Employer Found Vicariously Liable for Failing to Properly Investigate Harassment Complaint
Case: Evans v Ikkos Holdings Pty Ltd and Ythos Holdings Pty Ltd and Ikia Holdings Pty Ltd t/as Pasadena Foodland and Crugnale [2019] SAET 222
A supermarket employer was found vicariously liable after failing to adequately investigate an employee’s sexual harassment complaint.
The South Australian Employment Tribunal determined that the business had not taken reasonable steps to address the allegations, resulting in an order to pay compensation for psychological harm.
This case demonstrates how inadequate responses to complaints can expose employers to significant legal and financial risk, particularly under the Positive Duty introduced into the Sex Discrimination Act.
Background
In 2019, a worker at Pasadena Foodland lodged a complaint of repeated inappropriate touching by the head chef, Camillo Crugnale. The matter proceeded to the South Australian Employment Tribunal after the employee alleged the employer failed to properly investigate and respond to her concerns.
Incident Description
The employee reported an incident to the Assistant Store Manager and HR Manager, who reviewed CCTV footage from the relevant area. However, the camera angle did not provide clear visibility.
According to Tribunal findings:
The managers did not treat the complaint with appropriate seriousness.
No formal statement was taken from the employee.
No written record of the complaint was made.
CCTV footage was not closely reviewed and was later overwritten.
No additional investigative steps were taken at this stage.
The Tribunal described the employer’s initial handling of the matter as careless, which became a key element in assessing liability.
Legal Proceedings and Decision
The complaint was later escalated to the General Manager, who met with the employee and her union representative. The employer concluded that the allegations could not be substantiated and took no further action.
The employee applied to the South Australian Employment Relations Tribunal, seeking damages for psychological injury arising from the alleged sexual harassment and the employer’s failure to act. She sought $150,000 in general damages.
Outcome
The Tribunal awarded the employee $30,000 for psychological harm and found Pasadena Foodland and Crugnale jointly liable under the Equal Opportunity Act 1984 (SA).
The employer argued that it had:
Policies addressing sexual harassment
An expectation that staff understood these policies
Conducted an investigation
The Tribunal rejected this argument, finding that these steps were insufficient in practice.
Key Failures Identified
The Tribunal noted several critical shortcomings:
No formal investigation was conducted
No detailed statement was taken from the complainant
No witness interviews occurred
CCTV footage was not preserved
The issue was not escalated promptly to senior leadership
These failures formed the basis for the finding of vicarious liability.
Implications for Employers
This case reinforces the need for employers to respond to harassment complaints with rigor, impartiality and urgency. Policies alone are not enough. Employers must be able to demonstrate active, reasonable and proportionate measures to prevent and address unlawful conduct, consistent with the Positive Duty under the Sex Discrimination Act.
Effective systems require:
Clear reporting pathways
Prompt action when complaints arise
Comprehensive investigations
Documentation and evidence preservation
Trained leaders who understand their obligations
Key Lessons for Employers
Maintain up-to-date policies on conduct, harassment and complaint management.
Address inappropriate behaviour immediately to reduce escalation risk.
Clearly communicate that concerns are being taken seriously and steps are underway.
Conduct impartial investigations with documented evidence.
Ensure staff are trained to recognise, prevent and respond to harassment.
Consider using external investigators for complex or sensitive matters.
Conclusion
Pasadena Foodland incurred financial loss and reputational harm due to its inadequate response to a sexual harassment complaint. The decision highlights the legal exposure organisations face when they do not meet their obligations to prevent and respond to unlawful conduct.
By adopting thorough investigative processes, providing training, and fostering a safe and accountable reporting culture, employers can reduce risk and uphold their responsibilities under the Positive Duty.
Reference
Details of this case are published by the Federal Court of Australia.
