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

The Full Court of the Federal Court of Australia earlier this week handed down a landmark decision concerning the assessment of general damages for victims of sexual harassment who suffer psychological injury. 

On appeal the Full Court ruled that the general damages awarded at trial to a former employee of a multinational corporation who suffered a psychological injury because of sexual harassment by a work colleague were “manifestly inadequate”.  Instead, the Full Court ordered the former employer to pay compensation of $100,000 to the employee for general damages in lieu of the trial award of $18,000.

Psychological injury arising from established complaints of sexual harassment (and probably also other types of discrimination in the human rights jurisdiction) will now result in an award of general damages – compensation for pain, suffering and loss of enjoyment of life – determined in accordance with prevailing community standards.  These will include comparable awards of general damages in personal injury and workplace bullying decisions, rather than the relatively modest former precedent range of $12,000 to $20,000 until now endorsed by the Australian Human Rights Commission.

In this Alert, Senior Associate Damon King, Solicitor Claire Tuffield and Employee Relations Advisor Adele Garnett, summarise this important decision and the likely flow on effects for employers. 

Trial decision – findings of fact

At first instance the trial judge found that the plaintiff, Ms Richardson, had been sexually harassed over a period of approximately six months whilst working for Oracle.  In particular, Ms Richardson was subjected to sexual harassment on 11 separate occasions by the perpetrator, including on some occasions in the presence of co-workers and external client representatives. 

The harassment consisted of unwelcome and humiliating verbal advances, comments and slurs of a sexual nature, for example:

  • I love your legs in that skirt. I'm going to be thinking about them wrapped around me all day long;
  • I love it when you're mean to me. It just makes me think how hot you would be in bed.

The trial judge also found that, as a consequence of the sexual harassment, Ms Richardson developed an adjustment disorder with features of anxiety and depression, from which it had taken approximately 12 months for her to recover once the harassment stopped.

Oracle was held to be liable for the unlawful conduct of the perpetrator - also its employee - and ordered to pay compensation of $18,000 for general damages to Ms Richardson. 

Appeal decision – what is the benchmark in relation to general damages?

On appeal against the original award, Oracle unsuccessfully argued that monetary awards for general damages arising from sexual harassment are ordinarily within the range between $12,000 and $20,000. 

The Full Court relevantly observed:

 “...that continued adherence in sex discrimination cases, including sexual harassment cases, to a ‘range’ of damages awards that has not absorbed the increases evident in awards in other fields of litigation has resulted in an award in Ms Richardson’s case that, judged by prevailing community standards, is disproportionately low having regard to the loss and damage she suffered”.

Ms Richardson’s appeal was upheld by the Full Court which increased her general damages from $18,000 to $100,000.

What does this case mean for employers?

This landmark decision has important significance in relation to the enforcement of federal, State and Territory human rights laws and the general protections provisions prohibiting workplace discrimination in Part 3 –1 of the Fair Work Act 2009 (Cth). 

Employers may now find that victims of alleged human rights abuses (and their lawyers) will be less inclined to settle complaints for relatively modest sums.

More than ever, it is of upmost importance that all employers, small and large alike, have in place systems and processes designed to limit, if not eliminate, the risk of unlawful discrimination (including sexual harassment) in their workplaces.  These would ordinarily include codes of conduct, workplace policies, training materials and processes compliant with applicable legislation to ensure that staff are properly trained and regularly reminded about their personal responsibilities and obligations.

The significant costs of responding to human rights complaints and, if necessary, defending litigation to a final court or tribunal hearing, together with exposure to increased awards for general damages and also compensation for economic loss, will ordinarily far outweigh the expense of taking appropriate steps to provide a safe place of work.  In addition, a safe working environment will facilitate the long term retention of good staff.