Failure to manage discrimination in the workplace is costly for employers. Significant fines can be imposed on companies and directors that breach their legal obligations, and perhaps more importantly, workplace discrimination can also result in damage to an employer’s reputation, poor morale and high staff turnover.
This alert focuses on recent developments in the areas of age discrimination, sex discrimination (including pregnancy and gender identity) and sexual harassment. These areas are becoming hot topics in the media and modern society’s intolerance for such discrimination is reflected in recent case law and legislative changes, which in some areas have seen a substantial increase in penalties and compensation available.
Employers are encouraged to consider these developments and ensure that their discrimination policies and training procedures are up to date so that your workplace doesn’t become another newspaper headline or statistic.
With the retirement age to increase to 70 by 2035 we expect employers may see an increased focus on age discrimination in the workplace. Although there are a few occupations where age limits apply, generally in Australia employers cannot discriminate against employees (or job applicants) on the basis of age, with prohibitions under federal and state anti-discrimination laws and also under the general protections provisions of the Fair Work Act 2009 (Cth).
Examples of age discrimination include only providing training opportunities to younger staff or engaging employees under different contractual arrangements depending on their age.
In April 2014, the Fair Work Ombudsman successfully prosecuted its first age discrimination matter. Fair Work Ombudsman v Theravanish Investments Pty Ltd and Ors  FCCA (2 April 2014) concerned a worker who was terminated from his hospitality role when he reached the age of 65. His employer had a policy not to employ anyone past retirement age. This was held to be unlawful, with the court awarding:
- $10,000 in compensation to the employee
- a $20,790 fine on the company, and
- the company directors were fined $4,180 each.
The Fair Work Ombudsman commented that this case serves as a warning to employers that discrimination on the grounds of age will not be tolerated.
Recognition of intersex status and same sex couples
In April 2014 the High Court recognised intersex status in Norrie v NSW Registrar of Births Deaths and Marriages  NSWCA 145. The court held that the NSW Registrar of Births Deaths and Marriages can recognise and record sexes other than male or female. Individuals who do not identify as either male or female may now be identified as intersex or non-specific sex on their identification documents.
This modern approach and recognition of intersex status has recently also been reflected in amendments to the Sex Discrimination Act 1984 (Cth) (SD Act). As of 1 August 2013, prohibitions under the SD Act were broadened to:
- prohibit discrimination on the additional grounds of sexual orientation, gender identity and intersex status (defined as having physical, hormonal or genetic features that are neither wholly male or female), and
- clarify that the protection from discrimination on the grounds of relationship status applies equally to same sex couples.
Under the SD Act, it is unlawful to discriminate against a person on the basis of their sex, which includes discrimination on the grounds of marital or relationship status, pregnancy or potential pregnancy, breastfeeding and family responsibilities (and now the additional grounds above), but previously did not extend to protect same-sex de facto couples.
With the new protections now in force, employers should ensure that workplace policies, procedures and training programs are updated to reflect these changes.
Pregnancy and return to work procedures
A report released by the Human Rights Commission in June 2014 revealed that 49% of mothers have experienced discrimination in the workplace over the course of their pregnancy, maternity leave and return to work. For fathers or partners, 27% reported having experienced similar discrimination.
The case of Sagona v R & C Piccoli Investments Pty Ltd & Ors  FCCA 875 is illustrative of the types of discrimination faced by pregnant workers and the high penalties that can be imposed on employers who do not comply with their legal responsibilities or recognise the costs associated with failing to retain pregnant employees and working parents. Ms Sagona worked as a photographer and her employer:
- insisted that once her pregnancy was visible, Ms Sagona would have to work behind the scenes as her appearance would be offensive to customers
- sought to reduce her pay rate during her pregnancy
- imposed unreasonable sales targets on Ms Sagona
- refused to consider a request to return to work part-time after the birth of her child, and
- forced her to take long service leave before the birth of her child because it would be ‘too hot’ for a pregnant woman to work during January and February.
The court awarded $174,097 in compensation to Ms Sagona. The company was fined $45,000 and further penalties of $8,000 were imposed on each of the directors.
Pregnancy and redundancy
As redundancies become increasingly common, it is important businesses carefully consider the risks associated with choosing certain classes of workers to be made redundant and how to manage this effectively and appropriately to avoid the potential for discrimination claims.
The cases of Poppy v Service to Youth Council Incorporated  FCA 656 and Stanley v Service to Youth Council Incorporated  FCA 643 offer guidance to employers about when pregnant workers may be made redundant.
In these cases, two women were made redundant during their maternity leave. Their duties had been allocated to other staff during their period of leave. The employer decided that these alternative arrangements were effective in the long-term, and the women’s roles were no longer required.
The women both made claims for compensation for discrimination on the basis of their pregnancy. The court held that the redundancies were genuine and the pregnancies played no part in the employer’s decision that the roles were no longer necessary. In both cases, Justice White was satisfied that although the decisions to make the positions redundant came about due to the relevant employee’s absence from work (rather than as part of a wider organisational restructure), it enabled the organisation to find alternative arrangements which were tested and found to be satisfactory. The court noted that this kind of business decision might be made when employees take any kind of extended leave and was not discrimination.
However, a $4,000 compensation award was paid to one woman for the company’s failure to respond appropriately to her requests for flexible working arrangements.
While these decisions demonstrate that employers are able to make legitimate business decisions while employees are on parental leave, employers should remember that:
- the employee on leave must be consulted about major workplace changes where there is an obligation to do so under an applicable award, enterprise agreement, workplace policy or employment contract, and
- the decision must not (in part of in full) be based on the fact that the employee is of a particular gender, pregnant or on parental leave.
Higher damages and broader definition of ‘workplace’
Recent cases demonstrate that the courts take sexual harassment in the workplace seriously, with the amount of compensation and damages available in these types of cases significantly increasing. This trend can be seen in the decisions set out in the table below.
In particular, two recent decisions of the full Federal Court of Australia have substantially changed the sexual harassment landscape in Australia.
In the case of Richardson v Oracle, Ms Richardson was successful at first instance and awarded $18,000 damages in compensation, which on appeal was increased to a total of $130,000, overturning previously conservative assessments and rejecting Oracle’s submission that there was a ‘permissible range’ of damages in sexual harassment cases that should be followed. Rather, the court determined the extent of damages payable by reference to her injuries and prevailing community standards, making the ‘conservative level’ of awards of damages in sexual harassment cases a thing of the past.
The case of Vergara v Erwin saw the Full Federal Court award the significant sum of $476,163 in compensation plus interest, further indicating the high range of damages now available in these types of cases.
Click here to view table
With the office Christmas party season fast approaching, the Vergara case is also a timely reminder to employers of their exposure to liability for sexual harassment occurring after hours and off their premises. In that case the court adopted a broad approach to the concept of a ‘workplace’, finding the employer liable for ongoing sexual harassment both at work and off site. The harassment locations included a hotel across the road from the office (where the parties had gone immediately following the sexual harassment at the office to discuss the incident), the street outside the hotel and a couple of days later after a work function.
The high costs to businesses in sexual discrimination cases is more apparent that ever, with the quantum of general damages available together with the breadth of what may now be considered a ‘workplace’. These changes highlight more now than ever before, the importance of clear and well communicated policies combined with appropriate training in order to minimise the prevalence of harassment in the workplace.
Lessons for employers
It is important that employers understand their legal obligations in relation to discrimination and seek advice if uncertain. We recommend that employers:
- remain alert to new developments in the areas of age and sex discrimination
- review their current polices and training procedures in light of the developments discussed in this alert and update if necessary
- ensure that these policies are clear and communicated throughout the organization, and
- ensure that regular training is undertaken by employees at all levels to ensure that workplace discrimination is identified and dealt with at an early stage.