In recent years, courts and tribunals have taken a more equitable and expansive approach to the assessment of damages in sexual harassment claims. The decision of the Victorian Civil and Administrative Tribunal in Collins v Smith (Collins) 1 has continued this trend, awarding an employee more than $330,000 in compensation for sexual harassment by her employer. 

Background

Ms Collins was employed as a postal worker without incident from 2011. In 2013, over the course of a four month period, Ms Collins was sexually harassed by her manager and the owner of the post office, Mr Smith. Mr Smith’s conduct included inappropriate touching or brushing up against Ms Collins; verbal comments and text messages of a sexual nature; repeated attempts to inappropriately kiss or embrace Ms Collins; and after Ms Collins rejected Mr Smith’s unwanted physical and sexual advances, repeatedly likening her to a Lamborghini sitting in a garage which Mr Smith did not want sitting there if he could not drive it.

Ms Collins ultimately resigned from her employment due to the ongoing harassment, which led her to experience daily panic attacks, sleep disturbance, nightmares, weight loss, nausea, shaking, post-traumatic stress, and a major depressive episode which led to her being placed on anti-depressants.

Vice President Judge Jenkins of the Victorian Civil and Administrative Tribunal (Tribunal) found that Mr Smith’s conduct constituted breaches of the Equal Opportunity Act 2010 (Vic) (EO Act), and that this conduct was the eventual cause of Ms Collins’ resignation from her employment. 

Mr Smith argued that he believed that his conduct was not unwelcome, despite Ms Collins having advised Mr Smith that she was happily married and repeatedly asking him for assurances that his behaviour would cease. Mr Smith asserted that Ms Collins had encouraged his behaviour through “words and subtle actions”, including asking to work Saturday shifts, when Mr Smith and Ms Collins would be alone in the post office. 

The Tribunal rejected Mr Smith’s argument that Ms Collins’ actions in placing herself in close proximity to him were inconsistent with her allegations about his conduct. The Tribunal was satisfied that Ms Collins’ actions were explained by her need to keep her job, her desire for discretion, the continued reassurances from Mr Smith that his behaviour would cease, and their previous long-standing professional relationship. 

Judge Jenkins followed previous authorities in stating that where an employer engages in sexual harassment of an employee, it is inappropriate to criticise the employee on the basis that they should have handled the sexual harassment better or removed themselves from the situation earlier.2 The Tribunal was satisfied that Ms Collins had taken all reasonable steps to maintain a professional working relationship and discourage Mr Smith’s inappropriate behaviour.

KEY POINTS

  • In Victoria, the workers’ compensation scheme for personal injuries arising in the course of employment does not operate as a bar to employees’ ability to obtain compensation for personal injury arising out of unlawful workplace sexual harassment or discrimination under the Equal Opportunity Act 2010 (Vic).
  • Courts and Tribunals are increasingly likely to make significant awards of damages where there have been contraventions of anti-discrimination and sexual harassment legislation.
  •  Employers will be vicariously liable for the unlawful conduct of employees unless they can show that they took all reasonable steps to prevent the unlawful behaviour occurring. 

Compensation for sexual harassment

In determining whether compensation was payable to Ms Collins, Mr Smith argued that the Accident Compensation Act 1985 (Vic) and Workplace Injury Compensation Act 2013 (Vic) (Workers’ Compensation Legislation) prevented the Tribunal from awarding compensation for personal injury occurring due to sexual harassment or discrimination in breach of the EO Act. His argument was that the Workers’ Compensation Legislation is a complete code regarding compensation for economic loss and non-economic loss (general damages for pain and suffering) sustained in the course of employment. On this basis, Mr Smith contended that the Tribunal’s power to award compensation in these circumstances was limited to damages for hurt, humiliation, and distress.

Given the absence of any previous authority expressly considering this issue, and the potentially significant ramifications if Mr Smith’s argument was accepted, the Tribunal invited the Victorian Human Rights and Equal Opportunity Commission (VEOHRC) to intervene in the proceeding and make submissions on whether the Workers’ Compensation Legislation restricted the Tribunal’s ability to award compensation for economic loss and general damages to Ms Collins.

The Tribunal held that both the EO Act and the Workers’ Compensation Legislation are designed to co-exist and can do so comfortably without limiting the scope and operation of the compensatory provisions of the EO Act.

In reaching this conclusion, Judge Jenkins reasoned that the two regimes operate in different fields, in that the Workers’ Compensation Legislation regulates compensation for injuries and accidents in the workplace, whereas the EO Act regulates discrimination and includes, as a remedy, monetary compensation for a breach of the law; and given the beneficial nature of the EO Act, it should be construed in a way which provides the fullest relief possible. Furthermore, it would be unworkable to have the Workers’ Compensation Legislation operate as a complete code. If the EO Act were “read down” to exclude the availability of compensation in all sexual harassment matters occurring in the workplace, it would require recourse to complex Workers’ Compensation Legislation in all claims where monetary compensation is sought for injury arising from a breach of the EO Act. In Victoria, this would require determination of whether the victim of the unlawful conduct meets the relevant “serious injury” thresholds under workers’ compensation legislation. This would have the unfortunate consequence that where an employee does not meet the thresholds, they would not be entitled to compensation, no matter how serious the breach of the EO Act.

In light of these considerations, the Tribunal held that there is no inconsistency between the Workers’ Compensation Legislation and the EO Act; and that damages for personal injury arising due to breaches of the EO Act in the course of employment are available in sexual harassment cases.

While Collins is the first decision which has expressly dealt with the interaction between the availability of compensation for personal injury in the workplace under Workers’ Compensation Legislation and the EO Act, the outcome is consistent with the approach adopted in previous cases in other jurisdictions. For example, in Richardson3 a Full Court of the Federal Court awarded the applicant significant damages under Federal sex discrimination legislation for psychological damage suffered as a result of severe sexual harassment during the course of her employment. Similarly, in the case of Poniatowska v Hickinbotham, 4 the Applicant was awarded $90,000 in general damages under the Federal sex discrimination legislation for sexual harassment in the course of her employment, which led to her suffering an adjustment disorder with mixed anxiety and depression. In each of these cases, the employees concerned could have pursued compensation claims under Workers’ Compensation Legislation in the relevant states, but elected not to.

Assessment of damages

In addition to making submissions regarding the availability of compensation under the EO Act for personal injury arising in the course of employment, VEOHRC also made submissions regarding the quantum of compensation which should be awarded to Ms Collins. In doing so, VEOHRC argued that the Tribunal should take contemporary community standards into account when determining the amount of compensation payable for unlawful sexual harassment.

Judge Jenkins recognised that there was a “gradual and ongoing reassessment of the approach to damages” by courts and tribunals in dealing with cases of this nature, and that changing community attitudes to the adverse consequences of sexual harassment extended beyond the loss of employment to include severe psychological illness, relationship breakdown, and negative impacts on general health and well-being. Her Honour considered previous case law as indicative of the revised approach to awarding general damages in sexual harassment and discrimination cases, including:

  • Willett v Victoria, 5 where a police officer who was the target of significant bullying and harassment was awarded $250,000 in general damages after the Supreme Court found that she had suffered a severe psychological disorder as a consequence of the harassment;
  • Swan v Monash Law Book Cooperative, 6 where an employee was awarded $300,000 in damages for pain and suffering and loss of enjoyment of life as a result of bullying and harassment in the workplace; and
  • Ewin v Vergara (No 3), 7 where an employee was awarded $110,000 in general damages and $293,000 for loss of past earning capacity following findings by the Federal Court that the employee had been sexually harassed in the workplace.

Having regard to similar cases and to the objects of the EO Act, Judge Jenkins held that “it is incumbent upon the Tribunal to have particular regard to the need to eliminate sexual harassment, to the greatest possible extent, in the workplace; and to encourage the identification and elimination of sexual harassment”. On the basis of the medical evidence submitted, the Tribunal accepted that there was a connection between the sexual harassment and Ms Collins’ subsequent psychological trauma; and awarded Ms Collins the total sum of $332,280, comprising $180,000 in general damages, $20,000 in aggravated damages, $120,000 in past and future loss of earnings and superannuation, plus out-of-pocket expenses.

Aggravated damages were awarded for reasons including Mr Smith’s role in directly supervising Ms Collins, the prolonged period over which the wrongful conduct continued, Mr Smith’s disregard for Ms Collins’ requests to maintain a professional working relationship, and his ongoing conduct in the context of Ms Collins’ increasing distress. Judge Jenkins also referred to the previous amicable and professional working relationship between the parties having made Ms Collins particularly vulnerable to Mr Smith’s behaviour.

Costs

Despite parties generally bearing their own costs in anti- discrimination matters before the Tribunal, an order was made against Mr Smith for the payment of Ms Collins’ legal costs as his case was considered to be very weak, and that his actions throughout the proceeding were unreasonable, particularly his failure to accept offers to settle the proceedings.

Bottom line for employers

The Collins case confirms that in Victoria, Workers’ Compensation Legislation does not fetter the powers of the Tribunal to award compensation under the EO Act. Accordingly, an Applicant who has suffered an injury during the course of their employment as a result of unlawful harassment or discrimination will not be excluded from accessing the full range of compensation available under the EO Act, including damages related to that injury.

The Collins decision also confirms the upwards trend in general damages awarded for unlawful sexual harassment. The development of case law in this area demonstrates the focus on community standards and the effects of the harassment on victims beyond pure economic loss.

Employers will be vicariously liable for the unlawful conduct of employees unless they can show that they took all reasonable steps to prevent the unlawful behaviour occurring. It is therefore critical that employers are cognisant of the significant exposure for the organisation, both from the perspective of legal and financial liability and staff turnover, and take pro-active steps to mitigate against these risks. Employers should implement robust policies and regular training to ensure that all staff are aware of expectations regarding appropriate workplace behaviour and the consequences of non-compliance. This will help employers to successfully defend sexual harassment claims based on vicarious liability where they can prove that they have taken “all reasonable steps” to minimise the risk of sexual harassment occurring.