This month we will look at a recent decision of the Victorian Civil and Administrative Tribunal (‘Tribunal’), where an employer who failed to prevent the sexual harassment and assault of a female employee was ordered to pay $150,000 in general damages.

Background

The 27-year-old Beauty Therapist (‘employee’) commenced part-time employment at the salon, Man Oh Man (‘Company’) in January 2018.   The business operated six days per week and employed six to eight staff members.  The employee’s co-worker (‘Mr Catalfamo’) had commenced employment in December 2017 and worked five days per week.  Mr Catalfamo and the employee were regularly rostered to work the same shifts, including working on Saturday mornings, when the two employees would be alone for the first hour of work.

On two occasions in 2018, the employee made complaints to the sole Director (‘Ms Bassari’) alleging that Mr Catalfamo was sexually harassing her in the workplace.  On 25 October 2018, the employee resigned from her part-time employment with the Company, however, she was then offered and accepted shifts as a casual employee.

It was while working a casual shift on 30 November 2018 that the employee was sexually assaulted by Mr Catalfamo.  The sexual assault was captured on the Company’s CCTV cameras.  The employee reported the incident to Ms Bassari by text message the same day, stating that, “I know you all thought it was funny whist I was working here how Fede would inappropriately touch me and told you on numerous occasions but today was the last straw” and “this isn’t right and things like this shouldn’t happen in the workplace”. 

After Ms Bassari reviewed the CCTV footage, Ms Bassari responded “Not once did I think it’s funny how Fede was inappropriately touching you. I did ask you each time you brought it to my attention if it was bothering you so that I can address the issue with him. … I have seen the video and I am extremely disappointed with Fede’s behaviour”.

The employee also reported the incident to the Victorian Police, and Mr Catalfamo faced, and subsequently admitted to, criminal charges.

The Finding – Sexual Harassment

The employee alleged (and the Tribunal accepted) that during the employee’s employment, Mr Catalfamo sexually harassed the employee in the workplace by:

• sticking his tongue in his cheek and looking at the Applicant in a sexual gesture;
• deliberately brushing past the Applicant;
• putting his legs between the Applicant’s legs;
• making suggestive comments, jokes and sex noises;
• making comments about the Applicant’s breasts;
• enquiring about the Applicant’s sex life;
• slapping the Applicant’s bottom;
• asking the Applicant if she would see his penis;
• requesting sex with the Applicant whilst at work;
• asking the Applicant if he could “finger” her;
• attempting to embrace the Applicant;

The employee further alleged (and the Tribunal accepted) that Mr Catalfamo sexually assaulted the employee on 30 November 2018 by:

• attempting to put his fingers in the Applicant’s mouth when her hair was being washed in a basin and her eyes were closed; and
• shoving his face between her breasts and moving his head left to right when she was in a reclined position having her hair washed.

Ultimately, the Tribunal was satisfied that Mr Catalfamo sexually harassed the employee within the meaning of section 92 of the Equal Opportunity Act 2010 (Vic) (‘EO Act’) and in contravention of section 93 of the EO Act.

The Findings – Vicarious Liability

The Tribunal also found that the Company was vicariously liable for Mr Catalfamo’s sexual harassment of the employee pursuant to s 109 of the EO Act.

In reaching this conclusion, the Tribunal made some observations which are critical for Employers to note:

Employment Handbook

The Company’s Employee Handbook (‘Handbook’) contained Anti-Discrimination, Equal Opportunity, Sexual Harassment policies and was available electronically and was generally emailed to new employees along with a contract of employment.  Despite Ms Bassari claiming that Mr Catalfamo was emailed the Handbook at the commencement of his employment, there was no evidence to confirm that to be the case.

Instead, the Tribunal noted that the Handbook’s version control indicated that the original (and latest version) of the Handbook was 1 January 2018, after Mr Catalfamo’s commencement date and that the Handbook was not in existence at the time he commenced.

While the Tribunal accepted that the Handbook was discussed in at least one staff meeting where Mr Catalfamo was present, it noted that the discussion could only have been “rudimentary at best” given Ms Bassari, through her own evidence, confirmed that she had only “flicked through” the 100-page document.

The Tribunal was also critical that the Company had no means of confirming whether employees had “read and understood the Handbook” or whether employees had “accessed” the electronic version of the Handbook.

Complaints Procedure

The Tribunal did accept that Ms Bassari did discuss the initial complaints made by the employee with Mr Catalfamo, and that he apologised and said that he would not do it again.  However, the Tribunal considered that the Company’s response to the initial complaints were “manifestly inadequate”.

Investigation

The Tribunal pointed out that there was no evidence that an investigation had been conducted into the employee’s allegations and that the employer had not examined the available CCTV footage, which may have recorded the conduct complained of by the employee.  The Tribunal suggested that the employer could have monitored the CCTV footage and asked other employees if they had “witnessed” the sexual harassment complained of by the employee, rather than just asking other employees if they had any issues with Mr Catalfamo.

Disciplinary Action

The Tribunal did not accept that Ms Bassara gave Mr Catalfamo a verbal warning in relation to the conduct on 30 November 2018 and noted that she did not investigate the incident because she was on an overseas trip.

Training

The Tribunal noted that there was no evidence that the employer provided Mr Catalfamo or other employees, with anti-discrimination or sexual harassment training after the employee’s initial complaints.

CCTV Footage

The Tribunal suggested that the Company could have used the available CCTV footage to “monitor the workplace to ensure employee compliance with its Handbook”.

The Tribunal concluded that what would have been appropriate precautions to prevent sexual harassment in the workplace would have been for the Company to ensure “Mr Catalfamo and other employees received, read and had a sound understanding of the sexual harassment and related policies in the Handbook, for example, by having employees undertake a short questionnaire, to conduct regular but not necessarily frequent refresher training meetings on the Handbook”.

Assist, Authorise and/or Encourage the Sexual Harassment?

The Tribunal rejected the employee’s claim that Company and Ms Bassari “assisted, encouraged and/or authorised the sexual harassment” by allowing the employee and Mr Catalfamo to continue working together after the employee’s initial complaints.  The Tribunal was of the opinion that “inaction” on its own did not give rise to such an argument.  The Tribunal did note that had the Company “not maintained the status quo regarding the [employee’s] and Mr Catalfamo’s working arrangements by increasing the time they worked tougher or worked alone together, then the outcome may have been different”.

Remedy

The Tribunal was required to consider and make findings on two issues of note in respect of the remedies available, being the scope of the employee’s entitlement to compensation; and the impact of the employee’s pre-existing psychological injury.

The Tribunal was empowered by section 125(a)(ii) of the EO Act to make an order that the Company pay the employee an amount the Tribunal thinks fit to compensate the employee for “loss, damage or injury suffered in consequence of the contravention…”. The Tribunal accepted the Company’s submissions that the purpose of an award of damages is to measure, in monetary terms, the loss, damage and injury, and did not accept particular submissions from the employee that there should be a punitive element to the outcome for the employer.

However, relying on established Federal Court authority, the Tribunal held the employee, as a victim of sexual harassment, is entitled to be compensated for non-economic loss by taking into account any “distress, hurt and humiliation” suffered.

The Company submitted an award of general damages should be reduced because of the employee’s pre-existing mental health issues. The Company specifically submitted that the main contributor to her mental health issues was the breakdown of a relationship with an abusive partner prior to the sexual harassment in the workplace.  In this respect, the Company relied on a comment by the employee to her psychologist that her difficulties predate the sexual assault and that “it’s not all PTSD from the sexual assault”.  However, the Tribunal applied the previous decision of Collins v Smith where Judge Jenkins held the Tribunal only needs to find that the contravening conduct is one of the reasons for the loss and damage.

In consequence of the employee’s suffering of distress, hurt and humiliation, and the exacerbation of her pre-existing mental health conditions, being anxiety, depression and PTSD, the Tribunal recognised these as a form of compensable non-economic loss and awarded general damages in the amount of $150,000.

Key Take-aways

While this decision was made by a Victorian Tribunal on the basis of the EO Act in Victoria, it is instructive for employers in other jurisdictions. In Queensland, in particular, the provisions of the Anti-Discrimination Act 1991 in respect of sexual harassment and employer’s vicarious liability are similar.

This case makes it plainly clear that the mere creation of policies will not discharge an employer’s legal obligation to protect employees from sexual harassment, and that tribunals and courts, when considering vicarious liability, will assess the steps taken by the employer to ensure their employees receive, read and understand the policies.

Employers should pay particular attention to what the Tribunal considered may have constituted reasonable precautions on the Company’s behalf.  The Tribunal contemplated that had the Company ensured their employees received, read and had a sound understanding of the sexual harassment and anti-discrimination policies by:

• having employees undertake a short questionnaire; and
• conducting regular but not necessarily frequent refresher training meetings,

they may have discharged their obligations (and so potentially avoided a finding of vicarious liability).

This case is also an advertisement for the importance of employers treating each allegation of sexual harassment seriously and conducting proper investigations (and taking appropriate disciplinary action where necessary) into such allegations.  In this case, had the Company taken the initial allegations more seriously, and taken more robust steps to deal with the initial allegations of serious misconduct, then the events that ultimately triggered the application may never have occurred.

In light of recent changes to the law on sexual harassment, employers should strongly consider contacting Aitken Legal to receive advice on whether their workplace policies are adequate, and/or whether they have taken appropriate steps to ensure their employees have received, read and understood the policies.