Legal roundtable: How will defining sexual harassment as ‘serious misconduct’ affect SMEs?

The Fair Work Act will be amended to allow employers to summarily dismiss perpetrators of sexual harassment in the workplace, and the Fair Work Commission (FWC) will be able to issue stop orders to directly address sexual harassment, as part of the federal government’s response to the landmark Respect@Work report. 

Prime Minister Scott Morrison and Attorney-General Michaelia Cash said on Thursday the government would accept all of the report’s 55 recommendations either “wholly, in part, or in principle” and introduce changes before the next budget to simplify and streamline sexual harassment legislation. 

While further details are expected to be made available soon about how the government plans to address each of these recommendations, it has committed to a number of key amendments to the Fair Work Act. 

This includes changing the definition of series misconduct to include sexual harassment and making sexual harassment a valid reason for an employee to be terminated. 

Additionally, the government will seek to change the Fair Work Act to allow for urgent request for “stop sexual harassment” orders, by amending the existing regime that allows for “stop bullying” orders.

So what do these changes mean for small business employers? And will amending the Fair Work Act actually lead to meaningful change?

SmartCompany asked a number of workplace lawyers to weigh in on the changes. Here’s what they had to say.

Fay Calderone, partner at Hall & Wilcox

Clarifying sexual harassment is “valid reason” for termination is a helpful clarification point and will embolden employers, especially those without experienced HR professionals and employment lawyers to advise on tap.

Although conduct occurs on a scale, in cases where an investigation substantiates findings of misconduct, we usually advise there is a valid reason for termination. The FWC will maintain power to determine unfair dismissal applications and consider whether terminations are harsh, unjust or unreasonable in all the circumstances. The “harsh” hurdle is often the hardest to cross even in cases of substantiated sexual harassment, although the FWC has been increasingly making decisions in favour of employers in these matters. This should give employers increased confidence in proceeding with terminations and defending claims.

Including this in the definition of serious misconduct will assist employers to confidently make a decision to summarily terminate where sexual harassment has been substantiated. This will mean there is no obligation to provide notice or pay notice in lieu. With senior executives who have notice periods of up to six months, this is a significant cost to organisations especially where sexual harassment has been substantiated but they are concerned whether the conduct is sufficient to constitute serious misconduct at law.

When the detail of the legislation is released and changes go through, we may be able to consider more closely contractual provisions to empower employers to terminate without notice in these circumstances.

Additionally, there has often been intersectionality between bullying and sexual harassment that would see victims accessing the jurisdiction, but the ability to apply for “stop sexual harassment” orders will provide a more proactive regime for victims to access where there is no impartial individual within the organisation to complain to, or where the organisation doesn’t have or hasn’t followed their internal policies or complaints resolution processes.

When ‘stop the bullying’ provisions were introduced into the Fair Work Act there were concerns from employers that the “floodgates would open”, but this has not come to fruition. This is because it is a challenging application for a worker to make when they are still employed and in the environment — especially where trauma is involved — and not one they can make when their employment ends, nor is there any compensation available.

The ability for the FWC to make orders that fetter management discretion and the requirement that it must consider employers policies, procedures and grievance resolution/investigations in making a decision should motivate employers to get their affairs in order to avoid the intervention of the FWC, and civil penalties if orders are breached.

It is positive to see the federal government finally committing to the recommendations in the Respect@Work report. Australian employers are on notice that sexual harassment at work is not acceptable and a safety issue. Leaders and boards should be paying close attention to what is happening on their watch and take swift and decisive action to ensure they are not exposed to urgent and compromising applications for “stop sexual harassment” orders.

Most importantly, employees who sexually harass others in the workplace are being sent a clear message: this behaviour will not be tolerated and this may finally be the circuit breaker for the cultural change we need to see.

Andrew Brooks, employment and workplace relations lawyer at Law Squared

Businesses have a moral, ethical and legal obligation under both common law and legislation to provide a safe working environment and ensure that all employees can come to work and feel safe.

Therefore, we welcome the Respect@Work report and any legislative changes that make it easier for businesses to respond to instances of sexual harassment.

By broadening the definition of misconduct to include sexual harassment, businesses will have additional support under legislation to terminate the employment of perpetrators and hence protect survivors of sexual harassment. It will also hopefully encourage survivors to come forward and report matters so that businesses can take action.

Athena Koelmeyer, managing director and principal at Workplace Law

Happily, the government’s response to the Respect@Work report seems sensible and comprehensive, if long overdue. 

The commitment to overhaul the tangled, inconsistent and in some cases, outdated, definitions of sexual harassment in workplace health and safety, anti-discrimination and employment laws should make a genuine practical difference in the effort to eliminate sexual harassment. 

Of immediate practical effect will be the proposed amendment to the Fair Work Act that will permit urgent applications for “stop sexual harassment” orders — similar to the “stop bulling” process available. The lack of immediate remedies to stop this kind of behaviour has been a significant barrier to achieving lasting cultural change. 

Also welcome is the inclusion of sexual harassment in the definition of serious misconduct, clearing the way for employers to summarily dismiss perpetrators. 

We fully expect employers to embrace these changes, which will support them to take firm and immediate action in response to incidents of sexual harassment in their workplaces and encourage them to work diligently towards creating workplace cultures where such conduct is not tolerated. 

Trent Hancock, principal at Jewell Hancock Employment Lawyers

While government action to prevent and address sexual harassment in the workplace is always encouraging, the recommended amendments to the Fair Work Act 2009 and the Fair Work Regulations 2009 are in and of themselves unlikely to help achieve these goals in any meaningful way. 

The proposed “Roadmap for Respect” provides that “the government recognises the importance of ensuring that employers are clearly empowered to dismiss perpetrators of sexual harassment where appropriate”. Employer groups have echoed this rhetoric and praised the recommendations as a way to embolden employers to dismiss employees for sexual harassment, without the fear of an unfair dismissal claim being made. 

This, however, is not the problem.

Sexual harassment has always been a valid reason to dismiss and has always been a form of serious misconduct. That is, it has always been conduct that has been inconsistent with the continuation of the contract of employment and has always been conduct that causes serious and imminent risk to the health or safety of a person. Therefore, employers have always had the ability to summarily dismiss an employee for engaging in sexual harassment and yet, sexual harassment in the workplace is still rife.

The problem is not the ability for employers to take action but rather the preparedness to take action. In my experience working with dozens of victims of sexual harassment in the workplace every year, businesses often look to quickly dismiss complaints of sexual harassment and “protect their own”, particularly when the respondent is part of senior management.

In some cases (which a scan of certain court registries will confirm), the complainant is themselves dismissed for purportedly making a vexatious complaint, or for seeking to obtain witness statements from colleagues about the sexual harassment. Again, the problem is not the ability for a business to dismiss a perpetrator, it is the willingness of the business to actually listen to, investigate and action complaints of sexual harassment.

The recent case of Brittany Higgins provides a perfect example of this. After reporting the alleged sexual assault to her employer, Higgins confided that she was made to feel as if her ongoing employment would be jeopardised if she took the matter further. This is an all-too-common story where the problem clearly did not stem from an ability to discipline the perpetrator, but rather an unwillingness to believe and support the victim. 

While the express inclusion of sexual harassment in both the act and the regulations is certainly welcomed, it is unlikely to have any impact at all on businesses that are not genuinely interested in preventing and addressing sexual harassment in the workplace, or are more interested in “protecting their own”.