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Friday Workplace Briefing

When Sexual Harassment Is Not Used to Seduce, Is It Still Harassment?

In this week’s Friday Workplace Briefing, Andrew Douglas and Kim McLagan discuss sexual harassment in the workplace. 

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About the Hosts

Managing Principal - Victoria

Principal Lawyer - Head of Workplace Relations

Episode Transcript

Andrew Douglas: Okay, now let’s get on to our topic for today, which is the case of Lindsay Swift and Highland Pine.

Kim McLagan: Okay. Ugh.

Andrew Douglas: Kim.

Kim McLagan: He’s a horrible man, a horrible man.

Andrew Douglas: Yeah.

Kim McLagan: Lindsay Swift.

Andrew Douglas: And I’ll give you Kim’s home address for any litigation that you need to issue ’cause the vicarious liability just got cut there. But this is an appalling case of a guy who, and we, Kim and I, I think it’s really just to cause shock, have fun, taunt, whatever it is.

Kim McLagan: Yeah.

Andrew Douglas: Said a whole range of things-

Kim McLagan: Outrageous.

Andrew Douglas: …To both women and men in an organisation. Nothing to do with whether he is attracted to them or not. But Kim.

Kim McLagan: Oh, he just made really regular comments to co-workers inquiring about their sexual activity, talking to them about his own, showing female co-workers, not that he was attracted to them or anything like that, photos of other women who were often big-breasted. And he would talk to female co-workers about having threesomes and that sort of thing. So not coming onto them as such but lots and lots of sexual talk at the workplace.

Andrew Douglas: So…uncomplicated sort of story, really. In some ways, shocking story. And terminated for sexual harassment.

Kim McLagan: Yeah.

Andrew Douglas: Is it sexual harassment? Well, it was unwelcome. None of these people asked for it to occur.

Kim McLagan: Yeah. It was reasonably foreseeable that they’d be offended by it or humiliated or-

Andrew Douglas: Yep. So that’s a tick.

Kim McLagan: And, as I said, they had… Was there any sexual advance or request for favours or conduct of any sort of sexual nature? So tick with those.

Andrew Douglas: Tick of that. So there you’ve got the three, haven’t you?

Kim McLagan: Yeah.

Andrew Douglas: So sexual harassment. The point that Kim and I are raising with the case today, and we’ve got a problem we’re going to spend a bit of time agitating afterwards to go through it, is it doesn’t matter in sexual harassment whether you intend to seduce the person. Doesn’t matter what your intent was at all. But actually if your intent was to cause pain or to hurt or to humiliate, that aggravates it and that goes to damages and can include aggravated damages which are punitive damages. So here’s, you know, in this case, if it was a sexual harassment claim rather than a termination claim, okay? Then there would certainly be an element of aggravated damages that would be sought against him. Okay?

Kim McLagan: Yeah.

Andrew Douglas: Those awards at the moment are relatively small. They go between about, at the highest at the moment, it’s about $50,000 but if we follow the American trend in damages for aggravated damages, which we ultimately will do, in a few years’ time, we could be looking very substantial aggravated damages as punitive ways of stopping behaviour. But this was a ugly, repetitive set of facts that caused harm, he knew would cause harm. And he almost delighted in doing it, I think. So it’s a shocking case but none of it was with an intention to form a relationship. And there’s not a suggestion there is.

Kim McLagan: No.

Andrew Douglas: Okay? So sexual harassment, no intention to sexually harass but doing it is still sexual harassment. The more you can show an intention to any one of those elements like seduction or like hurting and humiliating, the larger the claim becomes, the larger the general damage and general damages are for loss of money, hurt, humiliation, loss of money, okay? They’re substantial. And since Richard and Oracle, non-touch forms of sexual harassment now range between about 30 to $150,000. If one of the people here brought it because they were repeatedly subjected to it, you could expect, if they developed depression, they’ve unable to come to work, that type of stuff, their general damages would be over $100,000. 2015, they would’ve been 12 to $14,000 so that’s the change ’cause it’s now aligning with the common law. So interesting. So why don’t we go on and have a look at the case study?

Kim McLagan: Okay. Need to lean forward.

Andrew Douglas: Put binoculars on.

Kim McLagan: I know.

Ingrid was the CEO of AusBridge, an engineering business listed on the ASX. Matteo was the Victorian Sales Manager. Although he earned north of 500,000 per annum, his base salary was 165,000 plus super and the rest was sales-based bonuses. Matteo had struggled through the failure of his second marriage and was known to drink too much, especially at work related functions.

Andrew Douglas: Not something we’d do.

Kim McLagan: Never.

Andrew Douglas: Never.

Kim McLagan: The AusBridge head office had a flash fit out. It was on the top 3 stories of Melbourne’s newest skyscraper (Levels 48, 49 and 50). But Friday night drinks had been going on since the day they opened their doors and the founder, now Chair, Rob Youse, loved it. He said it helped to rally the troops. Matteo didn’t think much of Ingrid. In fact, he thought she was ugly and stuck up.

At the end of financial year drinks, Matteo got plastered. Rob suggested he go home and Matteo pretended to leave but actually retired to the rooftop garden for a smoke. In the hour or so before leading up to Rob’s intervention, Matteo had commented on multiple women’s cleavage, told one woman she was hot and generally leered at women under the age of 30. None of this was unusual and there were other men, who attended this and other functions who behaved the same.

Everyone knew drinks finished at 7pm. At 7.05, Matteo came down from the roof to floor 48, where his, Rob’s and Ingrid’s offices were located. Ingrid and Rob were in the Boardroom discussing Q1 of 23/24 financial year-

Andrew Douglas: I think I might have said this, I might have cut it out, but Ingrid was the CFO.

Kim McLagan: Oh, okay.

Andrew Douglas: Yeah.

Kim McLagan: When Matteo burst through the door, he saw they were drinking single malt whiskey, poured himself several fingers of the dark peaty fluid, sculled it and came over to Ingrid and asked, “What is such a hot, sexy creature like you doing out, hanging out with the Chair? You could have any man you like, for example, me. Why go for crusty old Chair?”

Rob convulsed with laughter. Ingrid pushed Matteo’s hand away from her buttock where it had been resting and screamed at him and stormed out. She was obviously distressed and overcome by his conduct.

Andrew Douglas: Okay. Good one.

Kim McLagan: Good one. I love your studies.

Andrew Douglas: I was actually having a glass of very good wine, like at the time. So that’s why I could say it. It was clear that Matteo had no sexual interest in Ingrid. Was the conduct towards her sexual harassment and discrimination? Interesting argument here because it’s both.

Kim McLagan: Yeah.

Andrew Douglas: It’s clearly sexual harassment ’cause it’s unwelcome, it hurt, humiliated and it was of a sexual nature, okay?

Kim McLagan: Didn’t matter that he thought she was ugly and stuck up, had no sexual attraction to her-

Andrew Douglas: No, but it was obviously made in a sexualized manner and therefore it was. But it was also unwelcome behaviour based on her gender which is a protected attribute which demeaned her and therefore it is discrimination as well. So really quite serious. I don’t think people quite understand the discrimination aspect of sexual harassment. It’s very real and it is a compounding feature in litigation that you allege both. And what happens is, I haven’t asked the question here, is it a hostile workplace? But that will now also be pleaded because this is clearly a hostile workplace.

Kim McLagan: Yeah.

Andrew Douglas: And, therefore, the combination of harassment, discrimination, and hostile workplace will double general damages like that, okay? And that’s how a plaintiff law firm will argue it, okay? It will say women aren’t safe, women are treated differently, discrimination. She was treated differently, discrimination. And then she was harassed repeatedly by this guy. Bang. Big claim for GDs, okay?

The following day, Matteo’s employment was summarily terminated for sexual harassment of several women, and especially Ingrid. Would he have a successful summary dismissal case? And I’ll refer you to Keenan and Leighton Boral. I think the last part’s not quite spelled quite correctly but that’s me. Is there a jurisdictional argument to reject the claim? So let’s go jurisdictional argument. It’s 167,000 from-

Kim McLagan: 500 at the moment.

Andrew Douglas: Yeah, from 1 July. So he’s under that on base pay, super and bonuses if they’re discretionary or based on a performance-related thing rather than fixed. Do not come within it, high income threshold. Therefore, he’s got an unfair dismissal claim, he’d win the jurisdictional angle.

Kim McLagan: Yes.

Andrew Douglas: I want to just stop here and let everyone breathe through it because everyone has said and I can hear them say, “He’s got to go.” That’s not quite what the Full Court said in Keenan. Keenan was a case where a guy behaved just like this and at the after party upstairs, away from the party, he wasn’t the sharpest tool in the shed. He then sexually harassed the HR manager so you would’ve thought he was a dead duck. Legislation around employees in Australia is beneficial. That is, it’s designed to protect employees. So in this case, Ingrid has a lay down misère and we’ll talk about that and any claim she wants to bring.

Kim McLagan: Yes.

Andrew Douglas: But he is protected as an employee around whether this is harsh, unjust or unreasonable, okay? Now here’s a bloke, we’re going to presume for the purpose that he’s been working there a while. This behaviour has been condoned through the business. So you see harsh is already in the game. So when we look at it, is it a valid reason? Yes.

Kim McLagan: Yeah.

Andrew Douglas: But if other people are not terminated and they do the same thing, it’s unquestionably harsh.

Kim McLagan: Yeah.

Andrew Douglas: So the the nasty answer to this is it’s a line ball and you’d have to terminate him but you’d be doing a deal because he could win.

Kim McLagan: Yeah.

Andrew Douglas: ‘Cause Keenan did.

Kim McLagan: Yeah.

Andrew Douglas: And Keenan’s behaviour was much worse than his, okay?

Kim McLagan: True.

Andrew Douglas: So look, I just thought I’d raise it because people often don’t get it. But I guess it’s hard not to say this without giggling. We don’t harass women at work. We don’t let anyone do it. We stop them. We take really serious steps. We have process. We don’t treat people differently. We just go, “No, women are safe at work.” You’ve never positive duties. So if you didn’t believe it before, you’ve got to believe it now because liability’s just running at you. Okay, let’s go to the third question, Kim. I’ll let you read.

Kim McLagan: Oh, we hadn’t finished that one. Anyway.

Andrew Douglas: Hadn’t we? What was the-

Kim McLagan: I think my only point that I wanted to make that he was some summarily terminated the next day so it was clear that there hadn’t been a proper investigation process.

Andrew Douglas: Okay.

Kim McLagan: So it would fail on that basis as well.

Andrew Douglas: There you go. That’s the part I didn’t, we won’t go backwards but you’re right Kim and that just shows that I didn’t read my own script. Okay, so number 3.

Kim McLagan: Would Ingrid have a successful sexual harassment, discrimination claim and general protections claim against Rob, AusBridge and Matteo? If so, assuming she was unable to return to work and was on 350k per annum and aged 49, what would be her damages?

Andrew Douglas: So I think we can deal with first and easy, yes.

Kim McLagan: Yes, yes, yes.

Andrew Douglas: Yes, yes. At the moment, she got a general damages claim over $100,000 probably but certainly between 80 to 120 would be a safe landing spot. Unable to return to work, there would be a significant discount. Just remember, we’ll talk about common law afterwards, what’s been imported over into damages for sexual harassment has been the tariff, that is the amount not the mechanisms of actual damages assessment. So I just want that to be clear.

Kim McLagan: Yeah, yeah.

Andrew Douglas: There has not been big special damages claims made and special damages are what you call in common law loss of earning capacity. They’re inclined to look at past loss of earning capacity and then give a bit of a lump going forward. Not the way, and we’ll talk about common law damages in a second. We’ve got no evidence about medical costs. They’d be relatively small in any event. So the issue here is, so just say it’s about $100,000, she’s certainly going to lose a year so she’s already at, say, $500,000. She’s so senior, her age at 49, difficult to get back in the market.

Kim McLagan: I’m on the other side of that.

Andrew Douglas: I’m well on the other side of that. So she’d probably end up with special damages of maybe over a million, okay? So she’s worth somewhere between about a million to 1.5 million. But can I just say Rob’s going to be liable for that? The company is going to be liable for that. It’s not just… So the issue is will the company indemnify Rob? Yeah, totally, it’ll indemnify Rob. But just imagine if you’re insured for this, okay? Can you imagine your premium? Can you imagine what the insurer is going to do with you? Imagine if you don’t disclose quickly to the insurer that this has occurred and they refuse indemnity. Suddenly, you’ve got $1.5 million just coming straight out. Then imagine what it does reputationally to you as a listed stock exchange with a Chair that’s been sued. Your share price is going to die. Have a look at the contracts that you have. If they’re government-based contracts, if they’re banking-based contracts around development, all of them have causes around sexual harassment and safety which make it a basis to terminate contracts. This is a much bigger issue than the damages. I just want to make that clear.

Kim McLagan: Yeah, yeah.

Andrew Douglas: All right. 4, Kim?

Kim McLagan: Would Ingrid have a successful work cover claim and common law claim in Victoria? If so, what would be the premium impact? So we’ve got head office premium is currently 140,000 a year. And the business premium, which we’ll talk about the difference, is around $3 million. Would she get up on a serious injury claim which is common law and if so, what would her claim be worth? So yes, common law ’cause she’ll be undoubtedly be able to demonstrate she’s suffered an injury and it’s happened out of or in the course of employment.

Kim McLagan: Yeah, yep.

Andrew Douglas: So threshold test, tick. If she’s suffered a severe impact on her life, which will be her loss of earnings, she’ll get the serious injury threshold.

Kim McLagan: Yep.

Andrew Douglas: To have common law damages, she will need to claim negligence against her employer. She’ll be able to demonstrate that against Rob quite easily because he laughed and he didn’t do anything to prevent the behaviour from occurring.

Kim McLagan: Yep.

Andrew Douglas: So common law claim, tick. And the damages-

Kim McLagan: Oh, I’m just-

Andrew Douglas: Really sorry.

Kim McLagan: Yeah, yeah, yeah. So damages would be, unlike what you said before, there’s a different calculation for common law claim.

Andrew Douglas: It’d be an actuarial table.

Kim McLagan: Yeah.

Andrew Douglas: And then go out to age of 65 with contingencies knocking back by about 20 or 30%. So she’s five or 6 million.

Kim McLagan: So millions.

Andrew Douglas: Yeah, five or $6 million claim. GDs would still be around about the same. They’d be okay. But the-

Kim McLagan: Loss of earning capacity.

Andrew Douglas: Loss of earning capacity’s the killer. And the other one, just very quickly for Kim, is in the workers’ comp stage. This is one of the very few business where head office is separate-

Kim McLagan: Yeah.

Andrew Douglas: …From the actual work in the business.

Kim McLagan: Like physically separate.

Andrew Douglas: Separate, and therefore there will be a separate premium, okay? So how much would it be if it was capped out over a three-year cycle in Victoria?

Kim McLagan: Okay, so, well, it’s just gone up from 30% capping. So a 30% cap on any premium would double the premium after the three years, after it’s been on there for three years. Now it’s up to 75%. So their premium would go up from 140,000 to 750,000 after three years.

Andrew Douglas: And if it was an embedded head office so it was a head office-

Kim McLagan: Oh, it’d be millions. It’d be seven and a half million potentially. I don’t, I dunno.

Andrew Douglas: Scary stuff, isn’t it?

Kim McLagan: It is.

Andrew Douglas: Anyway, so I just thought we’d just raise that ’cause it’s an interesting issue around classifications. Let’s go to question 5 ’cause we have officially run out of time.

Kim McLagan: Ooh.

Andrew Douglas: Were the actions of Rob and AusBridge breach of safety law, what type of breach? What are the penalties? Assume that she died in these circumstances. She ran out of the place and was knocked over while she was in a dissociated state from the pain of it.

Kim McLagan: Yeah.

Andrew Douglas: The answer is this is reckless endangerment and because she died, even though it’s leaving work, Rob’s laughter is an obvious breach. It’s a risk of industrial manslaughter. So I just want you to know, this is a safety prosecution and Victoria, they are prosecuting it.

Kim McLagan: Yeah.

Andrew Douglas: So I won’t go in too much because it’s time, Kim.

Kim McLagan: Woohoo.

Andrew Douglas: Lovely to catch up and we made it the other side.

Kim McLagan: And good work!

Andrew Douglas: Thumbs up. See you.

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