In the lead up to Christmas festivities and the holiday period, employers are warning employees about appropriate behaviours at work functions.  But are employers warning employees to also consider the consequences of their actions out of work?  Misbehaviour out of the workplace may later have a very real impact at work.

Whether it be at the Christmas party, an after function party or on the weekend, employees need to be perceptive of the impact of any misbehaviour on work.  Strained relationships, damaged reputations and the continuation of any bullying and harassment may be legitimate concerns for the workplace, productivity and health and safety.

Where an employer's legal liability for employee misbehaviour begins and ends is subject to ongoing debate.  Recently, the Full Bench of the Fair Work Commission reserved judgment on whether Facebook posts on the weekend can support an application that a worker has been bullied at work.  In this bulletin, we examine two recent Full Federal Court of Australia decisions under the Sex Discrimination Act 1984.  The decisions are a sobering reminder for employers.  

Where is the workplace?

In Vergara v Ewin [2014] FCAFC 100, the Full Federal Court dealt with the question: can the workplace be the pub across the road?  

In this case, two co-workers visited a pub across the road from their workplace.  Ms Ewin, the victim of sexual harassment, attended the pub to discourage the sexual advances Mr Vergara was making in the office.  Mr Vergara continued his advances at the pub.

Section 28B(6) of the Sex Discrimination Act says it is unlawful for a workplace participant to sexually harass another workplace participant at the workplace.  Section 28B(7) defines ‘workplace’ as “a place at which a workplace participant works or otherwise carries out functions in connection with being a workplace participant”. 

The majority of the Full Federal Court was satisfied the pub was a workplace.  Ms Ewin was carrying out a function in connection with being a workplace participant, namely to discourage the sexual advances.  The pub was where Ms Ewin was dealing with what had commenced at the workplace.  It is apparent that the decision gives a broad interpretation to what is the workplace.

Many workplace functions over the Christmas period are held in venues outside the traditional office.  What occurs at the Christmas party is in connection with employment.  Employers are vicariously liable for the acts of its employees in connection with their employment:  s106(1) of the Act. 

The Vergara case is a warning about how easily acts outside the official function or workplace can still be in connection with employment.  Provided there is a relationship between the act and employment, the act may be in connection with employment. 

An employer’s defence to a sexual harassment claim is that it took all reasonable steps to prevent the harassment: s.106(2) of the Act.  In our view, it is prudent for employers to warn employees of the need to consider the consequences of their actions out of work.  Employees need to be alerted to the fact that they may be liable for their actions outside of the immediate workplace setting and such inappropriate behaviour is not condoned.

What will it cost?

Apart from a few exceptions, damages for non-economic loss or general damages for victims of sexual harassment have commonly been in the range of $12,000 to $20,000.  In Richardson v Oracle Corporation Australia [2014] FCAFC 82, the Full Federal Court addressed the prevailing community standards when it comes to compensation for victims of workplace sexual harassment.

This case involved an employee, Ms Richardson, being subjected to “persistent and callous” sexual comments over a six-month period from a co-worker.  Some of the sexually explicit comments were made in front of others in meetings.  Ms Richardson suffered stress and was diagnosed with an adjustment disorder.

At first instance, the trial judge ordered Oracle to pay Ms Richardson $18,000 in general damages for pain and suffering.  Ms Richardson appealed arguing the amount was manifestly inadequate.

The Full Court increased Ms Richardson’s general damages from $18,000 to $100,000.  Justice Kenny said “whether or not the award of damages in the sum of $18,000 is manifestly inadequate is not to be determined here by reference to some previously accepted ‘range’ in sexual harassment cases”.  Justice Kenny said community standards “now accord a higher value to compensation for pain and suffering and loss of enjoyment of life than before”. 

For employees and employers found vicariously liable for sexual harassment, the upshot may be higher exposure to damages where an employee suffers significant stress and psychological illness as a result of the unlawful conduct.

The lessons

Prevention is the best cure.  Employers are well versed in warning employees to behave responsibly at the work Christmas function.  But will employers take the next step?

With social media, employers are telling employees about the dangers of their activity out of work potentially being a legitimate concern on their employment.  The same education should be provided with respect to other misbehaviour.

Inherent with most jobs is the need to work as a team and treat others with respect.  Relationships are dynamic and employees need to be aware that actions out of work may have a very real impact at work.  Please, think before you act.