A Policy is Not Enough – Company Held Vicariously Liable for Discrimination by Employee

Every business should have a written anti-discrimination policy but it is not enough that it merely exists. It must be communicated, implemented and enforced, both to minimise the likelihood of discrimination occurring and, if it does occur, to protect the business from being held vicariously liable for that discrimination.  A recent case[1] in the Northern Territory Anti-Discrimination Commission serves as an important reminder of this principle.

Centreprise Resource Group Pty Ltd (Centreprise) was an Aboriginal economic development company that had ceased trading by the time of the hearing in August 2015. Frances Newchurch was employed by Centreprise as a technical support and administration officer.  Graham Ride was the general manager of Centreprise and his granddaughter, Sarah Ride, was employed as a technical assistant.

Ms Newchurch made a number of allegations against Graham and Sarah Ride relating to statements made by them to Ms Newchurch, or in her presence, which she said constituted discrimination on the basis of race – namely, the fact that Ms Newchurch was Aboriginal.

The Tribunal dismissed some of the allegations but found in her favour on others, ultimately deciding that Ms Newchurch was entitled to $8,000 and $4,000 from Graham and Sarah Ride respectively as compensation.

The Tribunal then considered whether Centreprise should be held vicariously liable. The relevant legislation[2] stated that if a worker does an unlawful act in connection with his or her work then the Act applies to the employer “as if the [employer] had also done the act” unless the employer “took all reasonable steps to prevent the [worker] from doing the act”[3].  The concept of “all reasonable steps” was said to be “clearly a more onerous requirement than one to take ‘reasonable steps’ and places an obligation on Centreprise to show what it did to prevent the occurrence of discriminatory conduct, and that what it did can be said to have been ‘all reasonable steps’.”[4]

Centreprise did have a Policies and Procedures Manual but the Tribunal make it clear that the mere existence of policy is insufficient, quoting[5] the Queensland Anti-Discrimination Tribunal:

‘[T]he employer has a duty to ensure that its policies are communicated effectively to its executive officers, and that they accept the responsibility for promulgating the policies and for advising of the remedial action when breached’[6]

The Tribunal went on to say:[7]

‘I have no evidence before me of whether and how Centreprise communicated its policies effectively to executive officers, and whether those officers accepted responsibility for promulgating the policies and for advising of the remedial action when breached. I have no evidence before me of any provision of anti-discrimination training, any development and implementation of an equal employment opportunity management plan, any publication of an antidiscrimination policy, or the number of its workers and agents.’

It followed that the Tribunal did not accept that Centreprise had “taken all reasonable steps” to prevent the discriminatory conduct and ordered that Centreprise be apportioned liability in the amount of 25%.

Kott Gunning Recommendation

Employers need to be aware that having an anti-discrimination policy is a good place to start but insufficient in itself to escape liability for the discriminatory conduct of its employees.

For more information about this Update or Employment issue please contact us on (08) 9321 3755.  For a copy of Kott Gunning’s Serious Incident Response Guide please contact us.

The information published in this paper is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.

[1] Newchurch v Centreprise Resource Group Pty Ltd, Mr Graham Ride and Ms Sarah Ride [2016] NTADComm 1 (5 January 2016)

[2] Anti-Discrimination Act (NT)

[3] Section 105; a substantially identical test appears at section 161 of the Equal Opportunity Act 1984 (WA)

[4] at [8.2]

[5] at [8.4]

[6] Hopper v Mount Isa Mines Ltd and others [1997] QADT 3

[7] at [8.5]