Public companies take their disclosure obligations very seriously.
The risks of attention from the regulator, and shareholder class actions, make companies extremely careful about the information they provide to the market.
Companies know that investors who have suffered loss may well have the resources and support needed, and the will, to sue. And they know that the regulator is always watching.
So why doesn’t the risk of legal proceedings have a similar effect on companies when it comes to making sure their staff don’t engage in unlawful discrimination and sexual harassment? Why aren’t there roomfuls of senior leaders talking about what can be done to promote a discrimination- and harassment-free culture?
Some organisations – particularly those with good human resources advisors – know they have to try to remove hostility from the workplace. They are the firms trying to demolish barriers to workforce participation, not just to limit legal exposure, but to win the competition for talent.
But the threat of possible discrimination and sexual harassment proceedings is often not near the top of list in company risk assessments.
The reasons have to do with money, and power.
In discrimination and sexual harassment situations, those who suffer the loss tend to have little power. They are often easy targets for discrimination. Those who are sexually harassed tend to be people who are not in a position to fight back at the risk of losing their job.
Our estimable national and state human rights commissions do great work with the resources available to them, in investigating and considering human rights issues. As a nation we should be proud of those institutions.
But when it comes to fighting most workplace discrimination, Australia’s frameworks rely on individuals to complain about how they are treated.
Only a small proportion of those who suffer discrimination actually complain.
According to its 2011/12 annual report, the Australian Human Rights Commission received more than 17,000 inquiries about the law and the complaints process that year.
But it received only 2610 complaints in the same period.
Slightly fewer than half were resolved through Commission-supervised talks. The Commission is rightly proud of its work. But a large proportion of those complaints would have resolved because the complainant simply could not afford the costs and risks of going to court.
Those costs and risks are many. Firstly, going to court is daunting and legal representation is, for most people, a necessity. Legal costs would ordinarily run into the tens of thousands of dollars, or more.
Under federal discrimination law, losing parties generally pay winning parties’ costs. So the complainant – generally someone with little power and little money – must be willing to risk having to pay their own costs and most of the other party’s. Litigation is unpredictable – there is always a risk of losing. Those who cannot bear that risk often cannot litigate. That does not mean the alternative is preferable: “no costs” jurisdictions have their own problems.
It is very difficult for law firms to mount a business case to conduct discrimination and sexual harassment claims on a speculative basis – otherwise known as “no win, no fee”. So, complainants are expected to pay their lawyers along the way, unless they can find someone who will take their case at no charge, or some other reduced fee arrangement, as a form of corporate social responsibility. In other words, as the exception to the rule.
Contrast that situation with other types of claims. For example, class actions exist because there is a business case for them. The possible benefits outweigh the risks. A class action by definition involves lots of people who have lost money. The loss is quantifiable because it is financial. When everyone’s loss is aggregated, the amounts make the risks worthwhile.
Discrimination cases are completely different. There is a single person suffering the damage – not an investor, but a near-powerless employee who has to fund their own case. The ratio of risk to reward does not favour litigation.
That is not just because of volume, or legal costs.
People win discrimination cases generally don’t get much money for their trouble.
Unlike claims solely for calculable financial loss, in discrimination claims the court is also asked to do the near-impossible: work out how much money it would take to put someone in the position they would have been in if they had not been wronged. In other words, how much money would it take to make you feel as though you hadn’t been made to suffer distress, a sense of powerlessness, humiliation, and destroyed self-worth?
Some cases are hard to forget. A young woman I met – the only woman at her workplace – was hassled to the point of psoriasis, hair loss, and substantial distress and anxiety. Another, older woman suffered a terrible form of anonymous, mocking, sexual humiliation. How much money does it take to remedy those things, to put you in the position you would be in if it hadn’t happened?
Neither of those women sued. They were among those who couldn’t tolerate the costs and risks involved. But if they had, the compensation each would have received for that “non-economic loss” at the time would likely have been around $5000 to $15,000. And though compensation amounts are improving, many are not much better today.
All of those reasons are partly why, if you search for discrimination law judgements in the federal courts for the current financial year to date, you’ll find fewer than forty.
Why should it be that way? Why is it that courts are prepared to award hundreds of thousands of dollars to people who have been defamed, to compensate them for injured feelings, while rarely awarding sexual harassment victims more than $20,000 to compensate for feelings of fear, helplessness, anxiety, hurt and humiliation?
Why is it thought to take so much less money to cure private distress and humiliation than it does to vindicate reputation?
Discrimination laws would be more effective if compensation amounts, for the hard-to-quantify types of loss, increase. That would also improve access to justice because lawyers would be more prepared to adopt fee structures that better meet litigants’ needs. In turn, the greater likelihood of proceedings will change corporate behaviour for the better.