The Federal Court has ordered a Sydney jeweller to pay a record sum in damages after finding its owner had sexually harassed one of his employees. Here’s what HR needs to know.

An employee of a Sydney-based jeweller has been granted a record-breaking $268,000 in damages after the Federal Court found her employer subjected her to sexual harassment and victimisation. 

The previous record for damages in a federal sexual harassment case was set in 2019 when a law firm was ordered to pay $170,000 to an employee who had been harassed by a colleague.

“[This case] is a really useful, contemporary example of conduct that had a significant impact on the victim, and also the responsibility of leaders to demonstrate the best qualities of personal behaviour in a workplace,” says Will Snow, Director at Snow Legal. 

Unpacking the case in question

In her decision, Federal Court Justice Anna Katzmann found that the employee in this case had been badgered with unwanted advances from her employer, and had also been victimised for taking her complaint to the Australian Human Rights Commission (AHRC) in August 2020. 

According to the ruling, the owner of the jewellery store had confessed romantic feelings for the employee in January 2020, and had continued to make advances towards her over a prolonged period after she told him she was not interested in a romantic relationship with him.

During the months that followed, the employee said the owner repeatedly made comments about her appearance, sent her inappropriate text messages and gave her thousands of dollars’ worth of unsolicited gifts, including jewellery from the store. She also reported an occasion when he had touched her inappropriately.

In June 2020, while he was driving the employee home from work, the store owner once again expressed his romantic feelings for her. She responded by telling him she still did not feel the same way, and that he should move on. 

Following this incident, the employee began to experience acute anxiety symptoms and insomnia as a result of his behaviour. She took a week off work to recover, and when she returned, she said her working relationship with her employer started to deteriorate. 

Unsure what to do, she sought legal advice and later flagged a complaint of sexual harassment with the AHRC. In response, the jeweller’s legal team wrote a letter refuting the allegations and implying that the employee had stolen some of the jewellery the owner had gifted her, threatening to report her to the police.

During the court’s investigation, the text messages between the two parties were examined to determine the veracity of the employee’s allegations. While she had been friendly with the owner, and had shown appreciation for the gifts, the court accepted that her accounts of harassment and their impact on her mental health were genuine.

Interestingly, the emojis used in their texts were considered by the court; for instance, the ruling reported that, when the employee was presented with a text she had sent, “She accepted that the unicorn emoji was her way of showing appreciation to [the store owner] for the gift.”

“I’ve never seen more emojis in a judgement,” says Snow. “It’s a really interesting case study for HR as a contemporary expression of how people communicate and work.”

“It goes to show that a business in this situation, without any policies at all, could never demonstrate that it had taken reasonable and proportionate measures to stop unlawful conduct from occurring.” – Will Snow, Director, Snow Legal.

After finding in the employee’s favour, Katzmann ordered the business to compensate the employee with $140,000 in general damages, $15,000 in aggravated damages, $23,070 for past economic loss, $46,284 for future economic loss, $3000 for future out-of-pocket expenses and $40,000 for victimisation.

“General damages are damages for her humiliation or distress,” says Snow. “The court is acknowledging there that the behaviour, as it occurred over quite a long period of time, had a profound impact on her.

“The amount of $40,000 for victimisation was probably the most unique feature [of the payout]. Victimisation is when you treat someone less favourably because they’ve made a complaint. 

“When [the employee]’s lawyers wrote [to the employer] regarding her situation, and then, in response, the employer asked for a number of items of jewellery to be returned… that was criticised by the court as retribution for the fact she raised the complaint in the way that she did.”

Changes to handling of sexual harassment cases

The record-breaking payout in this case exemplifies the stricter approach to workplace sexual harassment that the government has taken in recent years. 

In December last year, the Sex Discrimination Act 1984 – under which this case was brought to the Federal Court – was updated with the inclusion of a positive duty for employers to take ‘reasonable and proportionate measures’ to eliminate sexual harassment and discrimination in the workplace.

The need for employers to take action to address this behaviour at work was laid bare by the AHRC’s most recent national survey (2022) on sexual harassment in Australian workplaces, which revealed that one in three Australians had been sexually harassed at work in the previous five years.

The most common forms of sexual harassment included sexually suggestive comments or jokes, intrusive comments or questions, inappropriate staring or ‘leering’ and unwanted touching. Certain cohorts were particularly vulnerable to this behaviour, including women, members of the LGBTQIA+ community, people living with disabilities and people aged 15-17.

Another concerning finding from this report was the fact that fewer than one in five victims of workplace sexual harassment (18 per cent) made a formal report or complaint about it – and, among those who did speak up, 40 per cent said no changes occurred at their workplace as a result. 

Snow says one of the factors at play here might be a lack of policies or processes to guide employees in making formal complaints, or feelings of lack of safety to do so. In this case, the jeweller’s failure to create a formal sexual harassment policy played heavily against it. 

“It goes to show that a business in this situation, without any policies at all, could never demonstrate that it had taken reasonable and proportionate measures to stop unlawful conduct from occurring,” says Snow.

For small businesses such as this one, where there is no in-house HR department, he suggests that employers consider how they can build a clear avenue for employees to report misconduct.

“One of the key findings from this case is that, if you don’t provide some mechanism for people to raise concerns, then often their only option is to go to an external party.

“That external party might be a lawyer, or it could be the Australian Human Rights Commission. So one of the things to consider, especially for smaller businesses that don’t have an in-house HR function, is [whether they should] partner with an HR consultant who is available to employees.

“There needs to be some sort of complaint handling mechanism so people can raise issues or concerns. And [this case is] an education piece for all businesses that, just because you’re small, it doesn’t mean you can get away with it.”

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