Express law No. 39

5 June 2006

Liability of employer for unlawful discrimination in
workplace

The Federal Court has held that an employer can be
liable for unlawful sexual harassment engaged in by an
individual employee where the applicant establishes that:

  • the employee did sexually harass the applicant
    contrary to the provisions of the Sex Discrimination
    Act 1984 (SDA), and
  • the employer is deemed to be liable for the unlawful
    conduct of the employee in accordance with section
    106 of the SDA.

Ingram-Nader v Brinks Australia Pty Ltd

[2006] FCA 624 (26 May 2006) (Cowdroy J)

The Court held that the employer can be the only respondent
to the court proceedings. The employee alleged to have
engaged in unlawful conduct need not be a respondent (jointly
with the employer) to the court proceedings.

The case reinforces the need for employers to have in
place adequate programs for the prevention of sexual discrimination
and harassment within the workplace, including mechanisms
for the reporting and investigation of alleged incidents
of sexual harassment.

Legislation

Sexual harassment, as defined by the SDA, is unlawful.
Certain discrimination is also unlawful under the SDA.
Complaints of sexual harassment or discrimination can be
made to the Human Rights and Equal Opportunity Commission
(HREOC) in accordance with the provisions of the Human
Rights and Equal Opportunity Commission Act 1986 (the
HREOC Act).

Generally the President of HREOC is required to enquire
into complaints and attempt to conciliate them (see section
46PF). The President can terminate complaints on various
grounds, including where the President is satisfied that
there is no reasonable prospect of the matter being settled
by conciliation (see section 46PH of the HREOC Act.)

There is no time limit for the making of complaints to
HREOC. However, the President may terminate a complaint
on the ground that the complaint was lodged more than 12
months after the alleged unlawful discrimination took place.

Where a complaint has been terminated, the complainant
can then commence proceedings in the Federal Magistrates
Court or Federal Court within 28 days of the issue of the
notice of termination. Court proceedings for unlawful conduct
in breach of the SDA are generally confined to matters
the subject of the complaint to HREOC. The proceedings
can allege unlawful discrimination by one or more of the
respondents to the terminated complaint (see section 46
PO of the SDA). A 'respondent', in relation
to a complaint, is defined by section 3 of the SDA to mean
the person or persons against whom the complaint is made.

Section 106 of the SDA provides that in certain circumstances
the employer may be liable for conduct of its employees
which amounts to unlawful discrimination. Section 106 provides:

(1) Subject to subsection (2), where an employee or
agent of a person does, in connection with the employment of
the employee or with the duties of the agent as an agent:

(a) an act that would, if it were done by the person,
be unlawful under Division 1 or 2 of Part II (whether
or not the act done by the employee or agent is unlawful
under Division 1 or 2 of Part II); or

(b) an act that is unlawful under Division 3 of Part
II;
this Act applies in relation to that person as if that
person had also done the act.

(2) Subsection (1) does not apply in relation to an
act of a kind referred to in paragraph (1)(a) or (b)
done by an employee or agent of a person if it is established
that the person took all reasonable steps to prevent
the employee or agent from doing acts of the kind referred
to in that paragraph.

Complaint

In the present case the complaint was made to HREOC in
December 2004. It related to alleged sexual harassment
in the period from December 1998 to August 2004. The complaint
was against the employer and against several former work
colleagues of the complainant.

The employer was not aware of any complaints of sexual
harassment before being advised of the complaint to HREOC.
The alleged individual harassers were no longer employees.

The complaint was terminated by the President of HREOC.
The applicant did not institute proceedings in the Federal
Magistrates Court within the prescribed period of 28 days.
The applicant commenced proceedings out of time and sought
an application for extension of time to commence the proceedings.

Decision of Federal Magistrate

Federal Magistrate Driver refused the applicant's
application for an extension of time within which to commence
the proceedings in the Federal Magistrates Court. He did
so on various grounds. He held as follows on what he referred
to as the issue of 'vicarious liability'.

The complaint to HREOC was against the employer only
even though it was a complaint of sexual harassment by
reason of the applicant's sexual preference. No
complaint having been made against the alleged harassers,
no proceeding can now be brought in this court against
those persons. The jurisdiction of the court is limited
to considering the claim against the harasser's
employer and would be based on asserted vicarious liability.

Decision of Federal Court

The Federal Court allowed the appeal from the decision
of Driver FM. One ground on which the appeal was allowed
was an error by Driver FM on the issue of 'vicarious
liability'. On this issue the Federal Court held
as follows.

  • The liability of an employer for the conduct of unlawful
    conduct of an employee depends on section 106 of the
    SDA, not on common law principles of vicarious liability.
  • The effect of section 106 is to deem the employer
    liable for the unlawful conduct committed by individual
    employees without the need to prove the elements of vicarious
    liability against the employer.
  • The effect of section 106 is to render the employer
    severally liable for the unlawful conduct of its employee.
    The Court therefore rejected an argument that section
    106 makes an employer jointly, but not severally liable,
    such that Order 6, Rule 5 of the Federal Court Rules
    would apply. That Rule provides that a party, which is
    jointly but not severally liable for relief, may apply
    for a stay of proceedings until all other persons jointly
    liable are joined to the proceedings.
  • The result under the SDA was consistent with common
    law principles for vicarious liability of employers for
    tortious conduct of employees. At common law a vicariously
    liable employer is a joint tortfeasor with the individual
    employee. At common law joint tortfeasors are jointly
    and severally liable for any loss occasioned by their
    tortious conduct.

Comments

Conduct involving alleged unlawful sexual harassment can
often involve only two individual employees, the alleged
perpetrator and victim. In such cases, the facts relevant
to the allegations are peculiarly within the knowledge
of the two individual employees.

Where a complainant to HREOC alleges unlawful sexual harassment
or discrimination by an individual fellow employee, that
employee should be a respondent to the complaint (see the
definition of respondent in section 3). Such an individual
employee should be identified by HREOC as a respondent
to the complaint.

In any cases where the employer is a respondent to a HREOC
complaint, the employer can seek an amendment to the complaint
to add as a respondent an individual employee who has allegedly
engaged in unlawful conduct. Section 46PF(3) of the HREOC
Act enables any complainant or respondent, with the leave
of the President, to amend a complaint to add, as a respondent,
a person who is alleged to have done the alleged unlawful
conduct.

Even where an individual employee allegedly responsible
for unlawful conduct is a respondent to a complaint before
HREOC, this does not necessarily mean that the individual
employee must be a respondent in any court proceedings.

Where an individual employee who has allegedly engaged
in unlawful conduct is not named by an applicant as a respondent
to court proceedings, the respondent employer could seek
orders to have the employee joined to the proceedings as
a respondent. In cases where an individual employee is
not made a respondent (for example, because the employee
is deceased or cannot be located), it might be difficult
for the respondent employer to adequately defend the proceedings
against it.

It is in the interests of employers to seek to ensure
that complaints of unlawful harassment and discrimination
are made and resolved in a timely fashion. This will assist
employers in resisting deemed liability for the conduct
of its employees.

Text of the decision is available at:
http://www.austlii.edu.au/au/cases/cth/federal_ct/2006/624.html

For further information please contact:

Paul Vermeesch
Special Counsel Litigation
T 02 6253 7428 F 02 6253 7381
paul.vermeesch@ags.gov.au

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