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A Bad Business - Fact Sheet: Cost to Employers

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A Bad Business
(Review of sexual harassment in employment complaints 2002)

Media Pack

In this section you can access:

Media Pack Index | Media
| Launch Speech by Pru Goward | Speech by Nareen Young | Case
Fact Sheets: Key Findings | The Complaints Process | Legal
Definition of Sexual Harassment
| Cost to Employers

Fact Sheet:

Cost to Employers

Sexual harassment represents a cost
to employers, in terms of disruption to the workplace, negative impacts
on productivity and workplace culture, and in particular, employee
absenteeism and employee turnover. Employers can also be held legally
responsible for acts of sexual harassment committed by their employees
or agents, exposing them to the possibility of legal proceedings and
compensation payments. In order to meet their legal obligations, employers
must take all reasonable steps to prevent sexual harassment occurring
in their workplace.

The data show that harassment remains
an issue for small, medium and large business in city, rural and remote
rural areas. The data also indicate that there is more that employers
could do to prevent sexual harassment and to address it where it does

Employee turnover and absenteeism

Chart: Employment status of complainant
at time complaint made to HREOC

Employment status of complainant at time complaint made to HREOC

At least three out of four complainants
were no longer actively working for the organisation where the alleged
harassment occurred by the time they reported the harassment to the
Human Rights and Equal Opportunity Commission (HREOC). These complainants
had been dismissed, made redundant, resigned, or were off work on
unpaid leave, sick leave or workers’ compensation.

This represents a considerable cost
to employers in recruitment, training and development, in addition
to the indirect cost associated with loss of staff morale inevitably
arising from unresolved disputes within workplaces.

Legal obligations

Many workplaces either do not have
a sexual harassment policy or have not implemented their policy, leaving
employers open to vicarious liability for the harassment.

In 130 complaints it was clear whether
or not the complainant had reported the harassment via internal mechanisms.
Amongst these complaints, 78 per cent of complainants (102 complainants)
had reported the harassment internally.

Seventy-seven per cent of reporting
of harassment was to people in a management or supervisory role. This
indicates an expectation by complainants that senior people within
an organisation would address complaints of sexual harassment. However,
since complaints were subsequently made to HREOC in these cases, this
also indicates that these managers and supervisors were unable to
resolve the complaints in these cases. This has significant implications
for business – indicating a need for managers and supervisors
to be prepared and able to handle complaints of sexual harassment.

The majority of complaints involved
employers who appeared not to have implemented sexual harassment policies
fully or at all. Amongst all 152 complaints analysed, only 36 per
cent (54 of 152 complaints) involved an employer who had a sexual
harassment policy that had been fully implemented. [1] Half of the employers either did not have a policy or had not implemented
the policy.


It is important to note that compensation
by the employer arising from conciliation does not necessarily represent
an admission that harassment has occurred. There are many reasons
why an employer may choose to pay compensation, including a desire
to avoid litigation and publicity of the case, to settle the dispute
more quickly or to minimise workplace disruption.

The amount of financial compensation
received by complainants in cases resolved at HREOC varied widely,
from a minimum of $500 to a maximum of $200,000. In almost all cases
resolved at HREOC, the employer agreed to compensate the complainant,
either as well as, or instead of the alleged harasser. This is a further
price paid by employers who had failed to prevent or satisfactorily
resolve the complaints themselves.

What employers can do

The data indicate that there
is more that employers can do to prevent sexual harassment and to
address it where it does occur. For example, this could include:

  • development and implementation
    of a sexual harassment policy, particularly by small business;
  • review of the adequacy of
    internal mechanisms for handling sexual harassment complaints;
  • ensuring internal complaints
    processes meet the expectations of staff;
  • better training for managers
    and supervisors so that they are prepared and able to handle complaints
    of sexual harassment;
  • greater use of training
    in response to complaints of sexual harassment, particularly as
    a means of preventing reoccurrences of this behaviour; and
  • inclusion of information
    about harassment in orientation for new staff.


1. An additional two cases have not been included
as question of whether the sexual harassment policy had been implemented
was in dispute between the parties.

This fact sheet is also
available for download in PDF Document for DownloadPDF and Word Document for DownloadWord formats.

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updated: 12 November 2003