A former employee of Oracle Australia has been awarded $18,000 damages for her estimated $450,000 sexual harassment claim. The Federal Court judgment makes important comments about the content of workplace sexual harassment policies and investigation processes.

What does this decision mean for employers?

The decision highlights the importance of ensuring appropriate internal investigation processes and workplace policies are in place. In particular:

• sexual harassment policies and training procedures may need to be updated to make it clear that sexual harassment is against the law and employers may be liable for an employee's breach
• the requirement for employers to take all reasonable steps to prevent sexual harassment sets a very high standard for employers to comply with, and employers should regularly review their policies and procedures
• it is essential to ensure clear, consistent and regular guidance and training for employees regarding appropriate workplace behaviour
• workplace investigations are inherently complex, and particular regard needs to be given to the sensitivities of the complainant and all those affected by the ongoing working relationship during the course of an investigation.

Background

Ms Richardson worked for Oracle Australia for over six years from late 2002, most recently as a Consulting Manager in Sydney. In 2008, she worked on a financial deal in Melbourne (the Project). Sales representative Mr Randol Tucker was also on the Project. Ms Richardson claimed that Mr Tucker sexually harassed her several times over the course of the Project, including by:

• saying to her in front of others 'Gosh, Rebecca, you and I fight so much ... I think we must have been married in our last life', and 'So, Rebecca, how do you think our marriage was? I bet the sex was hot'
• calling and sending text messages to Ms Richardson approximately 15 times in one evening to ask her to join him at an event
• making further comments to Ms Richardson such as 'we should go away for a dirty weekend sometime' and 'I love your legs in that skirt. I’m going to be thinking about them wrapped around me all day long.'

Until about November 2008, Ms Richardson tried to deal with the situation on her own. She then raised her concerns and an investigation was conducted by HR officer, Ms Sampayo. The investigation concluded that Mr Tucker made inappropriate comments towards Ms Richardson and that he was genuinely remorseful for having done so. As a result, Oracle issued Mr Tucker a first and final warning. Ms Richardson resigned from Oracle shortly afterwards in March 2009.

Decision

Ms Richardson brought proceedings in the Federal Court of Australia against both Oracle and Mr Tucker, claiming (among other things) sexual harassment and victimisation.

The Court held that Mr Tucker sexually harassed Ms Richardson and that his conduct was 'persistent and ultimately callous'. Largely due to the deficiencies in Oracle's policies and procedures, Justice Buchanan found Oracle vicariously liable for Mr Tucker's conduct, and ordered it to pay $18,000 damages.

In reaching its decision, the Court considered Oracle's investigation processes and its policies and procedures, as set out below.

Investigation process and results

Ms Richardson claimed the investigation procedures and results were flawed for a number of reasons, including that she was required to remain on the Project team throughout the investigation and to have regular contact with Mr Tucker by teleconference and email.

The Court found that Ms Richardson was not bullied by Ms Sampayo into making a formal complaint, and there was nothing unlawful about the actions Oracle took in investigating the complaint.

However, Ms Sampayo's 'well-intentioned, but perhaps misguided, attempts to maintain maximum confidentiality' compounded Ms Richardson's distress as she was required to have regular contact with Mr Tucker throughout the investigation. In this regard, Justice Buchanan found it was probable that 'a concentration on confidentiality and the “integrity” of the investigation process took precedence over more immediate attention to Ms Richardson’s particular needs or personal interests'.

In terms of her ongoing employment, Justice Buchanan rejected Ms Richardson's claim that her role had been diminished as her remuneration, status and employment level remained the same. He also rejected Ms Richardson's claim for economic loss and found that she actively sought alternative employment and legal advice before resigning 'in a way that suggested that she had no choice but to do so.'

Ms Richardson's claim for her medical expenses was also rejected as they were incurred after she commenced proceedings.

Policies

Justice Buchanan found Oracle did not take all reasonable steps to prevent Mr Tucker's conduct, as there 'were some serious inadequacies in Oracle’s own training packages'. Oracle introduced a new Workplace Diversity Policy in 2008 which did not refer to the legislative basis for the prohibition against sexual harassment, and did not clearly state that sexual harassment is against the law and that Oracle may be liable for sexual harassment by an employee. This was after the Human Rights and Equal Opportunity Commission guidelines were released in 2004, which specifically require policies to include these provisions. As such, Justice Buchanan said:

'In my view, advice in clear terms that sexual harassment is against the law, and identification of the source of the relevant legal standard, is a significant additional element to bring to the attention of employees in addition to a statement that sexual harassment is against company policy, no matter how firmly the consequences for breach of company policy might be stated. I take the same view about advice that an employer might also be liable for sexual harassment by an employee.'

Although Oracle's policy has since been updated, Justice Buchanan found that the omissions of the policy in place at the time were enough to establish Oracle's vicarious liability.

What does this mean for 'very optimistic' sexual harassment claims?

Justice Buchanan referred to Ms Richardson's claim as 'very optimistic', and noted that her resignation appeared to have been engineered by her lawyers to position her claim for damages. This contributed to the decision to award significantly less than the damages claimed, as part of Ms Richardson's obligation to mitigate her loss was 'not to abandon her employment with Oracle without good reason, or otherwise expose herself to unnecessary loss.'

The decision comes after a range of high profile sexual harassment cases including Lee v Smith [2007] FMCA 59, Poniatowska v Hickinbotham [2009] FCA 680, Fraser-Kirk v David Jones Limited [2010] FCA 1060, and Ashby v Commonwealth of Australia (No 4) [2012] FCA 1411, and suggests the Courts may take a conservative approach to awarding damages in some sexual harassment claims. Case law also demonstrates that the Courts set high expectations of the standards expected of employers in proving that they have taken 'all reasonable steps'. For example, the Court noted that even though Oracle took the necessary step of updating its policy, in doing so it effectively conceded that its prior policy was insufficient.