Boardroom Briefing | October 2021

Boardroom Brief

The legislative landscape around sexual harassment in the workplace has undergone important change (albeit not as much change as some had hoped for). Change that will be driven from the top – board representation, initiatives and governance. Change that will also have an impact on your corporate risk.

Background: Responding to disturbing levels of workplace sexual harassment and an AHRC’s Report (1), the Federal Government has implemented anti-harassment reforms including specific amendments to key Commonwealth legislation (2) – the Fair Work Act (2009) and the Sex Discrimination Act (1984) (the SDA). These recent reforms, which commenced on 11 September, will: extend the Fair Work Commission’s anti-bullying jurisdiction to include sexual harassment at work (which does not have to be repeated behaviour) and; clarify that sexual harassment is expressly included in the definition of “serious misconduct” as a valid reason for dismissal. Under the SDA a person who permits someone else to engage in sexual harassment can also be found to have engaged in the unlawful conduct, and that victimisation can form the basis of a civil action for unlawful discrimination; so, an employer could be vicariously liable for sexual harassment perpetrated by an employee. These reforms are game-changers for employers and boards.

Case Study: AMP’s promotion of a senior executive on the heels of settling a sexual harassment claim against him by a more junior employee, created investor and shareholder kickback resulting in the executive being demoted but not before AMP’s reputation was sullied and its assets under management took a 7% hit. Who you promote and reward reinforces your organisational values and your commitment to gender equality and the prevention of sexual harassment. Practical ideas as to how a board can respond to these sorts of challenges can be found in recent Reports (3).

Possibilities: Corporate boards and employers should take responsibility for preventing workplace sexual harassment including: visible leadership, enlisting appropriate skill sets and experience, strategic prioritization of gender equality and the implementation of systems to manage risk. If increased standards are not met there is increased potential exposure to: EPL claims, investor and shareholder actions, director accessorial liability, anti-discrimination and WHS breaches, criminal action and negligence claims. All of which impact on professional lines insurance policies.

In brief: sexual harassment is already a valid reason for dismissal under the Fair Work Act but these recent changes will up the ante for employers and directors, who must set the cultural tone. Good governance on gender equality and sexual harassment is now even more critical; prevention and response will need to be monitored, measured, and reflected in codes of conduct which are fit for purpose. With workplace sexual harassment - the right side of history is also the right side of risk management.

(1) Respect @ Work: A National Inquiry into Sexual Harassment in the Australian Workplace (released March 2020).
(2) Sex Discrimination and Fair Work (Respect at Work) Amendment Act 2021.
(3) Champions of Change Coalition, Disrupting the System – Preventing and Responding to Sexual Harassment (2020) and SafeWork - Preventing Workplace Sexual Harassment Guide (2021).

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