Essential ESG: Episode 11 – Respect@Work and amendments to the Sex Discrimination Act

Heidi Roberts, Partner, Responsible Business and ESG and Employment and Labour

Sarah Clarke, Partner, Employment and Labour

Erin Richardson, Senior Associate, Employment and Labour

Heidi: Welcome to another instalment of the Corrs Essential ESG podcast, coming to you from the lands of the Wurundjeri people of the Kulin Nation. I’m Heidi Roberts, partner in Responsible Business and ESG at Corrs. I’m joined today by Sarah Clarke and Erin Richardson from our Employment and Labour team. Welcome Sarah and Erin.

Sarah: Thank you Heidi.

Erin: Thanks Heidi.

Heidi: Today we’re talking about the recent amendments to the Sex Discrimination Act 1984 (SDA) and the Fair Work Act that are focused on preventing and eliminating sexual harassment, gender based harassment and sex or gender based discrimination in the workplace. So perhaps I’ll start by introducing some of the changes to the SDA and then we can discuss those.

The recent changes to the SDA implement the remainder of the recommendations from the Respect@Work report, most notably the positive duty on employers to eliminate sex discrimination and sexual harassment. The previous Coalition Government asked Sex Discrimination Commission Kate Jenkins to conduct a national enquiry into sexual harassment in 2018 which resulted in the 2020 Respect@Work report. The report called for a more proactive, risk assessment based approach to addressing sexual harassment and made 55 recommendations, the key one being to implement a positive duty in the Sex Discrimination Act. The Coalition Government implemented some of these recommendations in 2021 but declined to implement the positive duty. The recent changes that we see in the Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Act 2022 are the result of the Albanese Government’s election promise to fully implement all of the recommendations from the report, including the positive duty. This is a notable shift from the reactive, complaint driven approach to addressing sexual harassment or sex discrimination towards a more proactive assessment of the structural and cultural drivers present in a particular workplace, and the taking of positive steps to eliminate or minimise those risk factors to prevent such behaviour. So, Sarah, how do these amendments to the SDA define the positive duty?

Sarah: Thanks Heidi. The positive duty will require employers or a person conducting a business or undertaking to take reasonable and proportionate measures to eliminate, as far as possible, sex discrimination, sexual harassment, victimisation and conduct that is prohibited under the new section on hostile workplace environments. These changes are the cornerstone of the Respect@Work reforms and will be the most significant changes. It has similarities to the positive duty under workplace health and safety laws and some of the steps and considerations required to discharge that duty will be familiar to employers with respect to discharging vicarious liability under the Sex Discrimination Act. Factors to consider in determining whether an employer has taken reasonable and proportionate measures include things such as the size and nature of the employer, including their resources; the practicality and the cost of steps to eliminate the conduct; and any other matters, such as whether they have complied with guidance materials from the Australian Human Rights Commission.

Heidi: Erin, how does this fit with the positive duty under workplace health and safety laws which the previous government was satisfied already covered this?

Erin: So Heidi, the positive duty brings into focus some of the recent workplace health and safety developments, particularly in the psycho-social space and we’ve certainly seen safety regulators being much more active in the context of bullying and stress-related matters. And we’ve also seen them produce guidance for employees in respect of their particular workplace health and safety requirements for risk assessments and prevention of sexual harassment specifically. There is some overlap between the matters that are to be taken into account in determining whether a duty holder has complied with the positive duty and those which constitute the meaning of what is reasonably practicable under workplace health and safety legislation. Also, the explanatory memorandum to the Bill now passed provides that the two duties are intended to operate in a mutually reinforcing way. However, the Senate report into the Bill, now passed, also made clear that the workplace health and safety duty and the amendments to the Sex Discrimination Act for the positive duty are intended to be separate frameworks and compliance with the positive duty will not necessarily mean that a duty holder is compliant with other legal duties, including under model workplace health and safety laws. So, submissions into the Senate report did express different views about whether the standard of ‘reasonably practical’ sets a lower threshold for compliance than ‘as far as possible’. For instance, say if Work Australia submitted that the positive duties focus on subjective considerations such as the size and resources of a duty holder may impose a lower threshold than the purely objective standard in workplace health and safety laws. The reality of course is that until the positive duty is tested in the courts and receives judicial consideration, we simply don’t know whether these tests will be found to impose different standards and that remains to be seen. In the interim, while there are certainly differences between the duties, in practical terms the new positive duty requires employers, we think, to adopt broadly a safety and risk prevention lens throughout the workplace which many employers and other duty holders will of course be familiar with but we are also of the view that proper compliance with the positive duty will require more and, among other things, a more sophisticated gendered lens to those duties.

Heidi: Sarah, you mentioned before that the positive duty also requires employers to eliminate conduct related to hostile workplace environments. Can you talk us through that?

Sarah: The Act creates a new cause of action in the Sex Discrimination Act to make it unlawful to subject another person to a workplace environment that is offensive, intimidating or humiliating to a person on the ground of sex. Courts have found in the past that conduct resulting in a hostile work environment may be captured through existing provisions of the Sex Discrimination Act. However, the new provision is intended to provide clarity and certainty for employers in this regard. The section picks up familiar concepts from the Sex Discrimination Act, such as the reasonable person test in assessing whether conduct is unlawful. It also permits the various circumstances to be taken into account like the role and authority of the harasser and whether the conduct was serious or repetitive. Examples of a hostile workplace environment might include displaying pornographic materials around the office, engaging in general sexualised banter or innuendo, and telling offensive jokes. The section is really trying to stamp out inappropriate behaviour that is not directed towards an individual but is harmful nonetheless. The positive duty also extends to preventing conduct of this nature.

Heidi: I want to drill down a bit deeper into steps organisations need to take to comply with the positive duty. Particularly what they need to do to assess the cultural and systemic drivers of risk and to develop preventative actions. In the first instance, employers are going to need to understand their level of risk drawing from data and information broadly across various functional divisions of their business. So for example the diversity and inclusion area and, to an extent, human resources will be familiar with assessing cultural drivers of risk such as low worker diversity and power imbalances where the workforce is dominated by one gender, age group, race or culture; applying a gender and diversity lens on recruitment, promotions, pay, talent development, leadership composition and other such factors; and a workplace culture that tolerates lower level sexual harassment - everyday small acts of disrespect and inequality that are ignored and reports of sexual harassment that aren’t taken seriously. But that needs to be put together with other information and types of risks. So operational and safety related groups who are familiar assessing risks such as isolated workers, people working from remote locations with limited supervision, availability of communications systems and duress alarms. Risk assessments will be critical to identify these risks across different parts of the business and address them. And both the explanatory memorandum and the Respect@Work report identify that risk assessments are going to be a core part of discharging this positive duty. So Erin, do you want to take us through what conducting a risk assessment looks like in this cultural and systemic context?

Erin: Sure. So you’ve just identified some of the key aspects and risk factors associated with conducting risk assessments, collecting relevant data, and identifying risk factors – all the drivers of sexual harassment and other types of gender-based harm. At a basic level, risk assessments identify risks inside and outside of the organisation, such as some of those you’ve just mentioned, and the actions required to eliminate or reduce those risks. Identifying those risks will be informed by the data as you’ve just discussed but also through consultations and meetings with staff, exit interviews, anonymous surveys, insights from managing past workplace conflicts and grievances and the like. Of course OHS practitioners will be very familiar with conducting risk assessments but, as you’ve just mentioned, the OHS team will need to work closely with diversity and inclusion and HR, to name just two, to ensure that the risk assessment is comprehensive and properly done. In terms of specific risk control and minimisation measures, that will of course be informed by a range of factors across the board and be tailored and tied into what diversity inclusion and human resources are doing as well. For instance programs providing mentoring for women in other groups; grievance processes that are properly gendered and culturally sensitive; leading inclusive training and skills development; recruitment and promotion strategies to improve gender imbalances and redress any pay inequalities; and of course training for all customer-facing roles which we know to be particularly high-risk. Organisations can then use the data they collect to monitor trends over time, measure the effectiveness of the control measures, and evaluate whether current strategy policies and training might need further improvement or refinement. For instance, an organisation’s risk assessment might identify a particularly higher risk, both in terms of seriousness, likelihood and frequency of sexual harassment at the workplace, informed by complaint data and survey responses from staff. Then, relying upon the data on the gender composition of its workforce, an organisation might assess that power imbalance. Is it a male dominated workforce as a key cultural driver of the sexual harassment? And then implement control measures designed to address that risk. So that might include things such as implementing gender equality and diversity targets across all areas of the organisation, looking to senior leadership positions on the board, and building gender equality benchmarking into REM reviews and performance appraisals. Very importantly, the effectiveness of these controls will need to be regularly reviewed using data the organisation collects from relevant measures such as on promotions, workforce composition and REM.

Heidi: So how will these new obligations be enforced?

Erin: One of the things that really sets this positive duty apart from other existing positive duties in other jurisdictions of course are the enforcement powers that will be coming into force later this year. And they go to the quite significant powers that the Human Rights Commission will have with respect to policing and monitoring compliance with a positive duty. The amended Act gives the Commission quite expansive powers of monitoring and enforcement in relation to the positive duty which does, we think, constitute a significant departure from the present powers and role of the Commission. So it will have the power to enquire into compliance with the positive duty; it will have the power to issue compliance notices to compel the production of documents; to enter into enforceable undertakings with employers; it will also have the power to enquire, on its own motion, into any matter that may relate to systemic unlawful discrimination – all of these which will be backed up through Federal Court enforcement orders. So with these new powers obviously there is a considerable compliance regime that our clients will need to be aware of. And certainly clients should be aware that matters that are brought to the attention of the Human Rights Commission might also be the subject of a separate safety investigation.

Sarah: Heidi, there are also some important recent changes to the Fair Work Act which will impact the enforcement of sexual harassment following the Government passing its other key piece of IR legislation. The Secure Jobs, Better Pay Act amends the Fair Work Act to expressly prohibit sexual harassment in connection with work. This prohibition extends to all workers within the meaning of workplace health and safety laws and employers may be vicariously liable as they are under the Sex Discrimination Act for the conduct of their employees unless they took all reasonable steps to prevent the harassment. The amendments also allow a complainant or their representative to apply to the Fair Work Commission, seeking that it make a stop sexual harassment order or that it otherwise deal with the dispute. This new jurisdiction for sexual harassment disputes is broadly modelled on the general protections compliance framework and empowers the Fair Work Commission to deal with the dispute by mediation or conciliation. Where this fails, the parties may agree to arbitrate the dispute and the Fair Work Commission has broad powers to order compensation and direct a respondent to undertake remedial actions. Given unions’ familiarity with the Fair Work Commission and its relative low cost and speediness, we expect that this jurisdiction will see an increase in sexual harassment claims relative to State tribunals and the Federal Courts.

Heidi: Thanks, Sarah. I want to move on to what all this means for leaders of organisations. The Act requires leaders to view an organisation’s risk of workplace sexual harassment holistically, not within functional divisions or with a traditional operational lens. The Board and leadership group need to understand how their organisation or culture is being experienced in real life and across various parts of the organisation, and within groups within the organisation. So managers across all functional and operational divisions really need to work together to bring all of the data, the risk assessments, the minimisation and prevention strategies and the effectiveness reviews into that overall organisational governance and risk framework. Many organisations are already engaging in initiatives that are really important for the prevention of sexual harassment, however few of them are bringing these functions together in an integrated way to form a highly effective and targeted risk assessment based prevention program. So where leadership sets the tone, risk assessment informs the prevention activities and a trusted, transparent and victim centred response, which is regularly reviewed, enables the improvement of the prevention programs. What then are the more granular practical steps that organisations will need to take?

Sarah: I want to start with your point about collecting data. Cross-functional teams should be engaged in collecting data and monitoring effectiveness. Human resources, diversity and inclusion, and workplace health and safety teams will need to work together to identify risk factors across physical, structural, procedural and cultural factors. Safety teams will be familiar with the collection of data for the purposes of assessing risk within a workplace but generally their experience is in relation to physical risks. The data that will be required in this regard also needs to include data composition of the workforce, availability and usage of parental leave and flexible working arrangements, a gender pay gap, promotions by gender, and hours of work and rostering for particularly vulnerable groups. Data from IT teams may also be relevant regarding the online working environment such as security settings, use of personal devices, social media access for work purposes. It will also need to collect complaint data, if this is not already occurring within an organisation. So such things as the number and types of complaints, informal or formal complaints received, or complaints received through a whistleblower process. The number and nature of allegations that have been investigated within an organisation and whether they have been substantiated. Actions that are taken following an investigation including disciplinary outcomes, and changes to policies and processes. And complainant satisfaction with outcomes of each complaint. The challenge for organisations really is to pull this data gathered from different parts of the organisation to then inform a holistic and global approach to assessing risk. For example, identifying parts of the organisation with more women, young people, migrants, and align that to complaints data and rostering.

Heidi: And what is expected of directors in terms of their duties and of directors and executives in terms of leading on these issues?

Erin: We are of course [aware] that organisational leaders have an absolutely crucial role to play in creating safe, respectful workplaces and in helping to end workplace sexual harassment because the tone from the top really does matter. This requires that all leaders are educated on prevention and response to sexual harassment, and accompanying issues related to gender, safety and appropriately trauma-informed response. A clear line of accountability in organisations is also very important to prevent sexual harassment. Leaders and managers need to be responsible for their own actions and lead by example when establishing expectations of respectful workplace behaviours. This also of course includes encouraging a ‘speak up’ culture where senior leaders are involved in prevention initiatives and are being seen to take action where there are instances of inappropriate behaviour. Finally, as Sarah has mentioned, elements of good leadership include communicating clearly about actions taken to address unacceptable behaviours, and transparency about mistakes, systemic issues and the actions that have been taken to address those.

Heidi: Yes, Erin, I wanted to finish by discussing transparency of outcomes as this will become increasingly important with the positive duty, but might still be new to some organisations. The Respect@Work report urged employers to adopt an attitude of transparency that respects victim privacy and confidentiality while also more openly communicating the outcome of sexual harassment complaints within an organisation. This approach engenders trust within the organisation about the seriousness with which sexual harassment will be treated and it can shift organisational culture over time. To this end, the complaint data that organisations collect – and, Sarah, you’ve discussed this – can be published in annual reports both internally and externally to promote accountability and transparency. Some employers have already adopted this approach however transparency is not just about complaint outcomes, it’s also about leaders being transparent about the organisation’s shortcomings and how they intend to address them in the future. So Sarah or Erin, do you have any final thoughts?

Erin: One final thought, Heidi, with respect to the use of non-disclosure agreements (NDAs) as an element of transparency in particular, in the post MeToo era there is very much an emerging consensus that traditional confidentiality requirements can be damaging both to complainants and to organisational culture. And listeners might recall that the Respect@Work report did not advocate a blanket ban on the use of non-disclosure agreements but did advocate for a more nuanced approach and promised the release of best practice guidelines, which have recently been released. The guidelines that the Commission have published do not include a template clause on the use or non-use of nondisclosure agreements but they have put forward the following principles. First, that confidentiality clauses should be considered on a case-by-case basis. Second, that the scope and duration of the confidentiality clause should be as limited as possible. Third, that confidentiality clauses should not prevent organisations from responding to systemic issues in providing a safer workplace. Fourth, all clauses in a settlement agreement should be clear, should be fair, in plain English and where necessary translated and/or interpreted. Fifth, that the person who made the allegation should have access to independent support or advice to ensure they fully understand the meaning and impact of the settlement agreement, including any confidentiality clause. And finally, that negotiations about the terms of a settlement agreement should ensure, so far as possible, the wellbeing and safety of the person who made the allegation and be trauma-informed, culturally sensitive and intersectional. So in summary, a significant shift in the use and approach to NDAs away from boilerplate or standard practice to a much more nuanced case by case approach, Heidi.

Sarah: Thanks Heidi. My main takeaway at this stage is that employers need to get to work now, shaping culture and preventing sex discrimination and harassment. While the enforcement and compliance aspects of these changes won’t come into effect until later this year, it will absolutely take time, effort and serious reflection for some employers to get their house in order to ensure that they are discharging their obligations.

Heidi: Thank you Sarah and Erin. Of course, we haven’t discussed everything in the amendments but I think we’ve given listeners a good overview of the most significant aspects and an indication of what kinds of things they need to start thinking about. So thank you for listening to another instalment of Corrs’ Essential ESG podcast. If you have enjoyed this podcast, don’t forget to subscribe wherever you get your podcasts to be notified of future episodes.