Steps employers can take to avoid liability for their employees’ acts of discrimination

There are various Federal anti-discrimination statutes that provide for employers to be vicariously liable for the acts of discrimination committed by their employees.

For example, in accordance with the Sex Discrimination Act 1984 and the Racial Discrimination Act 1975, if the acts of the employee were in connection with their employment, the employer could be held vicariously liable.

So, what steps can an employer take to avoid being liable?

The Federal Court in Von Schoeler v Boral Timber 2020 FCAFC 13 held that an organisation must take all steps that are reasonable to take. Whether all reasonable steps were taken by an employer will depend on various factors such as the size of the organisation, the nature of its workforce, the conditions under which the work is carried out and any history of unlawful discrimination at the workplace.

The Court stated that to defend against vicarious liability, an employer will need a policy that states in clear terms:

  • That discrimination is against the law;
  • The source of the relevant legal standard; 
  • That the employer takes such matters seriously as it might also be liable for the conduct; and
  • That disciplinary action will be taken against offending employees.

Although Boral in this case had a “Working with Respect” policy, the Court found that:

[81] The paucity of evidence as to the steps actually taken to convey the seriousness and consequences of sexual harassment to employees, including Mr Urquhart, leads to the conclusion that Boral failed to establish that it took all reasonable steps to prevent Mr Urquhart from engaging in the sexual harassment.

All employers need to develop, implement, and maintain sufficient anti-discrimination policies and all new employees will need to be informed of these policies and be required to familiarise themselves with it. All existing employees should also be given refresher training on the policies from time to time.

A failure by an employer to enforce its own policy could also be seen as a workplace culture that tolerates unlawful discrimination.

Disclaimer: This summary is a guide only and is not legal advice. For further information on employers’ legal obligations, call ECA Legal Pty Ltd on (08) 6241 6129 or email ecalegal@ecawa.org.au.