The recent Federal Court decision in Ewin v Vergara (No 3) [2013] FCA 1311 highlights how important it is for employers to have in place appropriate policies and procedures to prevent sexual harassment, and to respond appropriately to complaints.

All the parties involved in the case paid a high price for identified incidents, which may have been prevented if appropriate policies and procedures had been in place and if appropriate training had been provided.

Background

At the time of the incidents, the applicant, Jemma Ewin, was employed as the Group Financial Controller of Living and Leisure Australia Limited (LLA). She held a relatively senior role, reporting directly to LLA's Chief Financial Officer.

The respondent, Claudio Vergara, was an employee of a recruitment and labour hire firm named Robert Walters Pty Ltd (Robert Walters). At the time of the incidents, Mr Vergara was performing work for LLA pursuant to a contract between Robert Walters and LLA. He was junior to Ms Ewin and reported directly to Ms Ewin.

The office lights incident

On 13 May 2009, Ms Ewin and Mr Vergara were the only two people in the office at approximately 8.30pm, all other staff having left hours earlier. Mr Vergara indicated that he was going home. He shut down his computer and made his way to depart, but then returned, turning off the office lights and approaching Ms Ewin's desk. Mr Vergara tried to touch Ms Ewin's hand to turn off her computer, saying that they should finish work for the evening. When Ms Ewin demanded that Mr Vergara turn the lights back on, he indicated that he would only turn the lights on if she agreed to come and talk to him 'about something'.

On her evidence, Ms Ewin agreed to go to the Waterside Hotel with Mr Vergara, despite feeling uncomfortable, so that they could hold discussions in a more public place.

The Waterside Hotel Incident

Whilst at the Waterside Hotel, Mr Vergara sexually propositioned Ms Ewin and made numerous sexually explicit remarks. Although the Waterside Hotel incident did not occur during work hours or in the LLA office, Justice Bromberg found that it was a 'workplace' for the purpose of the Sex Discrimination Act 1984 (Cth) (SD Act) for the following reasons:

'The relation between what Mr Vergara and Ms Ewin were doing at the Waterside Hotel and each being a workplace participant is established by the fact that the [office lights incident] was workplace based harassment and that Ms Ewin and Mr Vergara moved to the Waterside Hotel to deal with that incident of harassment. Those matters establish a sufficient connection to the workplace to render the Waterside Hotel a "workplace" for the purposes of s28B(6) during the course of Mr Vergara's and Ms Ewin's attendance at that place'.(1)

The King Street incident

After Ms Ewin rejected Mr Vergara's advances at the Waterside Hotel, Mr Vergara announced that he should go, and he left Ms Ewin at the bar. Ms Ewin left some time later, only to discover Mr Vergara waiting for her at the door. Mr Vergara proceeded to follow Ms Ewin as she walked up King Street towards the train station. At one point, Mr Vergara said something to Ms Ewin, prompting her to turn towards him. Mr Vergara then grabbed Ms Ewin by the lapel of her jacket and tried to kiss her.

Again, although the King Street incident did not occur during work hours or in the LLA office, Justice Bromberg found that it was a 'workplace' for the purpose of the SD Act for the following reasons:

'[The attempt to kiss Ms Ewin] formed part of the same course of conduct which began with the sexual harassment at the LLA office earlier that same evening…In my view, the place at which the conduct occurred had a sufficient workplace nexus and satisfied the statutory definition of "workplace" for the same reasons as those that pertain to the finding I have made in relation to the Waterside Hotel'.(2)

The sexual assault

Two days later, the staff from the LLA office attended a work function at the Melbourne Aquarium. Both Ms Ewin and Mr Vergara consumed alcohol during the work function. After the function ended at approximately 6:30pm, most of the LLA staff went to the Insignia Bar, where Ms Ewin and Mr Vergara continued to consume alcohol. Ms Ewin gave evidence that she deliberately avoided Mr Vergara at the work function and at the Insignia Bar.

At about 10pm, Ms Ewin began feeling unwell and she proceeded to the ladies' toilets. Ms Ewin recalled cleaning herself after vomiting, but lost her memory between leaving the toilet and catching a taxi home at approximately 12:20am.

Based on the evidence of Mr Vergara and the data recorded for swipe card entries to the LLA office building, Justice Bromberg found that between 10:40pm and 12:00am, Mr Vergara and Ms Ewin engaged in sexual intercourse in the corridor between the lifts and the front door to the LLA office. Justice Bromberg further found that 'it is probable that Ms Ewin either maintained her antipathy to sexual activity with Mr Vergara or, because of her intoxication, Ms Ewin was unable to freely form a view to the effect that the conduct was agreeable or desirable to her. In either case, the conduct is to be regarded as unwelcome sexual conduct'.(3)

Although the conduct did not occur within the confines of the LLA office, Justice Bromberg found that it occurred in a workplace for the purpose of the SD Act for the following reasons:

'The definition of "workplace"…is cast in wide terms. A "workplace" is not confined to the place of work of the participants but extends to a place at which the participants work or otherwise carry out functions in connection with being a workplace participant…(4)

…The fact that the activity occurred out of working hours or that attendance was not for a work related purpose, does not affect the corridor's characterisation as the workplace of both Mr Vergara and Ms Ewin…' (5)

Sexual harassment

Ms Ewin claimed that the behaviours described above were unlawful sexual harassment as contemplated by the SD Act.

The Court unsurprisingly found that the behaviours met the definition of sexual harassment, namely unwelcome sexual advances, an unwelcome request for sexual favours, or other unwelcome conduct of a sexual nature 'in circumstances in which a reasonable person, having regard to all of the circumstances, would have anticipated that the person harassed would be offended, humiliated or intimidated'.(6)

In a workplace

Importantly, as noted above, the court found that all of the behaviours described above occurred in a workplace, thereby bringing the behaviours within s 28B(6) of the SD Act, which states

that 'it is unlawful for a workplace participant to sexually harass another workplace participant at a place that is a workplace of either or both of those persons'.

Complaint to management

Ms Ewin gave evidence that she perceived her workplace to be 'a boys club' and she had therefore been reluctant to complain to management regarding the sexual harassment. Following the sexual assault, Ms Ewin did approach her direct supervisor, Mr Newton, with a complaint. Ms Ewin explained the events in the days leading up to the sexual assault, to which Mr Newton responded by laughing and stating that he had 'been hit with the ugly stick and had never had the pleasure of being a target of sexual harassment'.(7)

The case stated that Ms Ewin felt humiliated by Mr Newton's response and she felt unable to tell him about the sexual assault. The following week, Mr Newton travelled to Shanghai. Whilst he was in Shanghai, it occurred to Mr Newton that Ms Ewin might find herself alone in the office with Mr Vergara. He therefore initiated an investigation of her complaint approximately one week after the complaint was made, asking a female human resources consultant to attend the LLA office to conduct the investigation.

Compensation

Ms Ewin claimed approximately $2.5 million in compensation.

The Court ultimately awarded her $476,163 plus interest; of which approximately $265,600 had already been paid by LLA and Robert Walters pursuant to confidential settlement agreements reached prior to the hearing of the matter.

Lessons for employers

It is important for employers to understand that:

Inappropriate interactions occurring between employees outside of normal working hours and / or at venues other than the normal office or workplace can still have a sufficient connection to be work-related and therefore a matter for which an employer may be responsible.

Policies and procedures need to acknowledge and reflect the breadth of the concepts of 'workplace' and 'work-related'.

Workers (both employees and contractors) need to be properly inducted and familiar with the policies and procedures, such that all employees recognise what is sexual harassment and that a single event falls within its ambit (rather than assuming / thinking that no responsibility or liability can arise without a prior warning or complaint).

A bullying and harassment policy cannot be effective if workers are not confident that any complaint made will be treated seriously, with respect and confidentially. If there is no confidence in the policy then it will not be relied upon, resulting in the occurrence of unreported and unchecked behaviour in breach of the policy.

It is inappropriate for management to treat complaints in a flippant or dismissive manner, no matter how innocent or trivial the complaint may appear to the manager without investigation.

Social events connected with employment form part of the workplace and are work related, such that encouragement of or facilitation of worker intoxication, participation in dangerous activities or allowing workers to be left in dangerous or vulnerable situations, can lead to employer liability.