Why workplace harassment hits your bottom-line more than you think

Why workplace harassment hits your bottom-line more than you think

Workplace harassment, and in particular, sexual harassment, is prevalent, poorly understood and sizeably underreported. As many as one in three Australian workers experience workplace sexual harassment but fewer than one in five report it.

The new Respect@Work laws mean organisations that fail to take proactive and meaningful action to prevent sexual harassment, sex discrimination and victimisation at work could face financial penalties and be named publicly for failing to comply. Creating a workplace free from sexual harassment has never been more important. 

Under the new vicarious liability provisions, an employee can seek a remedy from their organisation, in addition to the alleged offender, where the organisation did not take all reasonable steps to prevent the sexual harassment. Employers who do not comply with their obligations can face significant penalties and jail time.  It is also criminal offence to victimise a person for bringing a complaint.

New powers of the Australian Human Rights Commission (AHRC) to investigate and enforce the Respect@Work laws will commence in December 2023.  It is imperative the organisations take steps now to comply with the positive duty and other obligations now. 

What are the financial costs of sexual harassment at work?

Lost productivity

As well as having a devastating and profound impact in victims, their families and bystanders, sexual harassment has a detrimental impact on the Australian economy.  In 2018, research by Deloitte’s Access Economics revealed that sexual harassment costs the economy approximately $3.6B annually, with a significant proportion of this attributed to lost productivity resulting from incidents.   

Loss of talent

Fewer than 1 in 5 people who experience sexual harassment make a formal complaint.  Instead, many employees choose to leave and find a new job.  According to AFR, the cost of replacing a top performer can be two or three times their annual salary.  The same article says that new hires take time to onboard and are not as productive as experienced employees. In addition, when good employees leave, it creates a ripple effect, which distracts other employees from their work and prompts them to consider “if they’re leaving, why do I work here?”.

Hefty legal costs 

Employers who fail to take all reasonable steps to prevent sexual harassment from at work may face hefty legal penalties. And that doesn’t include the bill from the lawyers!

The Respect@Work Amending Act has introduced an express prohibition of sexual harassment into the FairWork Act. Contravention of this prohibition will attract civil liability and a penalty of up to $82,500 for companies and $16,500 for individuals.

The harm caused by sexual harassment can also lead to WorkCover claims.

Victim-survivors may also bring other legal action for the damage caused by sexual harassment. The damages awarded can be significant. Recent research suggests that the damages awarded by courts to victim-survivors for sexual harassment & sex-based discrimination is increasing.   

A bad name

Under the new Respect@Work laws, the AHRC can also issue non-compliance notices – a notice that no People & Culture leader ever wants to receive. And while the AHRC’s aim isn’t to name and shame, it will be difficult for businesses to count the cost of dented investor confidence, lost deals or recruitment fails from having their company name on the AHRC’s list of Respect@Work failures.

Taking proactive steps to combat sexual harassment at work is an important investment in people, culture and the business.  It is foundational to supporting high performance and inevitably, failure to comply with Respect@Work laws will hit the bottom line.

Get started today


Cut It Out! is a program to help employers combat sexual harassment at work and comply with the Respect@Work laws.

Download a brochure and see how the Cut It Out! program will help you build a safe, inclusive and respectful workplace and avoid costly penalties.

Book a demo

See how Rely can help you prevent, detect and respond to workplace issues, like sexual harassment, and meet your positive duty obligations.

Subscribe to Rely

Join our community!

We help leaders build better cultures. Join us and make an impact!

Content summary

Share content

Related content

Building confidence and trust in workplace responses to sexual harassment

Do your workplace reporting systems build trust & confidence?

When employees don’t trust the organisation’s reporting system, or fear that reporting will make the issue worse, this leads to low levels of reporting, preventing leaders from truly understanding what is happening.
Rolling out Respect@Work

Rolling out Respect@Work

This article summarises 7 standards set out in the AHRC’s Respect@Work 2020 report to develop a holistic management action plan and establish a proactive and systematic framework for prevention and response to workplace misconduct.
Human Rights Law Center Whistleblower Project launch

Rely partners with the Human Rights Law Centre to help build a fairer Australia

Australian whistleblowers now have a much needed advocate to help them when there is nowhere else to turn.

Our brands seen in