A Full Court of the Federal Court of Australia has substantially increased an award of damages for non-economic loss in a sexual harassment claim, on the basis that such damages should be calculated not by reference to past cases but instead in consideration of the value contemporary society places on compensation for pain, suffering and loss of enjoyment of life.

Implications for employers

Following this decision, we anticipate that employers will see an increase in damages awards in sexual harassment cases and in anti-discrimination claims generally (including potentially those brought under the discrimination adverse action protection in the Fair Work Act 2009 (Cth)).

Employers should ensure they are taking appropriate steps to manage the risk of such conduct occurring and of the potential for vicarious liability, including maintaining adequate anti-discrimination and anti-sexual harassment policies and procedures and providing employees, contractors and the like with regular comprehensive training.

Background: law

Under section 28B(6) of the Sex Discrimination Act 1984 (Cth) (SD Act), it is unlawful for an employee to sexually harass another employee.

Complaints of sexual harassment under the SD Act are dealt with under the Australian Human Rights Commission Act (Cth) (AHRC Act). Where a complaint is upheld, a court may award compensation under section 46PO(4) of the AHRC Act. Historically, damages awarded in the case of successful SD Act claims have been in the lower range.

Background: facts

Ms Richardson was an employee of Oracle Corporation Australia Pty Ltd (Oracle) as a consulting manager. In 2008, another Oracle employee, Mr Tucker, sexually harassed Ms Richardson by way of a humiliating series of slurs, alternating with sexual advances. Ms Richardson notified her manager of the conduct, at which point she was instructed to make a formal complaint to Oracle’s human resources department (HR).

HR subsequently conducted an investigation into Ms Richardson’s complaint. Whilst the investigation was taking place, Ms Richardson was forced to continue working with Mr Tucker.

Ms Richardson’s complaint was ultimately found to be substantiated. However, while Mr Tucker was warned, he retained his position. Attempts to reposition Ms Richardson’s role so that she did not have to work with Mr Tucker were unsuccessful. Ms Richardson felt unable to continue at Oracle and ultimately resigned. She subsequently brought a complaint of sexual harassment.

Decision at first instance

At first instance, Justice Buchanan found Mr Tucker to have breached section 28B(2) of the SD Act by engaging in conduct amounting to a repeated pattern of sexually harassing conduct. He further found that Oracle was vicariously liable for Mr Tucker’s conduct.

Justice Buchanan ordered that Oracle pay Ms Richardson damages of $18,000 as compensation for non-economic loss, namely physical and psychological harm suffered. In awarding this sum, Buchanan J referred to a range of decided cases on sexual harassment, and noted that the typical range for compensation was $12,000 to $20,000. No compensation was awarded for economic loss.

Ms Richardson appealed.

Decision on appeal

On appeal, Justices Kenny (in a stand-alone judgment) and Besanko and Perram (in a majority judgment) overturned Justice Buchanan’s finding as to damages. Their Honours held that, while the award of $18,000 in damages was in conformity with past awards in similar cases, it was manifestly inadequate. This was because:

  • prior cases merely give guidance on damages. Damages are not to be determined by reference to a previously accepted “range”;
  • compensation must be reasonable, having regard to the loss and damage suffered by the complainant;
  • contemporary general standards prevailing in the community should be considered when assessing damages. Society now places a higher value on compensation for pain, suffering and loss of enjoyment of life than previously;
  • the court has a broad discretion to award damages because section 46PO(4)(d) of the AHRC Act imposes no restriction on the quantum of damages for loss and damage suffered by a complainant as a result of sexual harassment; and

Justice Buchanan had not adequately compensated Ms Richardson for the damage to her relationship with her former partner.

Justices Besanko and Perram further held that Ms Richardson’s decision to leave Oracle was directly linked to Mr Tucker’s conduct. Accordingly, she should have been compensated for associated economic loss.

Ms Richardson’s damages were increased from $18,000 to $130,000, with $30,000 being compensation for economic loss.

Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82