“The fish rots from the head down” is an oft-quoted phrase in the world of organisational politics.

Poor culture tends to start at the top, and flow down into every crevice.

This was on display the past few weeks with well-publicised allegations of sexual harassment and other mistreatment made by workers at Country Road and Channel Nine.

In the past few weeks these scandals have claimed the jobs of multiple senior executives at Country Road and Nine.

The saga expanded even further last week to engulf a man once described by former Prime Minister Paul Keating as “all tip and no iceberg”, in former Nine chairman and federal treasurer Peter Costello, who resigned after colliding with a journalist at the Canberra Airport.

InDaily is not suggesting Costello was involved or condoned in the alleged conduct by senior executives at Nine.

So, with some high-ranking executives sent to face the corporate firing squad, it begs the question: If problems start at the top, how do Australian workplace laws regulate behaviour to ensure that business leaders set the right course for the organisations they lead?

Respect at work

In 2020 the Australian Human Rights Commission published a report of the National Inquiry into Sexual Harassment in Australian Workplaces, called Respect@Work.

In her foreword to the inquiry’s report, Sex Discrimination Commissioner Kate Jenkins concluded at the time that the “legal and regulatory system is simply no longer fit for purpose”, recommending a “new model that improves co-ordination, consistency and clarity between the anti-discrimination, employment and work health and safety legislative schemes”.

Among the 55 recommendations made by the Respect@Work report, recommendation 17 said that the Sex Discrimination (SD) Act should be amended to introduce a positive duty on employers to take reasonable and proportionate steps to eliminate sex discrimination, sexual harassment and victimisation, as far as possible.

A positive duty means that organisations can be regulated more proactively, because rather than having to wait and respond to something when it goes wrong, regulators can pursue an organisation for failing to put things in place to prevent sexual harassment whether it has occurred yet or not.

In September 2022 the amendments to adopt the positive duty were introduced into the SD Act, while also providing additional powers to the Sex Discrimination Commissioner to investigate employers and assess compliance in an effort to combat systemic sexual harassment.

Importantly though, while the positive duty to eliminate sexual harassment applies to the business or organisation, it does not necessarily extend to any of the senior officers within it.

This stands in contrast to obligations applying under workplace health and safety laws, that (in all Australian states and territories except Victoria) contain due diligence duties that apply specifically to the officers of a business.

Workplace health and safety issue

Sexual harassment is an issue of its own that permeates all facets of society, but when it occurs in the context of a workplace it may also be a breach of Australian workplace health and safety (WHS) laws.

With the evolution of WHS, and recognition of psychosocial hazards as a distinct area of risk, WHS laws are being increasingly recognised to provide some protection for workers from sexual harassment in the workplace, as well as consequences for those who commit it.

Under WHS laws (outside of Victoria) officers of companies may face liability for failing to implement systems to prevent sexual harassment in the workplace, even if that conduct doesn’t occur.

This is because WHS laws place a duty on officers to exercise due diligence in staying up to date with their knowledge of health and safety, and oversight of processes for the management of it.

New Fair Work Commission powers

Responding to recommendation 28 of the Respect@Work report, in March 2023 new laws also came into effect that give power to the Fair Work Commission (FWC) to deal with sexual harassment in the workplace.

They did so by making a “stop sexual harassment order”, and powers to assist with faster and more cost-effective resolution of other sexual harassment disputes before those matters proceed to court.

The FWC may also have power to order compensation for workplace sexual harassment, but only where both parties agree to allow the FWC to do that.

In all other cases a worker seeking compensation would need to continue to pursue the issue in the courts.

Still some way to go

Although the landscape continues to evolve, recent events at Country Road and Nine serve as a painful reminder that cultural shifts may be slow in the making.

The Australian legal framework has adapted to respond to the systemic nature of the problem, but change needs to be embraced, and where necessary enforced, from the top down to really stop the rot.

Scott Riches is an employment lawyer and former union official. He is also director principal of Capacita

– TND