The AICD encourages directors to work with management to develop an organisational framework that prioritises a transparent and ‘complainant centric’ approach in responding to sexual harassment in the workplace. Please refer to the Clayton Utz Report (available for download below) commissioned by the AICD to provide a practical roadmap of the relevant board-level and legal considerations for effectively responding to workplace sexual harassment.
As part of the AICD's program of work on the board’s role in effectively addressing workplace sexual harassment, the AICD has commissioned a report by Clayton Utz (available for download below) to provide a practical roadmap of board-level and legal considerations for effectively responding to workplace sexual harassment (report)
The Report explores considerations and common challenges that can arise when an organisation considers its response to sexual harassment allegations, offers case studies, and outlines steps that organisations can take to effectively prevent and respond to sexual harassment misconduct.
The Report endorses the Australian Human Rights Commission’s (AHRC) Respect@Work Report’s recommendation to adopt a ‘complainant-centric’ approach to responding to sexual harassment in the workplace. This approach is guided principally by a complainant’s safety, wellbeing and wishes in determining what actions are taken, and how.
Members are also encouraged to refer to the AICD’s Director Tool: A Directors Guide to Preventing & Responding to Sexual Harassment at Work for context and insights on this important systemic issue.
Sexual harassment is unlawful and can cause deep physical and psychological harm to employees. Sexual harassment poses a significant work, health and safety (WHS) risk, and organisations have a legal responsibility to identify and prevent the risks of such conduct and behaviours in the workplace.
Failure to prevent and respond appropriately to workplace sexual harassment causes significant harm to victims as well as an organisation’s culture and reputation in the broader community. Failure to prevent and appropriately respond to sexual harassment in the workplace can also result in significant legal liability for organisations. Employers and their boards can be held vicariously liable for sexual harassment under anti-discrimination laws and in breach of their obligations under WHS laws.
The AICD has encouraged directors and management to work together to elevate the prevention of sexual harassment and early intervention as a leadership priority. However, recent research led by the AHRC and the Australian Council of Superannuation Investors (ACSI) suggests that more work needs to be done by boards. Based on a survey of company secretaries and investor relations leads of ASX 200 companies, the research revealed that:
• just 19% of respondents acknowledged that the board had primary responsibility and accountability for the prevention and response to sexual harassment; and
• fewer than half of all respondents (43%) indicated that sexual harassment was a regular board agenda item.
The AICD’s Director Tool outlines suggested areas of focus for boards and questions for directors to ask about their governance and organisational approach to support prevention efforts, including settling clear expectations on culture, modelling appropriate behaviour, policy review and reporting.
To continue this conversation, the AICD encourages directors to also consider the role they can play in bringing about change in how their organisations respond to workplace sexual harassment. This relies heavily on a tone from the top and a call to action from the board.
Current strategies focused on compliance and reactive management of complaints have not shifted the dial on incidents of sexual harassment for organisations or their employees. Short-term corporate reputation, legal and financial liability considerations can overshadow other important factors in cases of sexual harassment, particularly the harm to victims and culture from allowing misconduct to go unchecked.
The AHRC’s Respect@Work Report recommends that organisations take a more decisive, transparent and 'complainant-centric' approach to responding to sexual harassment in the workplace. Critically, a ‘complainant-centric’ response aims to minimise any further harm to a complainant and puts the focus on a complainant’s safety, wellbeing and wishes in determining what actions are taken by an organisation, and how.
A practical roadmap for directors
The AICD has commissioned a report by Clayton Utz (available for download below) to provide a practical roadmap of the relevant board-level and legal considerations for effectively responding to workplace sexual harassment. The AICD commissioned this Report to support directors in driving real and substantial change in how sexual harassment complaints are addressed.
The report considers the following issues and provides case studies from Clayton Utz on:
- Failure to prevent sexual harassment: The key legal risks that can stem from a failure to adequately prevent sexual harassment in the workplace include: vicarious liability claims for sexual harassment under discrimination laws; WHS claims for a failure to manage WHS risks and provide a safe place of work; victimisation claims under anti-discrimination legislation; and civil claims for a failure to protect employees from reasonably foreseeable harm arising out of their employment.
- Mismanagement of sexual harassment claims: Mishandling claims of sexual harassment cannot not only cause further trauma for complainants, but may also expose organisations to further legal risks. These may include workers' compensation claims or stress leave claims on the basis that the organisation has supported a hostile workplace; responded to the matter in a way which is discriminatory; breached its WHS obligations; or failed to afford procedural fairness.
There are also common challenges that can arise when an organisation considers its response to sexual harassment allegations. This includes circumstances where allegations are raised anonymously or through whistleblowing channels; the complainant does not wish for the matter to go into any formal process; allegations of sexual harassment are contested and there is no objective evidence that would resolve the matter; or decisive action is required and procedural fairness cannot be observed (for example, if the conduct or complaint is required to be reported to the police). Again, how an organisation responds can minimise the risk of further harm to complainants as well as the broader culture and wellbeing of staff. The Report outlines the legal and risk considerations relevant to organisational policies and responses.
- A ‘complainant-centric’ approach: Directors should work with management to develop a flexible response framework to support a 'complainant-centred' approach to responding to sexual harassment, recognising different circumstances will call for different treatment. To support this approach, managers and leaders should undergo training to understand how trauma and fear can shape how complainants may (or may not) present and how they are best to engage with them.
- Procedural fairness: Assessments or investigations should be implemented in a fair and impartial way that supports and empowers the complainant, while still ensuring procedural fairness and the alleged perpetrator’s right to respond to the allegations against them. In cases of serious misconduct, however, the organisation may need to prioritise employee safety and workplace culture. The Report canvasses issues including unfair dismissal risks and balancing of these considerations. Adopting a ‘complainant-centred’ response to sexual harassment needs to be the priority and these risks can be mitigated by following a procedurally sound investigation.
- Transparency and confidentiality: Navigating choices around confidentiality and transparency when considering an organisation's response to sexual harassment investigations is a delicate balancing act. In dealing with allegations of sexual harassment, a common practice has been to keep allegations, investigations and outcomes confidential through enforced confidentiality arrangements, such as non-disclosure agreements (NDAs). These arrangements can have the effect of ‘silencing’ complainants in the interests of protecting perpetrators and the organisation’s reputation. Equally, as highlighted in the Respect@Work Report, NDAs can provide complainants with privacy or anonymity to protect their professional standing and wellbeing, as well as avoid the uncertainty, financial and emotional costs associated with litigation.
- The Respect@Work Report calls for greater transparency in the handling of sexual harassment misconduct – including giving complainants of sexual harassment a choice as to whether they would like to use an NDA or not, or a tailored confidentiality arrangement. The board should encourage management to develop policies that enable an exercise of judgement having regard to the complainant’s preferences for the handling of the complaint, the seriousness of the misconduct and the benefits to all parties and the wider organisation in considering these issues.
- Taking steps toward openness and permitting the open discussion of outcomes where misconduct is established may increase legal and reputational risk, at least in the short term. However, in the longer-term proactively supporting greater transparency can address systemic drivers of sexual harassment and improve culture within an organisation. The Report outlines the legal considerations that apply to supporting this shift, including the steps an organisation can take to minimise the risk of a defamation claim resulting from greater transparency around misconduct.
Boards can play a direct role in guiding organisational responses to complaints, through the questions they ask of management, board reporting and policies and processes. In most cases, boards will more likely become involved in considering the organisation’s response to a specific incident or conduct involving members of its senior leadership, or that otherwise raises significant legal or reputational risk.
In general, however, boards should work with management to develop a framework for response to sexual harassment misconduct that applies throughout the organiation. This would include systems, policies and procedures that prioritise a complainant-centric and transparent approach when responding to workplace sexual harassment. A framework that includes accountability for perpetrators will send a strong message about culture and standards set by the board.
By downloading or accessing a copy of this Report you agree that:
1. You will not publish a copy of this Report on any other website;
2. You will not make the Report available to the public; and
3. You will not edit, alter or distribute the Report other than in the form issued by the AICD.
Clayton Utz Report - Sexual Harassment in the Workplace
© Clayton Utz 2021. This report has been produced by Clayton Utz at the request of the Australian Institute of Company Directors (AICD) for publication as general information only and does not constitute legal, accounting or other professional advice. In receiving a copy of this report you acknowledge and agree that this report is provided for general information purposes only, in summary form, current at the time of first publication and you acknowledge and agree that you will make your own independent assessment of the material in the report. You also agree that you will engage and rely on the work of your own advisers in relation to your own, and your organisation’s specific circumstances. To the extent permitted by law, both AICD and Clayton Utz exclude all liability for any loss or damage arising out of reliance on the report. The report does not necessarily represent the views of the AICD.
Further resources for directors