Two recent decisions by the Federal Court of Australia indicate that courts are prepared to award successful plaintiffs tens of thousands of dollars for hurt and humiliation.

Vergara v Ewin [2014] FCAFC 100

On 12 August 2014 the Full Court upheld a decision awarding Ms Ewin a total of $476,163 in damages for sexual harassment.

In the initial decision, the Federal Court accepted that Ms Ewin was sexually harassed in May 2009 by a co-worker, Mr Vergara.  Mr Vergara’s conduct included repeatedly propositioning Ms Erwin, and on one occasion engaging in sexual intercourse with her while she was intoxicated.

The Court awarded Ms Ewin $110,000 in damages for the hurt and humiliation Ms Ewin experienced because of the sexual harassment.   The amount of the damages reflected the severity of Mr Vergara’s conduct.

On appeal, the Full Court dismissed some of the findings of sexual harassment against Mr Vergara, but accepted that the initial award of damages was still reasonable.

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

On 15 July 2014 the Full Court awarded Ms Richardson a total of $130,000 in damages after she was sexually harassed by a colleague, Mr Tucker.

At first instance, the Federal Court accepted that Mr Tucker had engaged in a “constant barrage of sexual harassment” towards Ms Richardson between April and November 2008. Mr Tucker’s conduct included humiliating slurs and sexual advances.

However, Ms Richardson was only awarded $18,000 in damages for hurt and humiliation in the original decision, which was consistent with damages awarded in similar sexual harassment decisions at the time.

On appeal, the Full Court determined that the damages Ms Richardson received were too low. Taking into account the effect the sexual harassment had on Ms Richardson, and prevailing community standards, the Full Court held that there was no reason why damages for hurt and humiliation in sexual harassment cases should be less than what is available in other claims (such as defamation).

The Full Court accordingly awarded Ms Richardson $100,000 in damages for hurt and humiliation.  Ms Richardson was also awarded $30,000 for economic loss because she had resigned from Oracle in response to the sexual harassment.

Implications for employers

These decisions highlight the importance of employers acting quickly to manage workplace issues in a fair and reasonable manner.  Sexual harassment can hurt not only the victim but also staff morale and an employer’s reputation.  The financial cost to an employer can also be catastrophic, even if the victim cannot point to any specific financial loss arising from a colleague’s unwanted attentions.

Employers must therefore be vigilant in ensuring that their policies and procedures for dealing with sexual harassment:

  1. clearly condemn such behaviour;
  2. genuinely encourage the making of workplace complaints by victims; and
  3. provide an effective and transparent process for investigating complaints and dealing with those complaints that are substantiated.

Employers must also understand that in the wake of these decisions, employees and their representatives are more likely to demand substantial compensation for supposed hurt and humiliation in other employment-related claims.

Russell Kennedy has already noticed plaintiff law firms relying on the Oracle decision to seek damages for hurt and humiliation in the tens of thousands of dollars as part of adverse action claims.  It is likely these claims will increase with time, although an employee will still need to demonstrate that any hurt and suffering they have experienced is on par with that of severe discrimination or sexual harassment if they wish to obtain damages such as was awarded in Oracle.

In any event, the Full Court decisions should be taken by employers and managers as a warning that the financial consequences of successful employee claims are real and considerable even when the employee has not suffered any actual financial loss.