Employers Beware: Awards of damages in sexual harassment cases just increased five-fold

A recent court decision has upheld an employee’s appeal, awarding her $130,000 in damages and economic loss for sexual harassment by a colleague. This amount is more than 5 times the amount she was originally awarded, with the Full Federal Court acknowledging that “prevailing community standards” demanded a higher amount of compensation. This decision is alarming for employers, who now face a higher pecuniary risk if found liable due to deficient workplace policies and procedures dealing with sexual harassment in the workplace.

Case study: Richardson v Oracle Corporation Australia Pty Ltd

Ms Richardson brought a claim against the perpetrator, Mr Tucker, and her employer, Oracle, claiming she had been sexually harassed pursuant to the provisions of the Sex Discrimination Act 1984. Under this Act, an employer may be held to be vicariously liable for the actions of its employees and agents.

The Court agreed that Ms Richardson had been sexually harassed and found Oracle vicariously liable, awarding $18,000 as non-economic loss. However, it rejected her claim for economic loss for $30,000 – being the difference in remuneration between her job at Oracle and her new job over a three year period – because the Court did not consider that the link between Mr Tucker’s conduct and Ms Richardson’s ultimate resignation was established.

On appeal, Ms Richardson’s non-economic damages was increased from $18,000 to $100,000 the Court and found that she was entitled to the further $30,000 – a total award of $130,000.

Why the increase?

Historically, the nominal award for damages in sexual harassment cases ranged between $12,000 – $20,000.

However, the appeal court noted that the award for damages in other areas such as workplace bullying and harassment ranged between $80,000 – $100,000 with the more serious cases in the range of $250,000 – $300,000 for damages and/or pain and suffering and observed that the damages awards for sexual harassment cases had not kept up with the passage of time nor had it “absorbed the increases evident in awards in other fields of litigation”. The Court stated:”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”.

Therefore, the award of damages of $18,000 was considered to be “manifestly inadequate”.

What does this mean for employers?

The upward shift in this area should serve as a timely reminder to employers to ensure that their workplace policies and procedures regarding sexual harassment are impenetrable and fully implemented so as to avoid being held vicariously liable for the actions of a rogue employee. Furthermore, we may now see an increase in the number of complaints made against employers parallel to the increase in settlement sums or awards of damages.

Contact us to discuss how HR Legal can assist you with updating or implementing your workplace policies.

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This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.