Respect@Work: sexual harassment as a governance and risk issue

Landmark sexual harassment laws have just been passed by the Federal Parliament. In this article, we consider the new laws, and examine the wider issue of sexual harassment, from a governance and risk perspective.

The push for change

In recent years a series of inquiries, increased media coverage and high-profile incidents have shone the spotlight on the issue of sexual harassment. Now faced with new laws which will significantly change the compliance landscape, companies and their boards need to examine whether their organisation has the governance in place to confront the challenge of sexual harassment and comply with significant new legal obligations.

It is increasingly being recognised that to create a safe and respectful workplace, meaningful action begins at the board and executive leadership level. This is coupled with a greater expectation on boards and management to develop a governance and organisational framework to elevate early intervention and the prevention of sexual harassment.

Against a backdrop of heightened awareness of the prevalence of sexual harassment, a national inquiry commenced in 2018 to assess the impact of sexual harassment and its prevalence in Australian workplaces. This culminated in the landmark Respect@Work report, which was published in March 2020. Concerningly, the report emphasised the prevalence and pervasiveness of sexual harassment in workplaces around the country.

The report made 55 recommendations which traversed legal, regulatory, social and economic issues. One of the most significant is the introduction of a positive duty on employers to prevent workplace sexual harassment, discrimination and victimisation. The much-anticipated Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Bill 2022 (Respect@Work Bill) was formally passed by both Houses of Parliament on 28 November 2022.

The new positive duty: a framework for action

The introduction of a positive duty represents a timely opportunity for organisations to reassess their usual practices with respect to workplace sexual harassment to ensure compliance with the new legal landscape. Further, now is the time for boards and executive teams to make sure that the governance around sexual harassment prevention and response is fit for purpose.

The Respect@Work report recommended that organisations consider adopting a practical and holistic approach structured around seven key domains. These domains are grouped around two key objectives – preventing and responding to sexual harassment.

Using these domains as a roadmap, we set out below some considerations for boards, and practical steps they can consider taking, as part of ensuring there is an appropriate prevention and response strategy.

DOMAIN	CONSIDERATIONS FOR BOARDS	Example uses 2
Leadership	Boards have a crucial role to play in showing leadership on sexual harassment and gender equality issues. There are many practical steps a board can take to implement a leadership approach to workplace sexual harassment. By way of example only, boards can consider preparing a leadership statement which clearly articulates that eradicating sexual harassment is a priority for the organisation and demonstrate leadership in decision-making, role-modelling, and by increasing transparency.
Risk assessment and transparency	Given the need to proactively prevent sexual harassment, boards need to ensure the company has assessed the risks of sexual harassment occurring in the organisation and has measures in place to mitigate those. A risk assessment approach is important not only in light of the positive duty, which emphasises prevention, but as part of each director discharging his or her duty under work health and safety law. Greater transparency about sexual harassment is key to prevention. Boards should consider the appropriate level of transparency in terms of both internal communications to employees, as well as public and market disclosure. Additionally, ASX-listed entities are required to consider the ASX Corporate Governance Council’s Corporate Governance Principles and (further emphasis on sexual harassment indicators in the Corporate Governance Principles were recommended in the Respect@Work report).
Culture	A good starting point is for boards to identify and assess existing company culture – looking at its positive aspects but also applying a critical lens to ensure areas of concern and risk are identified. By having a baseline, an analysis can then be conducted as to what the desired culture looks like, and steps taken to close the gap. There are many factors for boards to consider in terms of how company culture is ‘set’, including understanding the role of policies and human resources practices and ensuring the remuneration and reward framework supports the right behaviours.
Knowledge	Conventional methods of sexual harassment training can tend towards a ‘tick the box’ compliance exercise, designed mainly for the purpose of protecting employers from legal liability. Boards should reflect on and enquire as to whether existing training methods and policies are effective in reducing sexual harassment behaviour in the workplace. If the answer is no, an ongoing and engaging training method should be implemented, with a tailored approach to reflect the different roles played by people across all levels of the organisation.
Support	A victim-centred approach recognises that it is the victim who suffers the primary harm when sexual harassment occurs, and UN Women has published some useful guidance material on how this approach can be implemented in practice. Going further, a people-centred approach recognises the impact of sexual harassment reports on a wider group of people, including bystanders and the respondent.
Reporting	Boards need to be confident that the company’s reporting processes are fit for purpose. Overly formalistic reporting methods have been identified as an impediment to victims making a complaint. Reporting methods should be clear, transparent, flexible and open to all workers. It is now recognised that there is a need to have multiple reporting mechanisms and ensure people at all levels of the organisation are equipped to handle a report or concern appropriately.
Measuring	Boards should draw upon the collection of data to examine the prevalence of sexual harassment, help improve the understanding of the scope and nature of the problem and identify what more can be done to prevent and respond to it. Boards should consider receiving complaints data on a regular basis from management. Increasingly, it is important to view sexual harassment as a non-financial risk that should be reported in a similar way to safety issues. Without this information, boards are not in a position to identify systematic issues or supervise how a company is responding to issues of sexual harassment.