A recent decision of the Federal Circuit Court outlines the principles to be applied in assessing the amount of compensation payable for contraventions of the Racial Discrimination Act in the workplace.

In the initial determination of liability, Australia Post was found to be vicariously liable for conduct that included racial taunts such as calling the Sri Lankan applicant a “f**king black bastard” and describing his work as “slave labour”. These comments restricted his right to a work environment free of racism.

Despite what was described as their “exemplary policies”, Australia Post was held vicariously liable as they failed to take reasonable steps to investigate the applicant’s complaints.

In the proceedings with the respect to assessment of damages, the applicant sought $100,000 for general damages and a further $100,000 in aggravated and/or exemplary damages. Ultimately the applicant was awarded $40,000 in compensation as the court viewed the abuse as extensive and significant.

In response to the claim for aggravated damages, the Court observed that if Australia Post had acted promptly on the applicant’s complaints, the damage to the applicant would have been lessened, but found that to award additional damages would constitute “double dipping”. The court rejected the claim for exemplary damages on the basis that exemplary damages are only available for the most “egregious” cases in order to “punish a wrongdoer and deliver a measure of moral retribution or deterrence.”

Lessons for employers:

• Exemplary policies and education initiatives will not prevent an employer being held to be vicariously liable if it fails to investigate a complaint that raises reasonable grounds regarding a contravention.
• The well-known case of Richardson v Oracle Corporation Australia Pty Ltd introduced new principles for the assessment of damages that were widely considered likely to result in higher awards for discrimination, however this has not yet eventuated in instances of contraventions of the Racial Discrimination Act.
• Very few Australian cases have led to awards of exemplary or aggravated damages.