect to other types of discrimination complaints, in particular claims for discrimination due to physical disability or mental impairment, King says. "Psychological injury in personal injury cases and workplace bullying cases, where there's a breach of contract claim or misleading and deceptive conduct claim, they've been compensated at a higher level and that's part of the rationale in this case for having a consistent approach. Why should one type of physical trauma be different from another?" For workplaces this means it is not enough to have a harassment policy and see it purely as "HR's problem", King says. 

Business owners need to ensure policies and procedures are being actively enforced. "Oracle was found to be liable for the work colleague's harassment… because it had not taken reasonably practicable steps to prevent the harassment occurring in the first place," he says. "In particular, the global sexual harassment policy Oracle had adopted did not meet the regulatory standards recommended by the Australian Human Rights Commission.

 "This usefully illustrates how business decision makers need to be properly across their organisation's regulatory obligations and properly resource their HR team in ensuring implementation and monitoring of their behavioural standards through effective training and audit programs." 

Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82 (15 July 2014

Learn about Barringtons Online Bullying Training here. 

Blayne Webb, Director, Barringtons 

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