With all the buzz surrounding our ever-changing workplace relations environment, it has been easy to assume that at least all is calm on the equal opportunity front.

However, some recent decisions, as well as legislative changes, highlight the risks of becoming complacent in managing your organisation’s equal opportunity strategies. In particular, the new discrimination provisions of the Fair Work Act 2009 (Cth) (FW Act)—which commenced on 1 July 2009—open up a new alternative source of legal options for employees. In this newsletter, we consider the new ‘adverse action’ provisions of the FW Act, as well as recent changes to the federal Disability Discrimination Act 1992 (Cth) and the Age Discrimination Act 2004 (Cth).

In addition, anecdotally, we are seeing an increase in the number of complaints brought by employees. Many of these are coupled with workers compensation claims. It appears that where once an employee might have been prepared to walk away from a difficult employment environment, they are now more likely to stand their ground.

Clients with any queries about the new discrimination provisions, or the decisions summarised in this newsletter, should contact one of the Employee Relations partners.

Recent decisions

The decisions below highlight some common issues for employers:

  • thinking that your managers will do the right thing when responding to complaints of discrimination and harassment
  • what to do when an employee informs you of sexual harassment, but asks you not to take it any further
  • what to do when there are no witnesses to alleged unlawful conduct – how do you come to a decision of who to believe? and
  • assuming that having an equal opportunity policy in place will protect you from orders for damages.

Assuming your managers will do the right thing

In Poniatowska v Hickinbotham,1 a woman who was repeatedly sexually harassed in the workplace and then dismissed due to her complaints was awarded $466,000 by the Federal Court (one of the largest damages awards ever in the discrimination jurisdiction).

The Federal Court found that the complainant had been subjected to the following acts of sexual harassment:

  • unsolicited emails and a number of SMS text messages inviting her to have a sexual relationship
  • coarse MMS picture messages on her mobile telephone, and
  • terminating her employment (under the guise of performance management) because it was easier than addressing her concerns.

When the complainant spoke to her supervisor about the conduct, the supervisor took no action, instead commenting ‘what do you expect with a face like yours?’.

As a result of the harassment, Ms Poniatowska has suffered from depression and anxiety and had been unable to return to gainful employment, other than for a short period.

Ms Poniatowska was awarded $466,000 in damages and her legal costs. The costs finding is significant, given that in this jurisdiction the starting point is that both parties are to bear their own costs.

When to investigate – and how to decide when there are no witnesses

In AWU NSW (on behalf of Grahovac) v BlueScope Steel [2009] NSWIRC 86,2 a pump house attendant alleged he had been unfairly dismissed after harassing a fellow employee. The matter was heard in the New South Wales Industrial Relations Commission.

In an internal investigation, the employer found that the pump house attendant had harassed an employee by:

  • hugging the employee, and
  • giving the employee an open-mouthed kiss on each side of the neck.

The pump house attendant argued that his employer had gone too far in investigating the incident, because the complainant had said she did not want a full investigation as it could place the pump house attendant’s employment in jeopardy.

The employee’s manager however, informed the complainant that the incident clearly breached the employer’s policies and reported the matter to his supervisor and HR.

Deputy President Grayson held that despite the employee’s initial wish to avoid placing the pump house attendant in a position of jeopardy, the supervisor’s decision to treat the matter as serious and to take it to a formal reporting level was the proper one:

…it cannot be accepted in the modern workplace… that the Company was somehow at fault in taking the matter beyond the level of informal discussion between the applicant and his direct line supervisor. To do so would be tantamount to ignoring its own corporate objective of creating and maintaining a workplace which is free from discrimination and harassment.

During the investigation into the pump house attendant’s behaviour, it became apparent that the incidents complained of occurred without witnesses, and it became a question of who was to be believed: the pump house attendant (who had denied the allegations and said the employee was lying), or the female employee.

This is a common dilemma faced by many employers in investigations of this type. An employer must weigh the evidence of each employee and decide on the balance of probabilities what occurred, and who is (in the Commission’s words) the ‘witness of truth’.

In this case, the Commission found that:

Although there is no evidence provided by witnesses that can corroborate her allegations, on the balance of probability it is more likely that [the pump house attendant] did both hug and kiss [the employee]…as alleged.

The decision highlights the importance of escalating complaints of overt discrimination and harassment—despite what the wishes of an employee might be.

We have an EO policy – isn’t that enough?

In Sharma v QSR Pty Ltd t/as KFC Punchbowl,3 a teenage employee alleged that she had been subject to sexual harassment by an assistant manager.

The sexual harassment alleged by the employee included the manager:

  • purring at her like a cat
  • asking her to swim nude with him, and
  • making lewd comments about her appearance.

A Full Bench of the Administrative Decisions Tribunal found that whilst the employer had a policy on sexual harassment and provided training to its employees, it did little to ensure the policy was enforced.

In particular, it found that the assistant manager openly flaunted the policy by ‘talking dirty’ around other staff, and was never checked for his behaviour.

The Full Bench held that the employer had failed to take all reasonable steps to prevent the sexual harassment from occurring and found the company vicariously liable for the manager’s conduct.

The employee was awarded $15,000 to compensate her for injury to her feelings and distress.

Legislative changes

Changes have recently been introduced via the FW Act to federal legislation which will make it easier for employees to bring successful claims of workplace discrimination. In addition, the introduction of the National Employment Standards in 2010 is a prompt to employers to revisit their employment policies.

Adverse action provisions of the FW Act and powers of inspectors

The ‘adverse action’ provisions in the FW Act became effective on 1 July 2009.

These provisions represent an important step in equal opportunity law, by giving employees and unions an avenue to claim discrimination under the Act for any ‘adverse’ employment action—not just actions resulting in the termination of employment. ‘Adverse action’ is defined to include:

  • dismissing an employee
  • injuring an employee in their employment
  • altering the position of the employee to their prejudice, or
  • discriminating between the employee and other employees of the employer.

Protected grounds of discrimination include race, sex, sexual preference, age, disability, family status, pregnancy and religion.

In order to succeed in an action for discrimination, all an employee need show is ‘discriminatory treatment’ (an easier test to meet than that imposed by equal opportunity legislation). Further, a reverse onus of proof applies, so that the employer must disprove the allegations, rather than the employee proving the case. Action taken by an employer will be unlawful if it is taken for a reason which includes a prohibited reason—the reason does not need to be the sole or substantial one.

An employee who believes that their employer has taken ‘adverse action’ against them can make an application to Fair Work Australia (FWA) to deal with the dispute or lodge their dispute directly with the Federal Court or Federal Magistrates’ Court. This is not unlike the procedure that exists in state equal opportunity tribunals.

If an employee decides to complain to FWA, FWA can convene a private conference into the dispute, but only if both parties agree to participate. If a private conference occurs and the dispute is not settled, FWA can advise whether the dispute has any reasonable prospects of success. Where FWA does not resolve a complaint, the employee can proceed to the Federal Court or Federal Magistrates’ Court.

One factor which may contribute to an employer agreeing to participate in a voluntary private conference with Fair Work Australia is to reduce the possibility of a costs order in any later federal court proceedings. Under the FW Act, costs may be awarded if a party unreasonably refuses to participate in a matter before FWA.

It is not only employees who can allege breach of the ‘adverse action’ provisions in the federal courts: a union or an inspector of the Fair Work Ombudsman can also apply. There is no cap on damages which can be awarded and, most importantly for employers, the possibility of reinstatement of dismissed employees (which rarely, if ever, occurs in an equal opportunity jurisdiction). The court also has the power to impose a fine of up to $33,000 for a breach. Given unions’ familiarity with the FWA and federal courts, it is quite likely that matters which would have previously been agitated in the state equal opportunity jurisdictions will now be heard under the FW Act.

Further, to bolster these new provisions, the Fair Work Ombudsman is training some of its 300 inspectors to oversee the discrimination jurisdiction. In addition to instituting court proceedings, these inspectors have the power to investigate claims of discrimination in an employer’s workplace and demand the production of documents.

Duty to consider requests for flexible work arrangements

From 1 January 2010, the National Employment Standards (NES) will give employees who are parents or carers of school aged children or children under 18 with a disability the right to request flexible working arrangements.

Employers may only refuse to grant the request if they have reasonable business grounds for doing so. These grounds are not listed in the NES, but are likely to include:

  • the employee’s circumstances
  • the nature of the employee’s role
  • the nature of the arrangements required to accommodate those responsibilities
  • the financial circumstances of the employer
  • the size and nature of the workplace and the employer’s business
  • the effect on the workplace and the employer’s business of accommodating those esponsibilities
  • the consequences for the employer of making such accommodation, and
  • the consequences for the employee of not making such accommodation.

The NES require that the employee’s request be made in writing, and that the employer provides a written response within 21 working days. Where an employer refuses the request, the reasons for the refusal must be given.

Employers in Victoria will already be familiar with these requirements, given that similar obligations form part of the Equal Opportunity Act 1995 (Vic).

Amendments to the Disability Discrimination Act 1992 (Cth)

Changes have recently been implemented to the federal Disability Discrimination Act 1992 (Cth) which will make it easier for employees to successfully sue for disability discrimination.

There is now an explicit duty placed on employers to make ‘reasonable adjustments’ for people with disabilities (a duty previously set out in case law, but not in legislation). Changes have also been made to the test for indirect discrimination, removing the complex ‘proportionality test’ and shifting the onus of proof from the employee to the employer. These changes are a reminder to employers of their duty to reasonably accommodate an employee’s disability.

One positive for employers is that the defences of ‘inherent requirements’ and ‘unjustifiable hardship’ have been extended to apply to most acts of prohibited discrimination (with some exceptions).

Amendments to the Age Discrimination Act 2004 (Cth)

The Age Discrimination Act 2004 (Cth) has been amended to remove the ‘dominant reason’ test and provides instead that discrimination occurs if a person’s age was just one of the reasons for taking discriminatory action.

The amendments also change the legal name of the Human Rights and Equal Opportunity Commission to the Australian Human Rights Commission.

Implications for employers

With the new powers of Fair Work Ombudsman inspectors to enter your workplace to investigate acts of alleged discrimination and the continuing obligations on employers to take ‘reasonable steps’ to prevent unlawful action occurring, now is the time to revisit your policies and training.

Consider:

  • When was the last time you comprehensively reviewed your employment policies?
  • Are they easy to find and do employees know how to find them?
  • Is your documentation in order so that requests from a Fair Work Inspector could be easily accommodated?
  • Do your managers know how to react to allegations of unlawful behaviour, and will they address complaints appropriately?
  • Are you ready for the implementation of the NES, particularly the need to reply in writing to requests for flexible working arrangements?

Recent decisions and legislative changes highlight to move equal opportunity strategies higher up the list of organisational priorities.