Record sexual harassment compensation order upheld

In our July 2009 Briefly we reported on the record damages payment awarded to former Employment Services Australia (ESA) employee, Malgorzata Poniatowska, in the Federal Court case of Poniatowska v Hickinbotham. 

Ms Poniatowska was awarded $463,000 in damages after the Court found that ESA had engaged in sex discrimination and unlawful discrimination contrary to Section 14(2) of the Sex Discrimination Act 1984 (Cth) and Section 46PO of the Human Rights and Equal Opportunity Commission Act 1986 (Cth).  ESA appealed the judgment to the Full Court of the Federal Court of Australia, which recently dismissed the appeal.

This Thursday 19 August 2010 Norman Waterhouse will be conducting a seminar to discuss these recent trends.  The seminar will include a presentation from Paul Heywood-Smith QC, who was counsel in the Poniatowska case.  If you would like to attend, please click here for details.

The appeal

Before the Full Court, ESA argued that the Court at first instance erred on a number of grounds, including:

• emails sent by an employee outside work hours should not be regarded as being connected with Ms Poniatowska’s employment;
• numerous findings of fact that were not open to the Court based on the evidence before the Court; and
• the damages awarded to Ms Poniatowska were manifestly excessive.

With respect to the first ground, the Full Court found that the Court at first instance did not take the conduct of the employee (ie sending the emails outside of work hours) into account in determining that ESA had breached sex discrimination laws, accordingly there was no error.

The Full Court found that ESA had not established that the Court at first instance had done anything other than make findings open to the Court based on the evidence.  The Full Court was satisfied that Ms Poniatowska was a female who:

• was sexually harassed; and
• was subject to a robust working environment that she could not tolerate; and
• had complained about such treatment;
• such that she was considered an impediment to the smooth running of ESA’s business.

The Full Court concluded Ms Poniatowska was perceived as a problem by ESA because of her sex, and ultimately was dismissed by reason of a culmination of these factors.

In upholding the record damages payment, the Full Court determined that the Court at first instance had taken into account all relevant matters when exercising its discretion, and had awarded damages on the basis of ‘some years of considerable personal distress and unhappiness… brought about by her [workplace] circumstances’.

ESA further argued that fresh evidence should be placed before the Court regarding Ms Poniatowska’s later social security conviction, and that this evidence was directly relevant to the overall damages payment awarded.  The Full Court determined that the conviction may have some impact on Ms Poniatowska’s employment prospects (which is relevant to measuring the extent of her damages).  However, the Full Court considered that the Court at first instance had not awarded full future economic loss to Ms Poniatowska, and in any event, the new evidence was not significant enough to warrant remittal to the Court at first instance for fresh consideration of damages.

In dismissing the appeal, the Full Court also ordered that ESA pay 90% of Ms Poniatowska’s costs of the appeal.

Ms Poniatowska also lodged a cross appeal.  She argued that the Court at first instance had erred in calculating the appropriate amount of damages to be awarded, and had failed to award any sum for aggravated or exemplary damages.  The Full Court considered that the approach adopted for awarding damages was reasonable, and dismissed the cross-appeal.

Implications for your workplace

As we advised in July 2009, the case highlights the importance for employers in ensuring that they have appropriate discrimination, harassment, and complaint handling policies in place.

Given that such a significant damages payment was held to be reasonable, and with further high profile cases currently before the Courts, we continue to recommend that all employers continually review their discrimination, harassment, and complaint handling policies and procedures and ensure that they are being followed by all employees within the workplace.

Appropriate employee induction and performance assessment processes remain vital elements of the overall management of the employer-employee relationship. Further, it is critical that an employee who makes a complaint is not victimised in any way for making the complaint.

Please contact Lincoln Smith, Partner at Norman Waterhouse Lawyers, for advice on the specific implications of this decision on your business.

Lincoln can be contacted by telephoning 8210 1203, or by emailing him at lsmith@normans.com.au

If you find the information in this article useful, please feel free to forward it to someone at your workplace.

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