Landmark decision in sexual harassment case.

Reflecting changing community standards

In the decision of Richardson v Oracle Corporation Australia Pty Ltd1 the Full Court of the Federal Court has dramatically increased the amount of compensation for general damages (non-economic loss) awarded to an employee who was sexually harassed in the workplace from $18,000 to $100,000. In doing so, the Court acknowledged changing community standards in its significant departure from the accepted and cautious judicial approach to awarding limited damages for pain and suffering and loss of enjoyment of life.

Background

The applicant employee, Ms Richardson, was working at Oracle’s Sydney office as a consulting manager and Mr Tucker was working at Oracle’s Melbourne office as a sales representative. In April 2008 Oracle put together a bid team to secure work with the ANZ Bank and Ms Richardson became the bid manager for the project, with Mr Tucker also being on the bid team.

Ms Richardson claimed that she was sexually harassed by Mr Tucker when, over a period of months from April 2008, he repeatedly made lewd comments and sexual advances to her, such as:

  • ‘I love it when you’re mean to me. It just makes me think how hot you would be in bed’; and
  •  ‘I love your legs in that skirt. I’m going to be thinking about them wrapped around me all day long.’

As a result of Ms Richardson’s complaint to her line manager, Oracle conducted an internal HR investigation into the allegations and subsequently gave Mr Tucker a first and final warning on the basis of its findings. Ms Richardson resigned her employment with Oracle in 2009, claiming that she had done so as a result of Mr Tucker’s conduct and Oracle’s failure to take proper actions to address it.

Ms Richardson commenced proceedings in the Federal Court under the Sex Discrimination Act 1984 (Cth) (Act), claiming:

  • general damages for pain and suffering and the loss of enjoyment of life of at least $90,000; and
  • economic loss and recovery of medical expenses.

Decision at first instance

Justice Buchanan found that Oracle was vicariously liable for Mr Tucker’s unlawful conduct under the Act, including on the basis that Oracle’s relevant policy did not state in sufficiently clear terms that sexual harassment was against the law, nor did it identify the relevant legal standard. As a result, Justice Buchanan ordered Oracle to pay Ms Richardson $18,000 for emotional suffering, or general damages.  In doing so, Justice Buchanan acknowledged submissions made by Oracle that awards of general damages for sexual harassment generally fell within a range of $12,000 to $20,000 unless there were ‘features of aggravation such as psychological trauma and resulting incapacity for work…’

Justice Buchanan also rejected Ms Richardson’s claim that the sexual harassment had caused her to resign from Oracle and accept lower-paying employment.

Appeal decision

Ms Richardson appealed the amount of general damages awarded to her at first instance, claiming that they were ‘manifestly inadequate’.  Ms Richardson also appealed Justice Buchanan’s decision that there was no casual connection between the conduct and her resignation.

The Full Bench (Justices Kenny, Besanko and Perram) agreed with Ms Richardson that the level of general damages awarded was manifestly inadequate, particularly due to the loss and damage she had suffered and having regarding to prevailing community standards. The Full Bench increased the general damages award to Ms Richardson from $18,000 to $100,000.

Justice Kenny stated:

‘It is clear 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 Ms Richard’s case that, judged by prevailing community standards, is disproportionately low having regard to the loss and damage she suffered…The range has remained unchanged, notwithstanding that the community has generally gained a deeper appreciation of the experience of hurt and humiliation that victims of sexual harassment experience and the value of loss of enjoyment of life occasioned by mental illness or distress caused by such conduct.’

Justice Kenny noted a range of other important considerations underlying this view, including significant academic commentary about the historically conservative nature of the Courts in fixing general damages for sexual harassment and the intent of the Act, which ran counter to this historical approach.

The Full Bench also found that Mr Tucker’s conduct was a material cause of Ms Richardson’s decision to resign from Oracle and ordered it to pay $30,000 for economic loss. This was the difference between the salary she had received at Oracle and her new salary over a three year period.

Implications

Notwithstanding that the Oracle decision does not change the law on liability in sexual harassment cases, the decision, nonetheless, has significant implications for employers as it signals a move away from the accepted and cautious approach of awarding general damages for pain and suffering and loss of enjoyment of life.

Impact

This decision may impact significantly on the consideration by future courts of how to award general damages in anti-discrimination claims. It may also impact on the consideration of damages by courts in other workplace claims, for example, harassment and adverse action claims, in cases where there is evidence that the employee has suffered pain and loss of enjoyment of life.

As a result, employees may also seek to apply more pressure to employers to increase settlement amounts in sexual harassment and other workplace claims.

Lessons to learn

It is recommended that employers take this opportunity to revisit all of the steps that they are taking to prevent discrimination or harassment occurring in the workplace, including to ensure that they:

  • have appropriate and up-to-date policies dealing with discrimination and harassment, which specifically identify the unlawful forms of conduct and relevant legal standards;
  • regularly conduct refresher training for employees and managers, with a practical focus on monitoring and preventing inappropriate workplace conduct;
  • properly monitor employee behaviour within the workplace (including in relation to offsite work); and
  • have well-trained HR staff with the capacity to manage workplace complaints appropriately and expeditiously to minimise and manage the risks of these complaints as they arise.

1Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82 (15 July 2014)


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Posted on: 12 August 2014