It pays to be prepared if sexual harassment rears its ugly head in your workplace

By Elizabeth Ticehurst

The term ‘sexual harassment’ has a ring of the 1980s about it. It evokes images of the bad old days of shoulder pads and big hair, when women were treated as workplace ornaments and expected to conveniently resign when they married or fell pregnant.

Three decades since the introduction of the national Sex Discrimination Act (SDA) in 1984, it may be disheartening to realise that sexual harassment still casts a long shadow on Australian workplaces. Yet community and judicial attitudes appear to be changing, requiring greater accountability from organisations and perpetrators.

The 2014 case of Richardson v Oracle Corporation Australia Pty Ltd and Tucker is often cited as marking a turning point in how seriously courts view sexual harassment and its effects on the victim. The complainant was initially awarded only $18,000 for general damages, consistent with a long history of the courts awarding rather small sums for sexual harassment.

However, on appeal this award was considered “manifestly inadequate”. The appeal court took into account general standards in the community and the awards of damages in cases of workplace bullying, and increased the damages to $130,000.

Large awards of damages such as this do more to hurt the employer than the perpetrator however, thanks to a provision in the SDA (and similar provisions in the equivalent state acts) that holds an employer liable for acts done by an employee “in connection with the employment of the employee”, unless the employer has taken all reasonable steps to prevent the acts. The phrase “in connection with employment” has been so widely interpreted that it can extend to an employee’s actions outside working hours, and even outside of the workplace.

In a recent Queensland case, for example, a tribunal ordered damages of more than $300,000 to be paid to a hotel employee who was sexually harassed by a fellow worker. The victim was sleeping in a hotel room provided by the employer, when she woke to find the hotel’s night caretaker naked in her room making unwanted sexual advances.

Neither employee was working at the time of the incident, but the tribunal found there was a sufficient nexus between the conduct of the caretaker and his employment for the hotel to be found vicariously liable for his actions. Importantly, the hotel had also neglected to take many steps which may have prevented the sexual harassment, including implementing a policy prohibiting discrimination and harassment, and training its workers in that policy. All of this is frustrating to employers – many would argue they can’t reasonably be expected to control their employees’ actions when they are not even present at work – but there are also indications of a common sense approach being taken.

In the 2016 case Mrs Linda Smyth v Northern Territory Treasury and Mr Doug Kerr an employer successfully showed it had taken all reasonable steps to prevent sexual harassment, and thereby avoided liability for its employee’s actions. In this case the complainant argued that a male employee had sexually harassed her at work by touching her inappropriately and sending her offensive e-mails. She alleged that the treasury was vicariously liable for this harassment, as the perpetrator had harassed her at work.

The NT Anti-Discrimination Commission found, however, that the Treasury had taken “all reasonable steps” to prevent the harassment. They had done this by:

• Having a policy on harassment in the workplace (albeit not a policy that specifically defined sexual harassment).
• Training employees in the policy.
• Meeting with the victim and offering support.
• Giving specific training to the perpetrator in the requirements of the policy, after a complaint was raised by the victim.
• Monitoring the perpetrator in the workplace and moving him to a different desk.
• Conducting a mediation.

The Commission noted that Treasury had taken these steps even though the victim insisted she would deal with the matter herself and did not want to make a complaint. They were therefore not vicariously liable for the perpetrator’s actions.

Employers cannot afford to be complacent about sexual harassment. The good news is that being prepared can pay off. Implementing an appropriate policy and taking prompt action to address any issues will be crucial in defending an organisation from liability.

• Elizabeth Ticehurst is Special Counsel – Employment at KPMG

Conflict between co-workers needs to be handled delicately and resolved before it brings a business to its knees.

By Fiona Smith

Who would think a “good deed for the day” of washing and putting away a colleague’s coffee mug could bring an office to a standstill? But it did. People took sides, stopped talking to each other, work suffered, an official complaint was made and a mediator was brought in to settle the matter.

Crazy stuff can happen in workplaces because people don’t always act rationally and misunderstandings can occur when communication is poor.

“What is normal workplace behaviour? There is no such thing as normal, outside what is legally required,” says Joydeep Hor, managing principal of law firm People + Culture Strategies.

In the case of the coffee mug, the woman who brought the complaint thought the “good deed” was an attempt to annoy her. Her colleague thought she was doing the other woman a favour that might help them get along better.

Of course, there was some history behind the conflict. The complainant tended to keep to herself and was not particularly interested in being social. The other woman, who was outgoing, read her colleague’s reticence as rudeness and hostility and responded in kind.

They had both made complaints over two years to their manager about each other’s attitude, but – and here is the key point to this story – the manager decided this was too petty to act upon. Instead, the manager told each woman that the other would be spoken to, but it never happened. The manager just hoped it would blow over.

The mediator, Catherine Gillespie, says each worker was under the impression the other was ignoring an instruction to change her behaviour.

“The managers couldn’t believe they were complaining over [the coffee mug], but it was because management had ignored all the complaints over two years and hadn’t resolved the actual underlying issues,” says Gillespie, managing director of Workplace Harmony & Conflict Resolution.

Gillespie took all the parties for one-on-one meetings to find out what happened and then asked them to look at it from different perspectives. She then inquired what solutions they wanted and how they were going to work together going forward.

Once the role of the manager’s inaction was clearly understood, the women could shift some of the blame onto their boss, opening the way for better communication with each other.

“They both had the same intention: they wanted a good workplace,” says Gillespie.

In most mediations, Gillespie says she discovers a third person who could have resolved things. “But, because they didn’t, the situation has escalated”.

People don’t speak up because they fear the reaction when they ask someone why they don’t greet them when they pass in the hallway or why they seem to delay responding to their emails.

Speaking of emails, these missives are fuel to the bonfire of bad workplace relationships because the tone of written communications can be easily misconstrued.

“It is because they are overlaying all of their past history and assumptions onto that email that they read it in different ways,” Gillespie says.

“Then, when they don’t talk to each other, they start talking to their colleagues about how horrible the other person is.” Communication between the two people becomes difficult, team meetings are awkward and cliques and divisions form in the workplace.

“The productivity of the whole team is now affected because people feel like they have to take sides,” Gillespie continues.

Gillespie says most situations can be resolved: “They actually do want to have a voice and be able to resolve things. They don’t like being in that uncomfortable state.

“We need to have those difficult conversations – and people want to have them.”

Surveys of executives have shown 85 per cent of them had issues they were afraid to raise at work, according to Margaret Heffernan, a former CEO and author of Wilful Blindness: Why We Ignore the Obvious at our Peril.

“[They are] afraid of the conflict that would provoke, afraid to get embroiled in arguments they did not know how to manage and felt they were bound to lose,” she told an audience at a TED Talk in 2012.

This means that leaders, who go out of their way to recruit the best people, fail to get the best out of those people, she said.

Joydeep Hor says his firm is increasingly asked to audit the culture of client organisations and mediate when there is conflict. There is often a systemic problem that can be identified behind the conflict and, unless it is analysed, then trouble is likely to reoccur.

“You will be back in the same spot, maybe not with the same people, but very quickly,” he says.

Hor says disputes usually involve people who are reasonably well-regarded by their employer: “But, for whatever reason, some level of conflict has developed in the relationship – whether it’s a personality conflict, ways of working conflict, or a disagreement about operational matters.” This has a flow-on effect to other people.

“The organisation doesn’t see it necessarily as a legal matter, but they see it as a very core productivity and cultural matter,” Hor says.

If organisations want to protect themselves from conflict, they should start by having clear expectations about the kind of communication, respect and behaviour that is accepted, he says.

A sure sign of conflict is a rise in stress leave and complaints, says dispute resolution specialist Shirli Kirschner.

“We are primed to fight, flight or freeze when we feel unsafe and that is why conflict is so unhealthy for humans because, the minute we feel unsafe, we are running huge amounts of adrenaline and negative headspace,” says Kirschner, who is the principal of Resolve Advisors.

Kirschner says a common scenario is when a new person comes into a workplace and tries to change bad behaviour that has previously been tolerated.

That misbehaving person may have been protected because they were regarded as a high performer in other ways, because they had a close relationship with a client or were a favourite of the CEO.

“The new person coming in is operating by a new set of rules and that creates huge problems. The person exhibiting the behaviour may have been doing it for 10 or 20 years and they are completely befuddled about why it is suddenly not OK,” she says.

Conflict also arises when a valuable employee has a “messianic complex” and believes they are the only one who can keep the system running.

If an area becomes understaffed, these people will quietly take on all the extra work and not complain.

“And then, at a point, they snap. They then often feel angry and undervalued. Because of their own huge competence and silence, they are not under-appreciated, but no-one has any visibility about what they have done,” Kirschner says.

“The day they start feeling undervalued, the world starts falling apart on both sides. The organisation can’t understand what is going on and the person can’t understand how they can possibly be under-valued when they have given their heart and soul and hundreds of hours.”

Other common flashpoints are promotion from within, difficult personalities, poor communication or co-ordination (perhaps leaving people out of an information loop), or issues to do with the business that put people under intense pressure, such as downsizing or relocation.

Kirschner says dealing with conflict should start with an assessment. Going straight into an investigation can sometimes make things worse by unearthing bad behaviour on both sides.

She suggests taking each person for a confidential coffee meeting, where they can be asked what result they would like to see out of the situation.

Then a recommendation should be made for mediation, perhaps with an expert mediator, an investigation, complex coaching, or something else.

With any luck, that “something else” may involve something simple like an acknowledgement of the complaint, an agreement that things will change and a determination to “move on”.

Should investors have a say on what CEOs are paid?

The premise: Those companies which adopt a ‘say on pay approach’ are better led, perform well and have lower costs, so says research from business school INSEAD.

Maria Guadalupe
Associate Professor Economics and Political Science, INSEAD

We found that a say on pay does indeed pay off across multiple dimensions (in a paper published in the Review of Finance, ‘Say Pays! Shareholder Voice and Firm Performance’).

Our analysis, which covers 250 cases of proposals to adopt the say-on-pay policy between 2006 and 2010 – before shareholder votes on pay were mandatory in the US – shows that if the policy was adopted, say on pay increased shareholder value by about five per cent. We also show evidence that say on pay has a positive impact on firms’ accounting and operational performance in the years following the vote.

By giving shareholders a channel to express their opinions, it intensifies board monitoring and pressure on the CEO to improve performance. It can also affect the current level and structure of executive pay, making it more closely tied with performance.

Graeme Bottrill
National president Australian Investors Association

Shareholders have a wide range of investing, corporate and management skills, but I expect that the typical investor most likely has a minimum of these skills.

Since these ‘average’ shareholders have little ability to determine an appropriate remuneration package for a CEO, it’s difficult to imagine a mechanism where shareholders could have a credible input into such matters.

Having said that, it is certainly appropriate to call out the extremes. This is not some formal arrangement for ‘having a say’, but the investing community can certainly recognise an excess when presented with one, and may be active and vocal at annual meetings and the like.

My view therefore is that shareholders should not be given any formal arrangement to control CEO remuneration, but they may have a voice through the annual meeting process.

Martin Lawrence
Research director Ownership Matters

I think they should have an influence but not the final say. In a large listed company, you have to strike a balance between allowing shareholders to have their views heard and them actually having a final say.

The areas where I think shareholders should have an absolute say is around the allocation of their equity to executives. As a shareholder, you have a fundamental right to a share in the company. We used to have quite good rules in Australia for dealing with insiders’ capacity to get their hands on shares without paying the market price.

Those rules have basically been gutted over the last 10 to 15 years. Now you see the curious thing of large listed companies spending tens of millions of dollars of their shareholders’ money to buy shares for their executives without shareholders having any binding say on it at all.