Australian employers have been given a clear warning that damages for sexual harassment are likely to be much higher in future.   

In October 2013 we wrote about a Ms Richardson who won her sexual harassment claim against her employer and was awarded $18,000 in general damages, being damages for non-economic loss such as pain and suffering. Despite succeeding in her claim, Ms Richardson was ordered to pay the employer’s costs as she had rejected its settlement offer of $55,000 plus costs before the trial. At the time, there was much publicity in relation to the costs implications of pre-trial offers and the employer’s vicarious liability due to flaws in its training programs and workplace policies.   

By way of update, the Full Court of the Federal Court held on her appeal last month that the original award was “manifestly inadequate” and increased it to $100,000 for general damages plus a further $30,000 for economic loss and ordered the employer to pay Ms Richardson’s costs of the appeal. In the leading judgment, Justice Kenny observed that:  

  • community standards now attach a higher value to compensation for pain and suffering and loss of enjoyment of life than before;
  • damages awarded in Australian decisions outside the anti-discrimination legislation are significantly higher and a disparity has therefore developed in the amounts awarded;
  • the general range for awards of sex discrimination and harassment claims is between $12,000 and $20,000 (with some notable exceptions); and
  • this low level of damages runs “counter to the beneficial intent” of discrimination legislation (because it provides insufficient deterrent) and so impedes its social reform intent.    

This decision has paved the way for a significant increase in damages for sexual harassment claims. Complainants may have higher expectations in any settlement discussions and employers wishing to benefit from costs decisions like the first instance ruling here are going to have to pitch their offers at a correspondingly higher level. For Australian employers, it further emphasises the importance of pre-empting or defending such claims by taking “reasonable steps” to minimise the risks of sexual harassment and other unlawful conduct occurring in the first place, including by ensuring effective policies and training are implemented.