Career Advice Legal Case studies for employers

Time to make advances on sexual-harassment policies

The Background
Sexual harassment has been unlawful in Hong Kong since 1996. Although the courts here have yet to adjudge a multimillion-dollar sexual harassment claim of the type seen regularly in the US and other jurisdictions, in practice, this area of risk remains an issue with which many employers have to grapple.

The Hong Kong Equal Opportunities Commission (EOC) has a statutory responsibility to work towards the elimination of sexual harassment. Its most recent annual report, issued last year, stated that of the employment-related investigations under the Sex Discrimination Ordinance it conducted during 2011/12, 29 per cent concerned sexual harassment.

The EOC’s concern about sexual harassment in the workplace is such that it has just conducted a survey on this issue within the business sector. The survey, which was open for comments until 21 June, is intended to assist the EOC in formulating strategies for promoting anti-sexual-harassment campaigns in the workplace.

The Issues
Under Hong Kong law, sexual harassment is defined as any unwelcome sexual behaviour in circumstances where a reasonable person would have anticipated that the harassed person would be offended, humiliated or intimated. Simply put, it is conduct of a sexual nature that creates a hostile and intimidating environment.

Sexual harassment can take the form of verbal conduct, such as sexually suggestive or derogatory remarks, sexual jokes, and sexual advances; non-verbal conduct, such as lewd gestures or displaying sexually offensive pictures; or physical conduct, such as unwanted and unnecessary touching, grabbing, or deliberately brushing up against another person.

Cases involving sexual harassment can be high profile and high value. In Australia, a junior ex-employee of David Jones, a major department store, sued the company for A$37 million (HK$260 million). She claimed that the CEO had sexually harassed her by placing his hand under her clothes, trying to kiss her and repeatedly requesting that she go home with him. The claim eventually settled for A$850,000 (HK$6 million).

The case and the settlement were highly publicised. To date, we have not yet seen a case involving sums at this level in Hong Kong, but there is no legal reason why there could not be an attempt at such a claim in the future.

So what are the implications for an employee who sexually harasses a work colleague? What many employees in Hong Kong may not appreciate is that when a person commits an act of sexual harassment in the course of their employment, that individual may face civil liability for their actions. A court can order that the individual offender pay damages to the victim to compensate for any loss or damage suffered, and may even order punitive damages so as to deter future like conduct.

Employers, on the other hand, can be held vicariously liable for the actions of its employees, even when the sexual harassment occurred without the employer’s knowledge or approval. This should be a point of real concern for employers, particularly given that sexual harassment occurring outside normal business hours or outside the physical workplace can still be regarded as being conducted in the course of employment. This means that companies may be liable for their employees’ conduct at work-related functions, during business trips and even at casual after-work drinks.

There is some good news for employers. An employer will have a defence to such liability if it can show that it took reasonably practicable steps to prevent the conduct from occurring.

It is fairly straightforward for an employer to take steps to make this defence available. This includes drawing up and implementing an anti-sexual harassment policy, putting a procedure in place to deal with complaints, carrying out regular training of managers and staff, and monitoring the policy to make sure that it is working effectively. The cost for employers of taking pre-emptive steps to address this issue will be significantly lower than the cost of fighting a claim, and usually lower than the expense of settlement.

The Conclusion

Any employer that does not have a policy on sexual harassment in place, together with arrangements to address complaints and a programme of periodic training for staff, would be well advised to take steps now to implement these. For further guidance, employers can look at the codes of practice on employment issued by the EOC. They are designed to assist employees and employers to understand their obligations under the discrimination legislation, including in relation to sexual harassment.

Fiona Loughrey has headed Simmons & Simmons’ award-winning China employment group since 1999. Sarah Berkeley has extensive experience in advising on employment and discrimination issues, and has worked at the firm since 2001.

The information contained in this article should not be relied on as legal advice and should not be regarded as a substitute for detailed advice in individual cases. If advice concerning individual problems or other expert assistance is required, the service of a competent professional adviser should be sought.