Under the federal Sex Discrimination Act, an employer is “vicariously” liable for the acts of sexual harassment done by an employee in connection with their employment unless the employer took all reasonable steps to prevent that conduct.

In Richardson v Oracle Corporation Australia Pty Limited ([2013] FCA 102 (20 February 2013)) the Federal Court had to determine whether a global technology consulting practice was vicariously liable for sexual harassment committed by one of its employees.

The Court ruled that the following matters were in favour of the employer’s argument that they had taken all reasonable steps:

  • New starters received a copy of a document entitled “Code of Ethics and Business Conduct” (Code).  Their employment contracts imposed the requirement that they adhere to the Code in contracts of employment.
  • The Code included the following statement:

Harassment Oracle’s policy is to provide a work environment free from harassment. Although “harassment” most frequently refers to sexual harassment, workplace harassment may also include harassment based upon a person’s race, religion, national origin, gender, sexual orientation, age, physical disability or any other inappropriate or illegal basis. Oracle prohibits harassment in any form, whether physical, verbal, or non-verbal.

You are encouraged to report instances of harassment to your manager or, as appropriate, to your Human Resources Representative. Your report will be kept confidential to the greatest extent possible, and no complainant or witness will suffer retaliation because of a report made in good faith.”

  • Every two years employees were required to complete online sexual harassment training. This training was a global package which applied to all of the employer’s employees worldwide.
  • The employer had effective investigative policies in place, which were implemented promptly when the victim complained.
  • There was no evident culture of sexual harassment in the employer’s operations.

However the Court ultimately ruled that the employer had not taken all reasonable steps because the on-line training package did not identify the legislation in Australia that makes sexual harassment unlawful and did not explain that the employer might also be vicariously liable.  Staff needed to know that legal action could be taken against them for sexual harassment and that they could also be exposing the company to liability.  Statements to this effect should have supplemented the statements that sexual harassment is against company policy.

Lesson for employers

You should check your sexual harassment policy and make sure that it identifies the legislation in Australia that makes sexual harassment unlawful and explains that the employer might also be vicariously liable for sexual harassment.  A suggested clause is as follows:

“Sexual harassment and victimisation is unlawful under the Sex Discrimination Act 1984 (Cth) as well as anti-discrimination legislation operating in every State and Territory.  Unless the company has taken all reasonable steps to prevent an employee from committing acts of sexual harassment or victimisation in connection with his or her employment, the company is vicariously liable for that conduct.”