Australia: Bullying And Harassment: Responsibilities In Outsourcing Arrangements

The case of Naidu v Group 4 Securitas Pty Ltd [2006] NSWSC 144 (the Naidu Case), recently decided by the Supreme Court of New South Wales, demonstrates the need in corporate outsourcing arrangements for both the corporation with whom the worker is placed (the host) and the corporation that employs and places the worker (the employer) to have comprehensive bullying and harassment policies and procedures in place - and for those policies and procedures to be carefully and constantly checked and monitored.

Often, the decision to contract labour or professional services rather than entering into a direct employment relationship is based on a business’ changing (and perhaps unknown) resourcing requirements, the ability to contract qualified specialist resources without having to self-train, the minimisation of risk, reduced (long-term) costs and general flexibility. One factor that clearly cannot be abdicated, however, is an employer’s ultimate responsibility to ensure a safe place of work for its employees. In parallel, too, it is clear that a host will not be able to avoid liability for the worker simply on the basis that he or she is not its employee. It is clear that both a host and employer have duties in relation to such a worker - many of which may be similar.

The decision in the Naidu Case does not by itself constitute grounds for corporations to consider moving to a different resourcing model, but it does demonstrate the need for hosts and employers to both carefully consider their obligations and responsibilities in outsourcing arrangements.

The Naidu Case involved a particularly horrendous set of circumstances, in which Mr Naidu was subjected to bullying, racial and other abuse, threats of violence and other maltreatment.

Nationwide News Ltd (News) contracted Group 4 Securitas Pty Ltd (Group 4) to provide security services. Mr Naidu was employed by Group 4 and assigned to work at one of News’ sites and placed under the direct control of Mr Chaloner, one of News’ employees, and News’ Security and Fire Manager. Mr Naidu worked as Mr Chaloner’s assistant. Despite their different employers, Mr Chaloner was, in effect, Mr Naidu’s day-to-day ‘boss’ and integrated into News’ business. During the course of their working relationship, Mr Chaloner intimidated, bullied, humiliated and racially abused Mr Naidu leaving Mr Naidu with such serious psychiatric injuries that the Court considered he would never work again. Mr Naidu was awarded $1.9 million in damages against News. The decision on damages against Group 4 has not yet been finalised by the court. However, the additional damages claimed against Group 4 for their breaches of duty owed to Mr Naidu in the proceedings were some $1.7 million.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

The Court found that:

• Both Group 4 and News were liable in negligence for those psychological injuries. Both Group 4 and News were said to have breached their duty of care to Mr Naidu and failed to provide a safe workplace and safe system of work.
• There was an implied term of the employment contract with Group 4 that Mr Naidu must not be subjected to physical or verbal abuse.
• By leaving Mr Naidu to work under Mr Chaloner's (and therefore News') supervision, Group 4 had accepted responsibility for Mr Chaloner's conduct.
• Group 4 was aware of Mr Chaloner's propensity to engage in such conduct and should have enquired into the wellbeing of Mr Naidu.

An organisation that employs employees, engages contractors, contracts labourhire staff or engages persons to undertake work under any other arrangement should have a bullying, harassment and discrimination policy in place.

Employers who place their employees under the direct care and supervision of others should not assume that they are relinquished of their responsibilities if they do not see those employees on a daily basis. Indeed, the less they are seen, the heightened the obligation may be to make enquiries to ensure that they are OK. Corporations need to develop and implement policies and apply them to their own employees, their contractors, labour-hire and other workers over whom they have day-to-day control and also over their employees that provide services to or at another location, wherever that may be.