Landmark sexual harassment decision

Landmark decision heralds substantially increased general damages in discrimination cases

In a landmark ruling, the Full Court of the Federal Court has indicated that courts should acknowledge changed community standards and award higher compensation for general damages in discrimination claims. In this specific case, the Full Court increased the compensation for non-economic loss awarded to an employee arising from sexual harassment from $18,000 to $100,000.

The decision serves to reinforce the importance of preventing workplace discrimination and harassment.

The Original Decision

Last year, Justice Buchanan found that a female employee of Oracle had been sexually harassed by her male co-worker over a six month period in 2008. The employee claimed that the sexual harassment had caused her to resign from her employment and sought economic and non-economic damages.

The Court found that Oracle was vicariously liable for the conduct of its male employee and ordered the company to pay $18,000 for pain and suffering and loss of enjoyment of life. In this regard, it was held that Oracle had not taken ‘all reasonable steps’ to prevent the conduct.

At first instance, the Court rejected the claim for economic loss and found that there was no causal link between the harassment and the employee’s decision to resign from her employment and take a lower paid job.

The Appeal
The Full Court of the Federal Court (Justices Kenny, Besanko and Perram) upheld the employee’s appeal on both damages awards.

The key news for employers is that, in relation to non-economic loss, the Court found both that:

  • the damages awarded at first instance fell within the normally accepted range for sexual harassment litigation (which was said to be between $12,000 – $20,000 – with greater amounts awarded only for more egregious cases); and
  • the damages awarded were ‘manifestly inadequate’ and should be increased.

In reaching the decision, the Court signalled that community standards “now accord a higher value to compensation for pain and suffering and loss of enjoyment of life than before”.

While acknowledging that damages will be unique in each case, the Court pointed to several recent decisions outside the discrimination field where significant general damages were awarded, including:

  • Willet v Vitoria – $250,000 awarded to a former Police officer for pain and suffering;
  • Swan v Monash Law Book Co-operative – $300,000 awarded to an employee in general damages;
  • Goldman Sachs JBWere Services Pty Limited v Nikolich – $80,000 in general damages;
  • Walker v Citigroup – $100,000 in general damages.

In addition, the Full Court held that the sexual harassment suffered was a material cause for the employee’s decision to resign and awarded $30,000 in economic loss, which was calculated by reference to her loss of pay over a 3 year period.

The Court however rejected the argument that Oracle’s investigation of her complaint had caused her compensable losses.

This decision has the potential to, not only raise claimants’ expectations in relation to damages, but also increase the likelihood of significant damages awards in successful discrimination and harassment claims. It therefore reinforces the importance of employers taking all reasonably practicable steps to prevent these claims from arising. For example by:

  • having in place up-to-date policies;
  • conducting regular training; and
  • properly and prompting investigating all complaints.

These actions will serve to both encourage workplace harmony and leave you best placed to defend any claims that may arise.