Robinson v Goodman & Rivers
Scenario - a senior, highly-valued employee has crossed the line between acceptable and unacceptable behaviour, but he says persuasively that it's all innocent and in good fun. It may be tempting for HR and the employee's senior colleagues to let this incident pass with a gentle (informal) warning - but don't, it could come back to haunt you.
It has never been safe to do this. Failure to properly investigate and respond to allegations of sexual harassment (or discrimination or bullying), even if your initial view is that the allegation is not well-founded, has always exposed the employer to vicarious liability (and potentially other) claims. The failure to deal properly with this type of behaviour will not only be embarrassing if it comes to light later, but it can also undermine (often to a fatal extent) the employer's defence that it did all that it reasonably could to prevent the inappropriate behaviour. If that defence fails, then the employer will become (vicariously) liable for the harasser's behaviour.
Inaction of this type has now become even more fraught. In the recent high profile sexual harassment case involving the Chief Executive Officer of Rivers, a Federal Court judge has, possibly for the first time, admitted into evidence "similar fact" or "tendency" evidence - evidence from other employees of similar inappropriate behaviour in the past (Robinson v Goodman and Rivers (Australia) Pty Ltd  FCA 895, 2 September 2013). Traditionally, such propensity type evidence has been thought to be inadmissible on the basis that it was (arguably) irrelevant to the case of the current complainant and highly prejudicial to the respondent.
This proved not to be the case for this CEO and Rivers. Perhaps unsurprisingly, the CEO and Rivers settled the employee's claim shortly after this ruling. The settlement was for an undisclosed sum, but the employee was seen smiling and hugging her lawyer after the result. The Judge also commented that the settlement was "a good outcome". The CEO and the company then settled the claim by one of the other employees.
Interestingly, in another recent case, sexually explicit text messages between two colleagues in a relationship were ruled inadmissible in a claim by a third party against one of the parties in that relationship. Those text messages were found to be irrelevant to the third parties' unrelated claims (Shea v TruEnergy Services Pty Ltd (No. 3)  FCA 935, 27 August 2013).
In any event, HR professionals need to treat each complaint seriously and ensure they can demonstrate that it has been properly investigated and dealt with.