02 December 2008

2008 Round Up - The Rise In Damages For Discrimination

Australia: The Rise In Damages For Discrimination

14 October 2008
Article by Rick Catanzariti

A string of recent cases has led to some very large agreed settlements, amounts claimed and damages ordered in the discrimination arena. The cases highlight an apparent significant upward shift in monetary compensation that needs to be factored in when faced with discrimination claims. It serves as a timely reminder to businesses of their employment responsibilities and the consequences of not getting these decisions right. While the trend is evident in Australia, it may be the case that Australia is following the lead of other jurisdictions overseas.

We look at some of the cases that reflect this trend.

Australian Cases

Christina Rich v PricewaterhouseCoopers

On 28 March 2008 Christina Rich, a former PricewaterhouseCoopers (PwC) partner, walked away from the settlement of a long-running discrimination dispute with her former employer for a reported $5 to $6 million. Initially, Ms Rich sought $11 million in damages.

Ms Rich initiated legal proceedings in 2005 against PwC with allegations of discrimination, harassment and bullying. At the time, Ms Rich earned close to $1 million a year as the highest paid female partner at PwC in Australia.

In the proceedings Ms Rich alleged that partners of PwC had unlawfully discriminated against her in breach of the Sex Discrimination Act 1984 (Cth). She alleged that between 1999 and 2004 repeated sexual harassment went unchecked and her complaints about discrimination were not taken seriously.

Ms Rich's allegations against PwC included that a partner felt her breast and another, her immediate boss, repeatedly invited her to his hotel room during a conference in 1999. Her immediate boss also adopted a practice of greeting her with a kiss, despite her objections. In November 2001, after a work function and in the presence of colleagues, she claims another partner pushed her against a wall, forcibly undid her bra and felt her breasts. In February 2002, during a discussion about her success with clients, she alleges another partner said 'that's because, Christina, they are talking to your breasts'. PwC denied the claims at all times.

Fiona Dunn v Perpetual

On 31 March 2008, only three days after Christina Rich settled her proceedings with PwC, Fiona Dunn, a former senior employee of funds management firm Perpetual, commenced discrimination proceedings in the Federal Court against her former employer. Ms Rich was seeking $1.2 million in damages for alleged discrimination under the Sex Discrimination Act due to her pregnancy.

Ms Dunn was earning $672,000 a year before she went on maternity leave in 2007. She alleges she was bullied and ignored while pregnant, and that her job was made redundant while she was on maternity leave. Among other things, Ms Dunn alleges that a former Perpetual senior executive complained that there were 'too many women of child-bearing age' at the firm. Ms Dunn said the executive told her she did not need to return to work after the birth of her child, because her 'husband could support her'. Further she alleges it was said to her, 'if women want to compete with the men, they have to play like the men'.

Ms Dunn believed she was subjected to stress, anxiety, professional humiliation and bullying after she became pregnant and claimed to have been the subject of 'blatant and unashamed discrimination' by Perpetual, a company which she says had an 'unhealthy boys club culture'. Perpetual have so far denied Ms Dunn's allegations.

While the case continues in court, it will be of considerable interest to see how it resolves, considering it bares a number of similarities to Christina Rich's complaint against PwC.

Caroline Tan v Chris Xenos

On 11 April 2008, the Victorian Civil and Administrative Tribunal ordered its largest ever payment for compensation, an amount of $100,000, against an individual respondent in a sexual harassment case in Tan v Xenos (No. 3) (Anti- Discrimination) [2008] VCAT 584.

The complainant, Dr Caroline Tan, was a third year neurosurgery trainee at the Monash Medical Centre. In August 2004, Dr Tan rotated into a team that was headed by neurosurgeon Dr Chris Xenos. Dr Tan came to develop a close professional relationship with Dr Xenos and would discuss her development in training with him. In January 2005, Dr Xenos started inviting Dr Tan to his private rooms for extra tuition. On 15 February 2005, Dr Tan arrived at Dr Xenos's rooms after she had finished work that evening.

In the proceedings Dr Tan alleged that on 15 February 2005 Dr Xenos led her into his room by the hand and when she turned her back he approached her from behind, turned her around and embraced her. Dr Tan further alleged that Dr Xenos then kissed her on the lips, touched her inappropriately and indecently exposed himself to her. Dr Xenos denied that he had sexually harassed Dr Tan, and claimed that Dr Tan had fabricated the allegations.

The Tribunal preferred Dr Tan's evidence over that of Dr Xenos and found that Dr Tan was sexually harassed by Dr Xenos. The Tribunal ordered that Dr Xenos pay Dr Tan $100,000 for general damages. In making the order, the Tribunal considered that Dr Xenos was in a position of power over Dr Tan and was in a position of great influence as to her qualification and her future career.

While in a different employment context to the cases of Christina Rich v PricewaterhouseCoopers and Fiona Dunn v Perpetual this case is a warning to parties of the willingness of tribunals to award significant damages in discrimination cases. In calculating the damages, Her Honour commented 'it is true that the incident itself is not the worst one can imagine of sexual interference with another person', however, Her Honour went on to conclude that 'the award of damages in this case must be substantial'.

Overseas Cases

The following cases reveal the compensation claims being talked about in Australia are starting to resemble the overseas experience.

Switalski v F & C Asset Management

In early 2008, Gillian Switalski, the former head of legal at F&C Asset Management in the United Kingdom, claimed that sexual discrimination, harassment and victimisation at work had left her unfit to fulfil her role upheld by the Central London Employment Tribunal. Ms Switalski is now seeking an astounding £19 million (A$39 million) in damages from her former employer as compensation.

The claim arose after Ms Switalski left her £140,000 a year job in September 2007 after her manager criticised her for choosing a flexible working pattern which was designed to help her care for her two sons, one of whom has cerebral palsy and the other who has Asperger's syndrome. Ms Switalski's manager was shown to have a particular difficulty in working with women and appreciating Ms Switalski's requests for flexible work.

Morgan Stanley

In 2004 in New York, Morgan Stanley, a Wall Street bank, paid a settlement to several women of US$54 million (A$73 million) for workplace discrimination and sexism. Allison Schieffelin, a former bond saleswoman with the company, received US$12 million (A$16 million) of that.

Ms Schieffelin alleged she was denied a managing director's post because she was a woman and was fired in retaliation for filing her discrimination complaint. She accused the firm of destroying her career. Morgan Stanley, as part of the settlement, denied any discrimination.


With sexual harassment and discrimination claims and awards of damages on the rise it is important that employers take reasonable precautions or steps to prevent unlawful conduct occurring. Employers should ensure they have up-to-date policies that have been implemented across their business and all staff have training.

With no compensation cap in most discrimination jurisdictions, discrimination proceedings are attractive, particularly to high earning individuals or individuals with potential high earnings. In our experience effective complaint management policies and processes when coupled with keeping in touch with your workplace culture and environment, can be effective in protecting your business.

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