Are you a Board Director or Senior Executive? Please read on; your governance obligations depend on it.
On 2 September 2021, the Sex Discrimination and Fair Work (Respect at Work) Amendment Act 2021 ([email protected] Act) passed Parliament. The changes will come into effect the day after the [email protected] Act receives royal assent, which is expected to occur momentarily.
In June 2021, even prior to Parliament passing the [email protected] legislation, the Australian Human Rights Commission (AHRC) had published its report, Equality across the board: Investing in workplaces that work for everyone (AHRC Report).
Drawing on guidance from companies, the AHRC Report focused on the actions required of the most senior leadership of the ASX200 boards and executive management in preventing sexual harassment in the workplace. Based on a comprehensive survey of 118 ASX200 companies, as well as in-depth interviews with board members of 16 ASX200 companies, only 19% of participants reported that Board directors undergo training on good governance and sexual harassment.
In the wake of the [email protected] legislative changes, now is the time for Board directors and senior executives to carefully consider their governance obligations in respect of preventing and eliminating sexual harassment in the workplace. Before we get into the details of how you should do this, let’s re-cap the legislative changes.
The key legislative changes
The key legislative changes (and our initial views on them) are:
- a new object clause has been inserted into the Sex Discrimination Act to achieve, so far as practicable, equality of opportunity between men and women;
- similar to the definition of sexual harassment or sex discrimination, a new definition has been inserted which makes it unlawful to ‘harass a person on the ground of their sex’. Sex-based harassment will be defined as unwelcome conduct by reason of the person’s sex of a sufficiently serious nature which meets the threshold of being offensive, humiliating, intimidating, and seriously demeaning. The requirement that the conduct be seriously demeaning indicates that the intention of the provisions are to deal with more egregious forms of sex-based harassment;
- the Sex Discrimination Act now adopts the term “worker” used in WHS laws to ensure that interns, volunteers and self-employed workers are protected. The scope of the Sex Discrimination Act now also extends to members of parliament (and their staff), judges and state public servants;
- the AHRC will have discretion to terminate a complaint relating to the Sex Discrimination Act, where it had been lodged more than 24 months after the alleged acts took place (previously 6 months);
- the Fair Work Act now confirms that sexual harassment is a valid reason for dismissal (it already is but this now has legislative backing); and
- workers can now apply to the Fair Work Commission for an order to stop sexual harassment in the workplace, extending the Commission’s current stop-bullying jurisdiction. The new jurisdiction commences 2 months after the legislative amendments come into operation.
What should Board Directors make of this?
While legislative changes are important as they embed the social standards and norms that are expected from all of us, the research demonstrates that the elimination and prevention of sexual harassment in the workplace has far more to do with the culture and leadership of an organisation than it does with the law. This has been demonstrated by the continuation of high-profile sexual harassment cases, which have occurred despite having laws prohibiting sexual harassment that have existed for many decades. Allowed to fester, these issues can and will become a serious governance risk that increases legal liability and at times irreparably damages personal and organisational reputations.
These issues are sensitive and confidential in nature and therefore many Board Directors may not feel responsible for managing these issues. However, as with other hazards in the workplace, directors must take steps to identify the risks of sexual harassment and put in place control measures to prevent the conduct from occurring.
The AHRC Report found that most Boards consider that the governance and management of sexual harassment in the workplace should be dealt with by the senior management teams including People and Culture Teams.
However, as the Australian Institute of Company Directors has pointed out, sexual harassment is now recognised (and should be treated as) an important governance issue. For example, the ASX Corporate Governance Principles require Boards to instill a culture of acting lawfully, ethically and responsibly which requires companies to instill and continually reinforce a culture across an organisation of acting lawfully, ethically and responsibly.
In light of these responsibilities, our recommended steps for Board directors are as follows:
- Take action now. Deliver sexual harassment training to Board members and senior executives, including a focus on prevention;
- Consider implementing an internal working group or committee to develop a holistic prevention plan to address controls and culture;
- Ensure governance measures are put in place to monitor performance against the agreed prevention plan. Currently 43% of ASX200 Boards have a running board agenda item relating to the reporting of sexual harassment. This should be implemented if you haven’t already done so;
- Require that executive teams review and revise current Workplace Behaviour Policies to ensure that they reflect the new legislative changes and focus on prevention of sexual harassment in the workplace;
- Deliver sexual harassment training to all employees and managers that not only focuses on explaining the legal terms but trains employees on how to actively prevent sexual harassment including by using active bystander techniques.
How should management teams support the Board?
The role the senior management team has in supporting the Board is fundamental. The senior management team should take a proactive approach to preventing sexual harassment in the workplace and be in a position to demonstrate to the Board (but also to employees and other stakeholders) what measures have been put in place to actively prevent and eliminate sexual harassment in the workplace.
The team at Kingston Reid is available to assist in helping you develop your prevention plan, deliver training, whether to Boards, executives or employees, and review and update policies and procedures as well as discuss alternate means of complaint handling, such as Ombpoint. Please reach out if you require any assistance.