The Legal Risks Associated With Bad Employee Behaviour?

How Exposed Is Your Organisation To The Legal Risks Associated With Bad Employee Behaviour?

When an employee suffers bullying, harassment or unlawful discrimination in the workplace, who pays the price for such behaviour?

Where an employee feels that they have suffered damage because of bullying, harassment or discrimination in the workplace, the employee may choose to proceed with civil action to recover the costs for such damages.  The individual responsible for the alleged behaviour may not be the  only one to be ordered to pay damages. The employer may also be held vicariously liable and also ordered to pay compensation. These damage costs are uncapped and the costs to organisations can be very hefty.

Where a security officer, was subjected to physical threats, verbal and racial abuse, bullying and intimidating behaviour from his supervisor, the employer of the supervisor was ordered to pay nearly $2M in damages.

A female employee was awarded $466,000 in compensation when she suffered sexual harassment at work and where the employer did not have appropriate policies in place nor took appropriate action when the employee complained.

When it was determined that Brodie Panlock’s suicide was as a result of bullying suffered at work, not only were the ‘bullies’ personally fined, both the Director and the company (that owned a ran Cafe’ Vamp) were fined $30,000 and $220,000 respectively.

All managers should understand the concept of vicarious liability and the statutes that enforce this concept. Such knowledge should not remain the property of HR only.

Definitions for vicarious liability are slightly but significantly different for each relevant Act.

The definition for unlawful behaviours within a company policy should be consistent with those provided in legislation and the policies should reference the relevant pieces of legislation to inform employees that standards of behaviour are set, not only because they are expected by the employer (to support a collegiate, respectful and productive workplace), but because the absence of these behaviours is required by law.

Policies should be comprehensive and include that it is an employee’s responsibility to abide by policies and to seek clarification if unsure of the meaning, applications or implications of any content within a policy.

An organisation should provide:

  • An initial training session with any introduction of a new policy ( and also within employee induction programs);
  • Regular update training on policies and expected standards of behaviour;
  • Keep records that employees have received and read policies and attended training sessions;
  • Continue to remind employees of workplace policies and expected behaviours via such methods as providing routine ‘reminders’ within emails or in newsletters, requiring employees to agree to abide by certain policies each time they log into a work computer or electronic network or providing reminders specifically just before an authorised work function or when an employee applies for offsite training or attendance at conferences;
  • Training for all managers so that they understand their responsibilities, the concept of vicarious liability and the need for all complaints to be taken seriously; and
  • Best practice complaint/grievance investigation processes.

In the case of P Micallef v Holden Ltd [2001] AIRC 67, an employee had been dismissed from employment with Holden for using a work computer to receive, maintain and transmit emails with attachments containing pornographic material.

At [5], Senior Deputy President Watson stated:

 ‘I find this constitutes a valid reason for termination related to his conduct, and the operational requirements of the respondent’s company, having regard to its statutory obligations and its broader obligations to its workforce.’

Senior Deputy President Watson found that the termination of the applicant by the respondent was not harsh, unjust or unreasonable because (at[8])

‘the company took reasonable steps to convey the policy and its implications to the applicant and other employees’.

Ignoring or not taking employee complaints seriously or not acting sufficiently or effectively to prevent further inappropriate behaviour from an employee can place an organisation at legal risk.

By ignoring or not taking an employee’s complaint seriously, an organisation will have difficulty arguing that it is not vicariously liable for the acts of its employees because its lack of action might appear to be authorising the inappropriate behaviour/actions of its employee/s.

While some managers may wish to ‘push the issue under the carpet’, an investigation is always useful to determine if allegations are substantiated or not and may also reveal:

  • A culture within a team or pocket of the organisation that accepts inappropriate behaviour;
  • That the complaint is not bona fide and hence the employer can inform and explain to the complainant that they are making false complaints (which may lead to disciplinary action against the complainant); or
  • If an organisation needs to take some action to protect the complainant from the behaviour of the respondent as well as limiting the organisation’s negligence.

All investigations should be carried out skillfully (in accordance with policy, natural justice and procedural fairness) and with outcomes being reported accurately and in a timely and appropriate manner.

Investing a little time and money in education and training, could save the company from having to pay large compensation claims.

Note: This article has not been designed to provide professional legal advice.

[1] Nationwide News Pty Ltd v Naidu and Anor; Iss Security Pty Ltd v Naidu and Anor [2007] NSWCA 377

[2] Employment Services Australia v Poniatowska [2010] FCAFC 92

[3] R v Map Foundation Magistrates Court of Victoria, Lauritsen, M 8/2/10

[4] Sex Discrimination Act 1984 (Cth) s 106, Age Discrimination Act 2004 (Cth) s 57, Racial Discrimination Act 1975 (Cth) s 18 (A), (E), Disability Discrimination Act 1992 (Cth) s 123, Equal Opportunity Act 2010 (Vic) s 109 Occupational Health and Safety Act 2004 (Vic) s 143

[5] Griffiths v Rose [2001] FCA 30 at [26] [6] Andrew Murray v Department of Family and Community Services February 2002  AIRC PR913897 at [45] [7] Cooke v Plauen Holdings [2001] FMCA 91 at [38]. Employer found to be vicariously liable for the discriminatory conduct of a manager by not taking sufficient or effective steps to prevent such behaviour.

[8] Dye v Commonwealth Securities Ltd [2012] FAC 242 & KW v B G Ltd, DP & DF (2009) QADT 7 at [244] [9] KW v B G Ltd, DP & DF (2009) QADT 7 at [244] [10] Adam James Harley v Aristocrat Technologies Australia Pty Ltd [2010] FWA 62

Sewell v Comcare [2012] AATA 320

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About the Author

Catherine Gillespie brings a wealth of skill to her clients. With particular expertise in teaching communication and workplace conflict resolution skills, Catherine has made a marked difference to the organisations she has worked with. She empowers teams and managers to adopt constructive styles that support harmony, productivity and progress in the workplace.