Litigation concerning sexual harassment in the workplace is a distressing and yet also dynamic area of law. In Australia complaints of sexual harassment need to be made to a variety of state, territory or federal statutory bodies in the nature of human rights commissions prior to accessing any court or tribunal process.

Businesses have long been advised of the need to implement sexual harassment policies and procedures in addition to providing training for workers addressing the issue. It is also vital to encourage early reporting of incidents and act on complaints of sexual harassment to assist workplace culture and also help reduce the risk of businesses being vicariously liable for the actions of workers. This update provides an overview of the impact of sexual harassment legislation on the workplace in Australia, including key trends, case studies and business risks.

What is sexual harassment?

Broadly speaking sexual harassment is unwelcome sexual behaviour, which makes a person feel offended, humiliated or intimidated. It is important to note that the test for whether behaviour is unwelcome, and thus sexual harassment, is a subjective one. That is, a court or tribunal will examine the mind of the complainant alleging the harassment rather than the mind of the alleged perpetrator. On the other hand whether conduct is sexual in nature (and can constitute sexual harassment) is an objective test determined by reference to the reasonable person.

Statistics

According to the 2012 Australian Human Rights Commission (AHRC) sexual harassment national telephone survey, one in four women (25%) and one in six men (16%) experienced sexual harassment in the workplace within the period of 2008 to 2012.[1]

How many complaints were there in 2014-2015?

Federal 212 complaints[2]
New South Wales 83 complaints[3]
Queensland 59 complaints[4]
Victoria 170 complaints[5]
Western Australia 36 complaints[6]
Tasmania 42 complaints[7]
Australian Capital Territory 6 complaints[8]
Northern Territory 57 complaints[9]

Risks for business

Considering that 25% of women and 16% of men identified as having experienced sexual harassment in the workplace between 2008-2012 the complaint figures above indicate that that there is a massive underreporting of incidents.

This means there is a very substantial and largely unidentified risk for businesses in the sexual harassment space. That this risk is largely unidentified is concerning as there has been a significant increase in the damages awarded when sexual harassment is found to have occurred.

Recent trend – increasing damages

The approach of courts and tribunals to applications alleging sexual harassment has changed when it comes to determining appropriate remedies such that financial awards are increasing in an upward trajectory.

Particularly large damages are available where the conduct occurs over a period of time, the conduct is serious and where the complainant has sustained a psychological injury which affects their ability to work.

In 2013 there was a high profile case in Victoria concerning Mr Vergara and his sexual assault of Ms Ewin. Mr Vergara was a contractor who was working at the premises of Ms Ewin's employer Living and Leisure Australia Ltd. As against Mr Vergara, Ms Ewin obtained AUD 476,163 in damages as a result of the sexual assault.[10] Separately, Living and Leisure Australia Ltd entered into a confidential settlement with Ms Ewin for an undisclosed amount. Ms Ewin also sought to institute criminal proceedings as against Mr Vergara.

In 2014 the Full Court of the Federal Court increased the damages payable to applicant Ms Richardson by her former employer Oracle from AUD 18,000 to AUD 130,000 and ordered Oracle pay Ms Richardson's costs.[11] This case marked the recent judicial reappraisal of the scale of damages in sexual harassment matters.

Below we discuss two recent cases which are indicative of the upward trend in sexual harassment damages:

Damages totalling AUD 332,280 awarded for series of sexual harassment over a couple of months

Collins v Smith (Human Rights) [2015] VCAT 1029

Collins v Smith (Human Rights) [2015] VCAT 1992

From May 2011 to April 2013 Ms Collins worked in a post office in Geelong owned and operated by Mr Smith and his wife. Ms Collins alleged sexual harassment perpetrated by Mr Smith including comments, requests for sex, advances and physical touching on several occasions.

Ms Collins detailed approximately 47 encounters of alleged sexual harassment which commenced in January 2013 with a declaration of sexual interest from Mr Smith, and culminated in physical touching such as grabbing in the crotch area and bottom, and placing his fingers inside her bra. As a result of the continued sexual harassment Ms Collins left employment at the post office in April 2013.

Evidence was provided by two women who had formerly worked with Mr Smith as their supervisor outside of the post office and in other workplaces. Their evidence was that Mr Smith had engaged in sexual harassment of them and provided broad corroboration of the type of conduct alleged by Ms Collins. The presiding Judge did not rely on this evidence but noted its content nonetheless.

Ms Collins provided text messages from Mr Smith to corroborate her oral evidence. Ms Collins' evidence was preferred by Judge Jenkins who noted Mr Smith's evidence was evasive, self-serving, inconsistent with text messages in evidence and at times offered no explanation for a course of conduct he alleged had occurred.

A variety of expert evidence concluded that Ms Collins suffered a major depressive disorder, anxiety and post-traumatic stress disorder. Ms Collins was prescribed anti-depressants, was under cognitive therapy, had lost weight and had trouble sleeping. Further, she preferred not to engage socially and was unable to work into the future. Ms Collins and her husband had moved away from Geelong as a result of the sexual harassment, their relationship suffered reduced intimacy and their previous plans to have children were put on hold.

Damages

Once sexual harassment was found the Victorian Civil and Administrative Tribunal in a separate decision considered remedy. Ms Collins had made a claim for workers compensation which had been granted. Mr Smith argued that in light of workers compensation legislation in Victoria Ms Collins should not obtain financial remedy for loss arising from injury during her employment when she had received workers compensation payments.

The Tribunal concluded that the workers compensation legislation did not regulate its jurisdiction under the Equal Opportunity Act 2010 (Vic) (EOA) and further that, the EOA conferred additional rights to those complainants may have under common law or otherwise.

The Tribunal commented that any construction of the provisions which would limit the remedies under the EOA due to workers compensation legislation would undermine the object of the EOA namely protection against discrimination.

The Tribunal had regard to the seriously detrimental impact the sexual harassment had on Ms Collins' life including her ability to work, social relationships and her relationship with her husband. The Tribunal had regard to the settlement negotiations between the parties. The highest offer made by Mr Smith was AUD 75,000 and the lowest offer from Ms Collins AUD 50,000 plus costs. The Tribunal concluded that the failure of Mr Smith to accept any of the offers made by Ms Collins was unreasonable and took this into account when ordering he pay Ms Collins's costs.

In late 2015 Ms Collins obtained damages of AUD 332,280 from Mr Smith for injury, loss and damage sustained as a result of the sexual harassment.

This case demonstrates that businesses have exposure not only via court proceedings for sexual harassment, but via workers compensation policies with subsequently claims of injury arising from sexual harassment.

Damages totalling AUD 1.3 million awarded in sexual harassment case

Kate Mathews v Winslow Constructors (Vic) Pty Ltd [2015] VSC 728

Ms Mathewswas employed by Winslow Constructors Pty Ltd (Winslow) as a labourer from August 2008 to early July 2010. Ms Mathews alleged that during this time she was subjected to abuse, bullying and sexual harassment from Winslow employees and subcontractors, and that Winslow was vicariously liable for the tortious acts of these workers. Winslow is a large construction company specialising in civil engineering.

During Ms Mathews' time at Winslow she was subjected to offensive remarks and conduct directed at her by many workers, largely by colleague 'C H', and to a lesser extent by her foreman, 'H G', whose names were both suppressed in the judgment.

The comments and conduct towards Ms Mathews was sexually degrading, offensive and threatening. She was shown pornographic material, received sexual requests, subjected to threats of sexual assault and also simulated sexual activity by C H.

On 1 July 2010, Ms Mathews went to her house at lunchtime, as she left C H threatened, "I am going to follow you home, rip your clothes off and rape you." Ms Mathews was frightened and scared and recounted the threat to her mother. Ms Mathews has not worked since.

On the fifth day of the hearing Winslow admitted negligence and, as a result, only the quantum of Ms Mathews claim was at issue.

Psychological effects

Ms Mathews suffered significant detrimental psychological effects following her employment at Winslow. Within days of leaving Winslow Ms Mathews had been referred by her then GP to a psychologist with the brief to "treat anxiety, stress and depression, secondary to recent sexual harassment at work."

Ms Mathews then sought treatment from another GP who remained her GP up until judgment. Ms Mathews' new GP initially assessed her as being severely depressed, and remained so over subsequent months despite a referral to a psychologist. It was found that Ms Mathews would become distressed at the sight of people in fluorescent vests or at the sight of a Winslow truck.

Throughout 2011 Ms Mathews continued to receive psychological treatment and was diagnosed with major depressive disorder with concomitant PTSD. Her treating psychiatrist later confirmed the diagnosis of Major Depressive Disorder (severe), and also as suffering from severe and clinical PTSD.

Ms Mathews continued to see treating psychiatrists and her diagnosis remained of major depressive disorder and a significant chronic PTSD which appeared not to have resolved or improved since she left work in July 2010.

Ms Mathews was treated with numerous prescription medications and between 13 November 2013 and 25 November 2013 underwent six Electroconvulsive Therapy Treatments (ECT). It was later given in evidence that Ms Mathew's resultant Bipolar II Disorder was 'ECT-induced'. Bipolar II Disorder is a recognised psychiatric disorder referred to in DSM-V.

It was put to the court that Ms Mathews' prognosis was poor and that her Bipolar II Disorder will require monitoring by a psychiatrist for the rest of her life, along with her PTSD which was noted as chronic and disabling, unlikely to remit significantly.

Jaw Injury

In addition to her psychiatric injuries Ms Mathews sustained an injury to her temporomandibular joint as a consequence of grinding her teeth. It was accepted by the court that Ms Mathews' employment at Winslow was also a cause of this injury and, as a result, causes ongoing pain and sever limitation to her capacity to chew and enjoy many foods.

Damages

Ms Mathews' general damages were assessed at AUD 380,000. This amount includes compensation for both her psychiatric injuries and her jaw injury

Due to the unanimous evidence that Ms Mathews was a good worker, with promotion within Winslow likely, total past economic loss was calculated at AUD 283,941.70.

The court was satisfied, on balance, that Ms Mathews would not work again, and future loss of earning capacity was calculated, after discounts, at AUD 696,085.

The damages as assessed then totalled AUD 1,360,027.