The trend towards higher awards for general damages in sexual harassment cases
The cases of Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82 (Richardson) and Gutierrez v MUR Shipping Australia Pty Ltd [2023] FCA 567 (Gutierrez) are indicative of a general trend of courts awarding significantly higher amounts for general damages for sexual harassment and discrimination cases. These awards are said to reflect community expectations and focus on the loss suffered by the victims, as opposed to the nature of the conduct.
What are general damages in this context?
General damages are intended to compensate for hurt, humiliation and distress suffered by the victims of discrimination or sexual harassment. These awards are in addition to awards for past and future economic loss.
Richardson and sexual harassment
Ms Richardson alleged that she was the victim of 11 incidents of sexual harassment by her previous co-worker. She sought compensation for both economic loss (because she said the co-workers’ behaviour caused her to resign from her employment) and non-economic loss for hurt, humiliation and distress.
The Federal Court found that Ms Richardson’s employer, Oracle, was vicariously liable for the conduct of the co-worker. The Court awarded Ms Richardson $18,000 for her pain and suffering, and loss of enjoyment of life.
Ms Richardson appealed the decision to the Full Court of the Federal Court of Australia. The grounds of appeal included that the amount of general damages awarded was manifestly inadequate. She was successful. The Full Court increased general damages to $100,000.
The Court was particularly concerned with measuring the harm suffered in a manner that aligned with community expectations – that is, it focused on the community having a greater appreciation for the hurt and distress that accompanies unlawful sexual harassment.
Gutierrez and discrimination
Gutierrez related to age discrimination. Mr Gutierrez was employed with MUR Shipping Australia Pty Ltd (MUR) from 1 August 2003 until 19 July 2018. He was 68 years old at the time of the cessation of his employment.
Around February 2018, Mr Gutierrez was told the company had a retirement age of 65 and was asked when he would retire. In March 2018, Mr Gutierrez was informed that a Ms Fernandes would be taking over from him. Mr Gutierrez then felt compelled to provide a retirement date, which he gave as July 2019.
The Court held there was indirect discrimination by virtue of the condition imposed by MUR that its employees retire once they were over 65. In assessing general damages, the primary judge found that Mr Gutierrez suffered a mild adjustment disorder and the cause of the adjustment disorder was the discussions relating to his employment.
The Court awarded Mr Gutierrez general damages in the amount of $20,000. Mr Gutierrez also appealed the award of damages arguing the $20,000 amount was manifestly inadequate.
On appeal, the Court found that the primary judge erred by failing to follow Richardson. The Court found when determining the amount of general damages, it is the loss suffered by the individual that is relevant and the Court should not assess damages based on the severity of the conduct.
The Court found that the primary judge erred in disregarding medical evidence which painted a picture of a man who had suffered considerable loss of amenity of life, a diagnosed inability to work, loss of enjoyment of social aspects of his life, and an adjustment disorder with depression and anxiety.
The Court overturned the $20,000 award and awarded general damages in the amount of $90,000.
Conclusion
These cases demonstrate the importance of employers taking steps to prevent sexual harassment and unlawful discrimination in their workplaces. Having policies on these topics and including such policies in inductions and ongoing training is important, as is face to face training, or training conducted by video conference. However, one the most important responses an employer can make to this issue is to promptly and appropriately respond when allegations of this nature are made. This will reduce the risk of a recurrence but also send a message to staff that the conduct is inappropriate. This will also be of interest EPL insurers, as the amount awarded for these types of claims will increase, which in turn will result in higher settlements and be reflected in claim reserves.
This publication constitutes a summary of the information of the subject matter covered. This information is not intended to be nor should it be relied upon as legal or any other type of professional advice. For further information in relation to this subject matter please contact the author.
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