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Significant compensation awarded for sexual harassment

A recent decision by the Federal Circuit Court of Australia has highlighted the significant financial risk to employers where it can be argued that the employer has essentially condoned sexual harassment in the workplace.

In the case of Alexander v Cappello & Vekiarellis, Judge Driver heard that the employee had been employed by the employer for a number of years prior to the sexual harassment incidents which took place in a takeaway shop run by the employer.

Facts

The employee was engaged on a casual basis.  The second respondent was the employee’s supervisor.  Over a period of approximately 6 weeks in 2008, the employee was allegedly subjected to a course of conduct by the supervisor which was the subject of the sexual harassment claim.  The alleged conduct included:

  • The delivery of pornographic material to the supervisor at work (although this was not alleged to offend the employee).  However, at the mention that the employee had similar material in her car, the supervisor asked her to get the material for him to look at.  This conduct was argued to be sexual harassment.
  • While the employee was picking up rubbish from the floor of the shop, the supervisor said words to her to the effect ‘I can see your g-string’.
  • The supervisor said to the employee, ‘If you have sex with me in my car, I can get you more work.  You will enjoy it’.  The employee replied, ‘No. Shut up.  I do not want to have sex with you.  You are being disgusting’.   The supervisor then said, ‘Where do you live?  I can come to your place and we can have sex there’. The employee said she would not tell him where she lived.
  • Whilst in the presence of a delivery man known to both the employee and the supervisor, the supervisor took a pile of menus and rubbed them on the employee’s bottom. The employee told him to stop.  The supervisor then approached the employee in the coolroom and pushed his groin into her face.  He then pointed to his penis and said ‘Come back here. I have something to show you’.
  • The last incident resulted in the employee making a decision to report the supervisor’s conduct to her employer.

The employee told one of the co-owners of the business about the conduct during one of his visits to the shop.   She was told that she should tell the other co-owner but that the conduct was certainly inappropriate.  He also told her that they were putting cameras in the store.

The other co-owner then called the employee later that day.  He told her that she had no right to tell his co-owner about the conduct as he did not run the store.  He told her to call him immediately if the supervisor did anything again.

The following day, the third co-owner visited the store and asked the employee what had happened.  The employee again reported the supervisor’s inappropriate touching and that he asked her for sex in exchange for more shifts.  She was again advised that the supervisor’s conduct was wrong and that if such conduct occurred again, that she should leave the store and call him.

Following these meetings with the 3 co-owners, the supervisor said to the employee in a subsequent shift, ‘come on, why don’t you take your jacket off so I can look at your bum, you know your bum drives me crazy’.  The employee again told him to stop.

Approximately 3 or 4 days later, the supervisor slapped the employee on the bottom.  She said ’don’t!” The supervisor then laughed and tried to grab her breasts and vagina and she told him to stop again.  The supervisor then said ‘What are you going to do?  Tell John or Emanuale?  I know they’re your friends.  I can find someone to fill your job easily’.

The employee was then afraid to return to work.  She sent a text to one of the co-owners and told her that she would not be attending work the following day.

When she then again returned to work, and while the employee was washing dishes, the supervisor squeezed her bottom several times and said ‘No one can see and no one will know’.  The employee rang the co-owner and told him of the conduct during that shift.  The co-owner told her that he would confront the supervisor and then call her.  He called her later that night and told her that he wanted to meet with her to discuss the situation.

The following day, the employee met with the co-owner.  The employee had a friend present for support.  The conversation exchange was as follows:

Co-owner:

“I have spoken to [the supervisor]. I cannot discuss what we talked about. There are two sides to every story. I am aware that you are taking anti-depressants. You shouldn’t have told Will about what was happening. If you respect our friendship, you will not take this further. If you do, it will end up ugly for you…You should look at the way you wear your top. I have told you before if you can’t work with [the supervisor] then I will have to let you go”.

Employee:

“This is not a personality clash. [The supervisor] has been touching me.”

Co-owner:

“The shop is losing money and if we had to replace [the supervisor] I would lose a lot of money. I’m in debt and I have a family to feed. Just let it go, there are lots of jobs out there”.

This signified the end of the employee’s employment.  The employee went on to suffer from a number of medical and personal issues, including drug use and depression.

Findings

At the hearing, the employer sought to justify the employee’s termination by saying the business was not doing well and that they had to let her go on that basis.  They also argued that the fact the employee had not adhered to one of the co-owner’s direction to only contact him on the sexual harassment matter was also a contributing factor.

Despite the employer’s arguments, Judge Driver agreed with the employee’s submission that she was terminated because she complained about the supervisor’s sexual harassment.  On the matter of whether sexual harassment had occurred, the employer argued that they had taken reasonable steps to prevent the conduct of the supervisor.  Judge Driver rejected that submission:

“[EC] took no steps at all to prevent sexual harassment occurring at the workplace prior to [the employee’s] complaints. He, together with his brother [JC], attempted an investigation of her first complaint but made no findings. The warning apparently given to [the supervisor] was an appropriate one but there was no effective monitoring of the situation subsequently. After [the employee’s] second complaint, [EC] and his brother [JC] appear to have simply decided that the problem was too difficult to resolve and that the best solution would be for [the employee] to quit her employment. This was a wholly inappropriate and ineffective response to the alleged harassment.”

Judge Driver awarded the employee $75,000 in compensation for the conduct of the employer in dismissing her which was deemed to be victimisation, together with $24,300 for the unlawful sexual harassment suffered by her.  In finding the employer vicariously liable for the actions of the supervisor, Judge Driver stated that:

“I have found that [the supervisor] has engaged in serious sexual harassment of [the employee] in the course of her employment. [The employee] complained to the person she understood was her employer, and mentor… but she was not believed. Instead, [the employee] was dismissed from her employment. That dismissal constituted victimisation of [the employee].  [EC] was a party to the dismissal of [the employee]. [EC] was also involved in the management of the takeaway and acted substantially in the position of employer. His involvement is sufficient to engage the vicarious liability provisions of the Sex Discrimination Act. Nothing was done on the part of the business to either protect [the employee] from that harassment or to deal with the situation appropriately once it was brought to attention. [EC]is vicariously liable for the conduct of [the supervisor]. [The employee] should receive substantial compensation for the serious harassment which has been established as well as the victimisation of her by [EC].“

Implications for Employers

This case is a perfect example of how not to deal with complaints of sexual harassment and the near $100,000 compensation order demonstrates how costly approaching matters in this way can be.  Employers should treat all claims of harassment as serious matters and seek to address the source of the harassment, and not surprisingly, should not attempt to force the victim from the workplace.  Having in place a sexual harassment policy and conducting regular training with employees is essential if an employer wants to have any chance of escaping vicarious liability.

Mark Bunch, Partner

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