Australia’s federal anti-discrimination statutes provide for employers to be vicariously liable for the acts of discrimination or sexual harassment committed by their employees or agents in certain circumstances.

In the Sex Discrimination Act 1984 (Cth) (SD Act) and the Racial Discrimination Act 1975 (RD Act), the discriminatory acts of the employee must be in connection with their employment or employment duties for the employer to be vicariously liable. The employer would have a defence under these statutes if it established that it took all reasonable steps to prevent the conduct.

In the Age Discrimination Act 2004 (Cth) (AD Act) and the Disability Discrimination Act 1992 (Cth) (DD Act), the acts of the employee or agent need to have been within the scope of their actual or apparent authority for the employer to be vicariously liable. The employer would have a defence if it established that it took reasonable precautions and exercised due diligence to avoid the conduct.

Taking all reasonable steps

Let’s explore what all reasonable steps means for the purposes of the SD Act and the RD Act. It’s clear that some reasonable steps will not be enough. However, only reasonable steps need to be taken to make out the defence.

The Full Court of the Federal Court of Australia in Von Schoeler v Boral Timber (2020) observed that what steps are reasonable will depend factors on 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 or sexual harassment.

The Full Court stated that to defend a vicarious liability claim, most organisations will need a policy that:

• states in clear terms that the discrimination or sexual harassment is against the law;
• identifies the source of the relevant legal standard; and
• explains that the employer might also be liable for the conduct.

New employees need to be educated about this policy and existing employees should have refresher training.

While the steps will be primarily preventative, the Full Court stated that a failure by an employer to comply with its own policies for investigating and dealing with complaints may be reflective of a workplace culture that tolerates unlawful discrimination or sexual harassment.

Unlike their state and territory counterparts, none of the four federal anti-discrimination statutes create a positive obligation on the employer to take certain steps to minimise the risk of discrimination or harassment in the workplaces they control. The failure of the Federal Government last year to take up the opportunity to legislate for this obligation in the SD Act attracted some controversy.

Taking reasonable precautions and exercising due diligence

The vicarious liability provisions of the AD Act and DD Act are different to those in the SD Act and RD Act. To defend a vicarious liability claim under the AD Act and DD Act, an employer must establish that they took reasonable precautions and exercised due diligence to avoid the conduct.

Whether an employer took reasonable precautions and exercised due diligence is determined objectively.

In Vance v State Rail Authority (2004), the Court stated that the employer needed to show that:

• it took steps to ensure its employees were made aware of what constituted discriminatory conduct;
• the discriminatory conduct was not condoned; and
• effective procedures existed for ensuring that, so far as possible, the discriminatory conduct did not occur.

In Korczak v Commonwealth of Australia (2000), the Court stated that this required employers to be “vigilant for conduct which may be discriminatory” and to take “proactive and preventative steps” to avoid discrimination. However, the precautions taken need only be reasonable, not perfect. The reference to “proactive and preventative steps” indicates that the due diligence requirement is like that in the context of work health and safety law.