Australia | Publication | September 2020
This article was co-authored with Electra Dow.
It is perhaps an understatement to say that 2020 has been a time of unprecedented change. From the perspective of someone embedded in the world of all things employment-related, one of the more significant of these is the impact of the pandemic on the workplace of the future, and the consequent focus on the cultural implications of the changing workplace. Within that environment, one area that is currently in the public spotlight, and rightfully so, is that of sexual harassment in the workplace.
With the almost depressing regularity with which new scandals are breaking, the publication of the Male Champions of Change report ‘Disrupting the System - Preventing and responding to sexual harassment in the workplace’ is both refreshing and timely, bringing with it a commitment to disrupt the system and make meaningful change.
While it may have appeared that the #MeToo movement has lost some momentum since its inception in 2017, renewed discussion in Australia about sexual harassment in the workplace during the course of this year has clearly demonstrated that standards and expectations are changing at pace. Importantly, shareholder activism and increasing Board scrutiny, combined with an increased willingness to report sexual harassment, are changing the dial on the nature of the discussion about sexual harassment in corporate Australia.
In the last few months, the media spotlight has again been cast on sexual misconduct and/or gender disparity at the highest levels in both the private and public sector. An official investigation into the conduct of the former High Court judge Dyson Heydon has resulted in damning findings against him, significant reforms in the High Court to protect their staff, and an exemplary response from the Chief Justice, Susan Kiefel. Similarly, shareholder and Board pressure in response to allegations of inappropriate conduct (sexual or otherwise) towards women has led to the very public removal from office of high profile senior executives.
Sexual harassment remains a significant issue in Australian workplaces across all industries and sectors. An organisational culture that permits, enables or rewards inappropriate conduct, or that does not adequately protect its staff, creates real and significant risk from a legal, commercial and reputational perspective. Employers should of course ensure that, both at Board and executive level, there is an awareness and understanding of the organisation’s culture or cultures and the risks that arise through such a culture and, most importantly, that steps are taken to mitigate or remove those risks. And yet it is more than just that risk that should be motivating employers to have zero tolerance for sexual harassment in their workplaces - it should be the need to ensure a safe, harmonious and productive workplace for all participants.
In this context, the recent publication of the incredibly detailed report by the Male Champions of Change, ‘Disrupting the system – preventing and responding to sexual harassment in the workplace’ (Report) should be a turning point in corporate Australia’s mindset towards meaningful action to prevent sexual harassment. The stated goal in the Report was to “identify the specific actions that CEOs could lead to disrupt workplace cultures and systems that enable sexual harassment to occur.” At the heart of the Report is the clear message that sexual harassment is not just about legal liability, it is “a social problem, one that is driven by gender inequality in the workplace”.
The lack of gender equality is unfortunately still painfully apparent in much of Australia. According to a recent report by Chief Executive Women (CEW), only three women were appointed to the role of chief executive of an ASX company over the last two years, out of 50 appointments. According to the CEW, there are now only 10 female chief executives in the ASX 200 and 65% of ASX 200 companies do not have women in line roles (critical CEO feeder roles). Whilst there has been some incremental progress in the number of companies who have achieved gender balance (i.e. having at least 40% women) in their executive leadership teams (30 in 2020 compared to 16 in 2017), there is still a long way to go.
While these numbers may seem bleak, the Report acknowledges this problem head on, notes that policies and processes in place in many organisations have failed to stamp out sexual harassment and outlines five key recommendations for how employers should handle and reduce sexual harassment. The Report emphasises that the focus on sexual harassment needs to move from a compliance, legal and reputational risk minimisation based focus to one where the goals are to prevent sexual harassment, and to intervene at an early stage, in order to reduce the number of impacted people.
In order to do this, the Report calls out five commitments to action of the Male Champions of Change. They are:
Elevate the prevention of sexual harassment and early intervention as a leadership priority, which would include having a stand-alone sexual harassment policy, having a policy on relationships at work, ensuring employment contracts and consultancy/independent contractor agreements clearly set out expectations and consequences of sexual harassment, measuring and monitoring data and having appropriate and effective reporting mechanisms in place;
Address sexual harassment as a workplace health and safety issue in acknowledgement of the long-term emotional, psychological, physical and financial impacts such behaviour can have on those affected. As a starting point this means that any potential hazards must be identified, such as whether there are any groups or areas of the business where there is a high risk of harassment occurring. Those risks and the factors that create or elevate the risk must be assessed, such as a lack of gender balance and exposure to alcohol. Steps must be taken to control the risks, and those control measures must be reviewed regularly to ensure that they remain effective;
Introduce new principles on confidentiality and transparency, and specifically the use of non-disclosure agreements only when requested by victims. This is a particularly interesting and contentious topic as currently settlements are often made on a without admissions basis, in the hope of protecting an organisation’s reputation. This could result in the perpetrators being empowered to engage in repeat conduct and, as can be seen from several recent high profile matters, is likely to be portrayed as a “gag order” preventing someone who is genuinely aggrieved from speaking up about their experience. The Report addresses this in some detail setting out clear principles on confidentiality and transparency in high profile sexual harassment matters. These principles include ensuring that any investigation is kept confidential, but once the investigation is concluded there should be no restrictions on the complainant’s rights to speak. Where the allegations are substantiated, the organisation should have the right to identify the perpetrator if it considers it appropriate, and it will be transparent about the outcomes, including any financial settlement paid to the perpetrator and the fact that a settlement was reached with the complainant (although not the amount paid to the complainant unless the complainant wishes to disclose that);
Inform, empower and expect staff to speak up and take action. This would include ensuring appropriate internal capability to respond to complaints, ensuring systems treat sexual harassment as a type of workplace injury, educating employees in respect of what constitutes sexual harassment and providing them with tools to raise concerns and support people who may be impacted; and
Listen to, respect, empower and support employees who are impacted. This would involve ensuring appropriate confidential avenues for complaints, having skilled teams who deal with complaints, allowing the person impacted the opportunity to guide how the complaint is handled, ensuring appropriate support, ensuring that investigations are conducted in a timely and confidential manner and ensuring appropriate disciplinary action is taken.
The above commitments are significant and, if appropriately implemented, could result in a much more focused approach to the prevention and management of sexual harassment in the workplace. The combination of the five commitments and taking the steps and approaches outlined in the Report to support those commitments could really effect cultural change. Most employers will already have taken many of the steps outlined in the Report such as having specific policies, grievance processes, support systems and training programs in place. However, some of the other steps will call for a more fundamental re-assessment of an organisation’s approach to sexual harassment. This is particularly the case with the commitment to elevate sexual harassment to a safety issue, with ongoing risk identification and assessment, and appropriate reporting mechanisms. In addition, the commitment to ensuring transparency surrounding substantiated allegations will no doubt cause some discomfort when negotiating settlement outcomes but will enable proper communications with all stakeholders and allow the complainant some control over their narrative.
The Report has been published at a timely point when employers will all be grappling with the impact of the pandemic and the impact of a new way of working on organisational culture. Interestingly, notwithstanding the increase in remote working due to COVID-19, an increase in sexual harassment claims has been reported this year. Victoria has seen one of the biggest increases in sexual harassment complaints, with cases up 6 per cent over the past year. Victoria's equal opportunity and human rights commissioner, Kristen Hilton, described the increase as "significant". This may be caused in part with people feeling emboldened to bring a claim when they are working remotely from the perpetrator.
Whilst the focus of the Report is to move away from viewing sexual harassment down the compliance and liability lens, and rather aiming to prevent and reduce harassment, the legal and reputational impact of sexual harassment claims cannot be discounted. Indeed, the potential legal and reputational ramifications reinforce the need to get it right from the outset and create a culture that calls out and sanctions bad behaviour, and supports those impacted.
Over the last decade there has been a marked shift in the attitude of the Australian Courts. They have recognised society’s changing views about the detrimental impact of sexual harassment on individuals by ensuring that compensatory damages awarded to victims of sexual discrimination and harassment are made by reference to prevailing community standards. The Full Federal Court recently dismissed a solicitor’s appeal against a finding that he had sexually harassed a paralegal and the award of $120,000 in general damages which he claimed to be ‘manifestly excessive’.1 In doing so, the Full Court reiterated that an award of significant general damages was warranted due to the severe psychological consequences of the Appellant’s actions and the egregious abuse of power in a situation where there was a clear power imbalance between the perpetrator and the victim.
This year has been a turbulent year for everyone. Something that corporate leaders should be able to control is building a culture that fosters respect and has zero tolerance for gender bias or sexual harassment. The Report sets out clear commitments and provides numerous tools to guide organisations through the challenge of disrupting their system and taking a new approach to the prevention of and response to sexual harassment in the workplace.
Our team has extensive experience in providing advice to employers and boards on steps to identify, assess, manage and mitigate sexual harassment risk, including conducting audits, investigating allegations, providing tailored training packages from Board level down and, where it becomes necessary, representing our clients in claims. If you would like any more information, please get in touch.
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