A recent decision of the full Federal Court of Australia has signalled that courts will likely award higher compensation for non-economic loss in sexual harassment cases in line with community standards.

In February 2013, the Federal Court found Oracle vicariously liable for the sexual harassment of a female manager by a male sales consultant during a six month period in 2008.  Oracle was found vivaciously liable partially due to an inadequate code of practice which was not properly tailored to Australia discrimination law.  Click here to read our March 2013 update about the first instance decision. 

The Federal Court awarded the female manager $18,000 for pain and suffering, however, on appeal this was increased to $100,000.

On appeal, Oracle argued that damages for non-economic loss in sexual harassment cases usually fell within the ‘range’ of $10,000 to $20,000.

In rejecting Oracle’s argument, the full Federal Court held that the assessment of non-economic loss was not to be determined by an accepted ‘range’ but rather the nature and extent of the managers injuries and ‘prevailing community standards’. 

The full Federal Court found that community standards now accord a higher value to compensation for pain and suffering and loss of enjoyment of life than before.  Accordingly, the damages for non-economic loss were increased to $100,000.

Lessons for employers

This decision is a strong indicator that employers are likely to be exposed to greater awards of damages in sexual harassment cases.

Employers will be held vicariously liable for actions of their employees unless they can demonstrate that they took all reasonable steps to prevent the unlawful conduct from occurring.  To prevent and adequately manage sexual harassment in the workplace so as to reduce the risk of being held vicariously liable, employers should:

  • implement an appropriate workplace behaviour policy specific to Australian discrimination legislation;
  • conduct regular appropriate workplace behaviour training; and
  • investigate any complaints of sexual harassment and implement necessary corrective actions.