The recent Federal Court decision in Richardson v Oracle Corporation Australia Pty Ltd [2013] FCA 102 reinforces the need for multinationals to properly draft and implement discrimination and harassment policies which reflect Australian laws in order to limit liability. The case highlights the risk of multinationals relying on a ‘one-size-fits-all’ global compliance policy to defend a breach of Australian law.

In this case the Australian subsidiary of Oracle International was found vicariously liable for a breach of the Sex Discrimination Act 1984 (Cth) by one of its employees. Oracle always stood to be found vicariously liable unless Oracle established that it took all “reasonable steps to prevent” the sexual harassment by the employee. The evidence that Oracle relied on in its attempt to satisfy that it had taken reasonable steps included the fact that:

  • All employees received a copy of Oracle’s “Code of Ethics and Business Conduct” when they joined Oracle; and
  • Every two years Oracle employees were required to complete online sexual harassment training. This training was a global package (designed in the USA) applying to Oracle employees worldwide and was said to be based on “global standards” of how to interact in a workplace.

Notwithstanding these policies and training packages it was found that Oracle did not take all reasonable steps to prevent the employee’s conduct. The court found that there were some serious inadequacies in Oracle’s internal policies and training which included the fact that the policies did not state in clear terms:  

  • that sexual harassment is against the law;
  • the federal, state or territory anti-discrimination laws that apply to the organisation; and
  • that an employer might also be liable for sexual harassment by an employee.

The court said in relation to the third element that it “is an additional element emphasising the lively and real interest that an employer will have in scrupulous adherence to its warnings.”

The court ordered Oracle to pay $18,000 to Ms Richardson.

Whilst not a significant compensation payment, given that the case ran for four years including 21 hearing days, the legal costs incurred by Oracle are likely to have been significant.

Lessons for multinationals

The message from this case is clear. Multinationals must ensure that any global policies applied in Australia comply with domestic laws. Specifically, international counsel should review and update existing policies on sexual harassment and ensure that those policies:

  • state in clear terms that sexual harassment is against the law;
  • refer to the federal, State or Territory anti-discrimination laws that apply to the organisation; and
  • state in clear terms that legal action could be taken against them for sexual harassment and that they could also be exposing the company to liability.