Record high damages awarded for sexual harassment

Australia’s sexual harassment framework has been subject to significant law reform as part of the implementation of the Respect@Work report recommendations. Now, a new benchmark for general damages awards has been set in a recent Federal Court of Australia judgment in Taylor v August and Pemberton Pty Ltd [2023] FCA 1313. Boards and employers should be aware of this benchmark when considering their approach to the new positive duty to prevent sexual harassment in the workplace.

Our previous article summarised the recent statutory reforms, including the new positive duty and the Australian Human Rights Commission’s (AHRC) expanded functions and powers. The final reform following the Respect@Work report recommendations has been introduced to Parliament, seeking to introduce costs protection against adverse costs orders for claimants in Federal sexual harassment claims. We are monitoring the progress of this Bill through Parliament.

In this article, we summarise the judgment and share key takeaways for employers.

Background

An employee of August and Pemberton Pty Ltd t/as Grew & Co (Company) from January 2018 to 6 April 2022 (her last day at work being 7 August 2020), made various claims against the Company and her manager. The employee alleged that, during her employment, her manager sexually harassed and victimised her after she complained about the sexual harassment. She also claimed the conduct breached her contract of employment.

Sexual harassment

The conduct

The employee claimed that the manager sexually harassed her because he:

• slapped the employee’s bottom in the office
• in early January 2020, told the employee that he had developed feelings for her. Despite the employee informing him that she was not interested in him, five months later the manager asked the employee whether he needed to “turn his feelings off” (declarations)
• gave the employee 19 gifts, including items such as a Chanel coin purse, various pieces of jewellery, $2,000 cash and a Michael Kors bomber jacket (gifts)
• made comments about the employee’s appearance, saying “you have a really nice body,” “you have a beautiful body” and “you have bedroom eyes” (comments).

The findings

Apart from the slap on the bottom, the manager did not touch the employee inappropriately and none of the other conduct in question was explicitly sexual. Nonetheless, Katzmann J found that the manager sexually harassed the employee when he slapped her on the bottom and made the declarations and, in doing so, contravened the Sex Discrimination Act 1984 (Cth) (SD Act).

On the other hand, the gifts and the comments did not constitute sexual harassment because Katzmann J was not convinced that in either, a reasonable person would have anticipated the possibility that the employee would be offended, humiliated, or intimidated by them, despite some of the conduct being deemed “unwelcome”.

As to whether the gifts were “unwelcome”, this was largely dependent on when the gifts were given to the employee. The gifts given before the first declaration in January 2020 were not unwelcome because there was insufficient evidence that the manager had a romantic interest in the employee during that period. The gifts given after the first declaration were clear expressions of the manager’s affection for the employee and were therefore unwelcome.

Breach of contract

The employee brought a breach of contract claim against the Company as an alternative to the damages claim for contravention of the SD Act. This was based on the same allegations as the sexual harassment claim. Given the findings on the sexual harassment claim, Katzmann J did not make findings regarding the breach of contract claim.

Victimisation

The conduct

The employee also claimed the manager victimised her in retaliation for making allegations of sexual harassment, lodging the AHRC complaint and/or asserting her rights. To succeed in the claim, the employee had to prove that:

• she was subjected to, or threatened to be subjected to, a detriment
• at least one of the grounds she relied on was the reason for the detriment.

Around August 2020, the employee’s lawyers wrote to the manager asserting that his conduct amounted to sexual harassment in contravention of the SD Act and that she was entitled to make a complaint to the AHRC. After receiving the letter, the manager’s lawyers sent letters to the employee’s lawyers, demanding that she return various items “gifted” to her (or their equivalent in cash), alleging they were the Company’s property, accusing the employee of theft and threatening to report her to the police. They also claimed that the employee had taken confidential information from the Company.

The findings

Katzmann J was satisfied that the legal requirements of victimisation under the SD Act were met and found that the manager committed victimisation against the employee on the basis that:

• Katzmann J accepted the employee’s evidence that the manager’s actions, save for the confidential information claim, had the effect of subjecting her to the threatened detriment of being charged with a criminal offence and the detriment of being embarrassed, offended, humiliated and/or distressed
• considering the circumstances surrounding the request for the immediate return of the items and the tone of the letters to the employee, Katzmann J found that these requests, as well as the accusations of theft and threats to report her to the police, were vindictive acts largely taken (if not entirely) because the employee alleged the manager (and the Company) had breached the SD Act and lodged the AHRC complaint.

Damages and compensation

The employee was awarded compensation of more than $268,230 comprising:

• general damages for sexual harassment: $140,000
• general damages for victimisation: $40,000
• aggravated damages: $15,000 (for the “unwarranted” allegation that the employee’s claim was “frivolous, vexatious and lacking in merit” and the “intimidatory” threat of personal costs orders against the employee’s lawyers)
• past out-of-pocket expenses: $878.80
• future out-of-pocket expenses: $3,000
• past economic loss: $23,070.64
• future economic loss: $46,284.

The respondents were also ordered to pay the employee’s costs.

Key takeaways

In this case, the Court was not required to consider whether the employer breached the new positive duty because the conduct occurred before the SD Act reforms. However, the findings and compensation ordered has set a new benchmark for general damages in similar cases moving forward.

Boards and employers should be taking steps now to ensure their workplaces proactively address sexual harassment risks. The importance of taking proactive steps to eliminate sexual harassment is compounded by the AHRC’s new powers and functions which came into effect on 12 December 2023 to monitor and enforce compliance with the positive duty to prevent sexual harassment in the workplace. This means the AHRC now has the power to:

• inquire into employers or other persons conducting a business or undertaking (PCBU) if the AHRC reasonably suspects non-compliance with the positive duty
• following the inquiry, issue a compliance notice
• apply to the Federal Court or Federal Circuit and Family Court of Australia for an order to enforce the compliance notice
• enter into enforceable undertakings with an employer or a PCBU.

Together with the new benchmark set by this case and the AHRC’s new expanded powers, employers should be alert to sexual harassment issues more than ever and take proactive steps to eliminate such conduct as far as possible in their workplaces.

If you have any questions, please get in touch with a member of our team below.

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Megan Cant

Jamie Kim, Fiorella Chiavetta, Chloe Hamer

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