Balancing the Act: ADCQ newsletter -
Vicarious liability - what does it mean in practice?
This article by Karen Walters (Anti-Discrimination Commission Queensland Commissioner) first appeared in Balancing the Act Issue 3, July 1998 pages 4 to 5.
'It is clear that employers need to not only introduce policies but also to proactively ensure their dissemination and follow-up on the implementation'.
An employer can be held liable in law for the discriminatory acts of employees unless the employer can show that reasonable steps were taken to prevent the worker or agent breaching the discrimination laws. The imprimatur for this vicarious liability is section 133 of the Anti-Discrimination Act .
What is the extent of that potential liability?
It is important to realise that there can be no 'cut and dried' formula - it will very much depend upon the size of the workforce and the nature of the business as well as other variables. Clearly, what is reasonable for a large corporation may not be reasonable for small business. The level of responsibility of an employer should be seen as a sliding scale, the larger the corporation, the higher the risk of incidence of discrimination and thus the more onerous the obligation to take 'reasonable steps'. Nevertheless, all employers should consider their obligation in two contexts - preventative strategies as well as remedial strategies - that is to say, embracing strategies to discourage discrimination and harassment as well as setting in place a mechanism by which grievances and allegations of sexual harassment, should they occur, can be resolved swiftly and effectively within the organisation.
In terms of deciding the preventative strategies of what will amount to reasonable steps, an extremely useful document is the Sexual Harassment - a Code of Practice for Employers book which was published by the Commonwealth Sex Discrimination Commissioner a few years ago. In deciding how detailed and specific the preventative strategies ought be, the Code encourages employers to consider:
- the size and structure of the organisation
- available resources
- nature of the work undertaken
- gender imbalances and workforce profile (distribution of gender, age, and ethnicity of workforce)
- history of sexual harassment
- relevant provisions in industrial awards
- working hours and level of supervision, and
- any other relevant factors - e.g. geographic isolation of the workforce, duties that require close proximity of workers (e.g.live-in arrangements).
Whilst all employers, regardless of the size of their workforce, are legally required to take reasonable steps to prevent sexual harassment and discrimination, it cannot be overstressed that what is "reasonable" will vary from employer to employer and case to case. Obviously, larger corporations with hundreds of workers will have a higher standard to attain in discharging the obligation compared with a very small family business. The Code draws a clear distinction between corporations, small business, and what is termed "very small business". Small businesses and the larger corporations are those employing 20 or more staff. For "very small businesses", where the owner/employer has direct contact with staff, the Code acknowledges that a formal written policy might be unnecessary. Obviously, there will be a vast range of employers in a grey area somewhere in between and the general advice of the Commission is that the safest course is to be overly cautious rather than taking a risk .
In relation to the larger corporations, the case law is quite clear. The vicarious liability provisions have been the subject of a number of recent cases federally and in Queensland. What has become clear from those cases is that the obligation of employers to take reasonable steps is more than mere rhetoric. The obligation is demanding, and is not necessarily discharged by the employer avowing a few mere tokenistic policies. There must be evidence of positive attempts being made which will obviously need to be tailored to individual cases. Two leading cases demonstrate the point.
In Evans vs Lee and Anor (1996) EOC 92-822, Ms Evans alleged sexual harassment in the area of service delivery by a bank manager. She alleged Mr Lee sought to have sexual intercourse with her and asked her to pose for nude photographs and following her refusal that increased reporting requirements were placed on her account. The bank submitted that they had taken reasonable steps to prevent the behaviour. They cited their policies on discrimination and harassment, pointed to a code of conduct, a video and circular letters dealing with sexual harassment in the workplace, a brochure and an article in the internal magazine. In 1991 a code of practice in relation to customers was issued. There was a system of auditing of management responsibility with a requirement that branch managers undertake with their staff each half year a discussion on sexual harassment. However, branch staff said there was no training on sexual harassment.
The hearing commissioner found that the respondent had not taken all reasonable steps to prevent the behaviour. He indicated that the bank had a responsibility to ensure that its policies were communicated effectively to its executive officers and that they accepted the responsibility for promulgating the policies. He found that there had been virtually no focus on the issues of sexual harassment and sex discrimination in service delivery. The respondents were ordered to apologise and pay $8000 in damages. Clearly, the obligation to take reasonable steps entails not just the development of policies - the rhetoric - but also the responsibility to disseminate and implement that policy to key areas where harassment might fester.
In Hopper v MIM EOC 92-879, although currently on appeal, the Queensland Tribunal clearly followed the Lee case. The company developed a policy and senior management attended a training course with the Commission and organised training and briefing sessions for employees with supervisory responsibility. The two key respondents in the case attended those sessions. A review was conducted. Certainly, the company was not totally inactive, but their action was not enough. It is not sufficient if briefings and training is undertaken at management level - the organisation must seek to ensure that the message gets down to the problem area or potential problem areas. The President agreed with counsel's contention that:
In particular, there was a failure to ensure that the message about anti-discrimination was known in areas where there were likely to be problems of liability ...
The employer has a duty to ensure that its policies are communicated effectively to its executive officers, and that they accept the responsibility for promulgating the policies and for advising of the remedial action when breached ... MIM failed to ensure that its policies were communicated effectively to employees on the ground, particularly to those employees where, as MIM well knew, there would be problems in changing their attitudes, and their attitudes would have to change if they were going to be able to work with female apprentices rather than only with male apprentices as had been the case in the past ... The message simply wasn't getting out to the trouble spots."
From these cases it is clear that employers need to not only introduce policies but also to pro-actively ensure their dissemination and follow-up on the implementation. The obligation is a dynamic one and should change to meet a changing workforce. Do not assume that one solution will fit all cases.
For all employers, the cases are clearly saying that mere rhetoric will not be sufficient to discharge the vicarious liability onus. An employer must demonstrate that a real commitment to a discrimination-free workplace is embraced and implemented within the organisation and the corporate culture. For large corporations and businesses employing over 20 people, as a bare minimum this would require a formal written policy, with processes to show the implementation of the policy, and continual on-going review. Training of supervisors and staff would be essential.
The amount of time and resources dedicated to implementing policies and providing on-going review will obviously be predicated upon a consideration of the variables. Common sense should be applied - the bigger the organisation, the greater the risk of discrimination, an organisation that is in an industry which has been historically classifed as 'male dominated' or tends to attract a high migrant workforce might need to be more vigilant and proactive in its follow-up monitoring. As the Code states, for very small businesses, a formal written policy may be unnecessary provided the employer from the outset verbally informs the small number of employees that sexual harassment and discrimination will not be tolerated, and should it occur, disciplinary action will follow. The employer should also make information available to staff about the issue via brochures available from the Commission. It is wise also for employers to make it clearly a condition of employment for new staff that non-discriminatory conduct must be followed at all times.