Sexual harassment a costly affair for small business

Cases

Sexual harassment a costly affair for small business

A recent case before the NSW Administrative Decisions Tribunal highlights the nightmare that small employerscan face if they don’t fulfil their legal obligation to warn staff that sexual harassment will not be tolerated.

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A recent case before the NSW Administrative Decisions Tribunal highlights the nightmare that small employerscan face if they don’t fulfil their legal obligation to warn staff that sexual harassment will not be tolerated.

Background

The employee, a personal assistant to the general manager of a small human resources company, alleged she had been subject to sexual harassment, sex discrimination and constructive dismissal under Sections 22A, 22B, 24 and 25 of the Anti-Discrimination Act 1977 of NSW. The company, Mondo Consulting Pty Ltd, denied the allegations.

The assistant claimed that Mondo’s general manager sexually harassed her throughout the two weeks she worked for the company. She claimed that Mondo Consulting, as her employer, was vicariously liable for the manager’s alleged sexual harassment, as well as being personally liable for discrimination.

The assistant had actually worked with the manager at another HR consultancy and opted to follow him to Mondo because he persuaded her that their former employer was in a financially precarious position. She told the tribunal that while he had a history of making general comments that were ‘unwelcome’, ‘derogatory’ and ‘unacceptable’, this was balanced by her fears of being out of a job if she stayed where she was.

Evidence

She said that after a week at Mondo the manager’s remarks were not only general, but also more personal to her. She claimed he made derogatory comments about her husband and visited a beach near her home when he knew her husband was away on business. She claimed that the manager regularly called her after business hours, and sent her ‘unnecessary and inappropriate’ text messages after work hours.

The assistant said that she decided to avoid the manager and ‘to limit their work contact as much as possible’, for example, by requesting that their regular weekly work meetings take place at her desk, rather than alone in the boardroom or at a local café. The manager, however, rejected these suggestions saying they needed a venue where they would not be distracted by telephones and other employees.

She told the tribunal she was hesitant to voice her objections to the manager’s remarks because of her fear of losing her position, and because she was not aware of any sexual harassment policy procedures being available at Mondo. Eventually, she spoke to the managing director about her concerns.

The tribunal heard conflicting evidence about the outcome of the interview, but as a result the managing director arranged for a HR consultant to speak to the assistant. The consultant was a former colleague of the managing director who had no particular experience in the area of discrimination and the assistant was not satisfied with the conversation. She claimed she was disturbed at some of the consultant’s responses such as: ‘So he didn’t touch you?’ and ‘you need to set up boundaries with [the manager]’.

When the assistant spoke to the managing director again about not wanting to work with the general manager, the director allegedly said she didn’t have time because she had a business to run and that it was up to the assistant and manager to ‘talk about what happened’. The assistant said she was ‘quite shocked and upset’ by the director’s comments and felt her complaint was being ‘swept under the carpet' and that the director was more concerned with her company than dealing with her complaint. At the hearing, the director conceded that she may have said she had a business to run, but she denied the remainder of the allegations about that conversation.

The assistant refused to take part in further mediation saying she was ‘upset and humiliated’ by the way the matter had been ‘handled’, that the director had made her feel ‘guilty’ and as though she should never have raised the matter, and that she felt she had ‘no option left but to resign’.

She claimed that after leaving Mondo, she found it ‘enormously difficult to work with other men’ and that she felt incapable of working as a personal assistant. She also said she took sedatives and sought counselling.

Findings

The Tribunal noted that at the relevant time Mondo Consulting did not have a sexual harassment policy in place. It said the director did not have sufficient knowledge of the relevant legislation, nor access to expert advice in this area, to recognise that it fell within the ambit of sexual harassment. It found that on the balance of probabilities, subsequent to her initial serious response, the director was inappropriately dismissive of the assistant’s complaint and had conveyed this feeling to the assistant.

At the hearing, the director conceded that she did consider the sexual harassment allegations to be time consuming and costly, and that while she did her best to manage the complaint, maybe she could have done better.

The tribunal commented that no matter how small an employer or principal is, the case law indicates that taking ‘all reasonable steps’ requires the employer or principal to have taken active steps. 'That is, even with a very small business, such as the tribunal finds Mondo Consulting to be, with only six staff at the time of the complaint, some steps must have been taken to prevent sexual harassment before the defence of "all reasonable steps" can be demonstrated on the balance of probabilities.'

It found that the question of whether a reasonable person would have expected the assistant to be offended by the manager’s behaviour was complicated as '… even a mature, married female, familiar with the work colleague who is allegedly harassing her, who can tolerate sexual comments when they are not about her, may find it difficult to be assertive against the work colleague if the alleged harasser is her superior, elder, and she is in a smaller, new workplace and in fear of losing her job'.

After concluding that the manager’s conduct was offensive, the tribunal turned to the question of whether Mondo was vicariously liable. 'The Tribunal notes that when [the director] established her business Mondo Consulting, part of her legal obligation in so doing was to ensure that her employees were protected from unlawful discrimination, and while having an anti-discrimination policy in place does not on its own fulfil this obligation, without ensuring the policy is actually known and adhered to, it is clear that before the complaint, Mondo Consulting did not meet its obligations in this regard, nor provide an environment which protected its employees from discrimination.'

The tribunal went on to find that the director’s actions in engaging her former colleague as a mediator did not constitute a reasonable step, since she 'lacked training and skills to investigate or to mediate a claim of sexual harassment, and the evidence as to her actual handling of the matter demonstrates her lack of expertise as to handling of sexual harassment allegations'.

The tribunal said it had some sympathy for Mondo’s director. It said that before the advent of the manager, she had a small company which apparently operated harmoniously. She engaged the manager to enable her to spend more time with her young child. However, after he joined the company, she soon found herself with a conflict, and soon after that, three new staff left the company. Nevertheless, it found that in establishing Mondo, the director assumed the responsibility for complying with the legislative duties of the company. It concluded the company was vicariously liable for the unlawful sexual harassment and it had not proved on the balance of probabilities that it did not authorise the sexual harassment or that it took all reasonable steps to prevent the manager from contravening the Act.

Employer liable

The tribunal also found Mondo personally liable for sex discrimination by reason of its permitting the sexual discrimination by the manager to take place. Alternatively, it was personally liable for sex discrimination because the person who carried out the sex discrimination was the manager and he was a senior official who constituted the ‘mind and will’ of the company and whose actions were the actions of the company itself.

Finally, the tribunal agreed with the assistant’s claim that she was constructively dismissed because Mondo failed to prevent her from being sexually harassed, and that the company’s failure to adequately and genuinely deal with her complaint left her with no choice but to resign.

The tribunal ordered Mondo to pay the assistant damages of $4,988. A further $5,000 as damages for hurt, humiliation and loss of faith in the employee/employer relationship was considered paid by a deed of settlement arranged with the manager prior to the case being heard.

The tribunal considered awarding aggravated damages against the company, but said that the sexual harassment and discrimination in the case, while not 'so trivial as to be permissible even in a very small workplace, nevertheless, was not of the most serious kind' and as such, aggravated damages were not warranted.

See: Asnicar v Mondo Consulting Pty Ltd [2004] NSWADT 143, (July 14, 2004).

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