What unlawful behaviour is really costing your company

The true cost of unlawful workplace behaviour can extend beyond financial and legal consequences, writes Franca Sala Tenna.

In an ideal world, workplaces are safe spaces where people can collaborate, innovate, and thrive.

But, unfortunately, unlawful behaviour related to sexual harassment, discrimination and bullying can have a major impact on work environments.

The true cost can extend beyond financial and legal consequences. The Australian Human Rights Commission found that fallout can include increased absenteeism, higher employee turnover, lower morale, decreased productivity, and management time lost in dealing with issues.

Unlawful behaviour in Australian workplaces is more prevalent than you might think.

A recent report released by Lloyd’s Register Foundation found that Australia has one of the highest rates of workplace violence and harassment in the world, with an average of 49.1 per cent (compared to 21 per cent globally). There is much we all need to do to make workplaces in Australia safer.

The safety laws and the Respect at Work Act 2022 significantly changed what constitutes unlawful behaviours. These changes place greater responsibilities on employers to be proactive, prevent unlawful behaviours, and manage complaints effectively and in a human-centred and trauma-informed way.

But what’s the true cost of unlawful behaviour in workplaces? And why do organisations need to prioritise effective prevention and intervention initiatives?

Financial implications

Unlawful behaviour can lead to expensive legal cases, settlements, and penalties. Discrimination lawsuits, sexual harassment claims, and bullying complaints can drain an organisation’s financial and human resources. In addition, the reputational damage can affect customer loyalty and investor confidence, leading to long-term economic and brand repercussions. A recent impact and cost assessment calculated that workplace bullying alone costs Australian employers between $6 to $36 billion every year when lost opportunity costs are considered.

Legal consequences

The Australian Human Rights Commission has statutory responsibilities under the Age Discrimination Act 2004, Australian Human Rights Commission Act 1986, Disability Discrimination Act 1992, Racial Discrimination Act 1975, and the Sex Discrimination Act 1984. In addition to federal legislation, each state and territory has equal opportunity and anti-discrimination agencies, with statutory responsibilities. Regulatory bodies such as WorkSafe may impose sanctions, investigations may lead to increased scrutiny, and executives and board members may face personal liability. Legal penalties can carry a heavy price tag.

Impact on wellbeing

The toll on employee mental health due to unlawful behaviour cannot be overstated. Victims of harassment or discrimination may experience anxiety, depression, and a decline in overall wellbeing. This not only affects the individual but also impacts team dynamics and culture. A workplace that neglects the mental health of its employees risks creating an environment of fear and resentment.

Loss of productivity

A workplace affected by unlawful behaviour is less likely to be a productive one. Employees who experience harassment or discrimination may become disengaged, leading to decreased productivity. The time spent dealing with managing such incidents, whether through investigations or legal proceedings, can further divert attention from core business activities.

Employee turnover

A toxic work environment often leads to high employee turnover. Talent may choose to leave an organisation where they feel unsafe or undervalued. The cost of recruiting, hiring, and training replacements can be substantial. Additionally, the loss of institutional knowledge and expertise can hinder the organisation’s ability to innovate and compete in the market.

Reputational damage

Unlawful behaviour can damage an organisation’s reputation irreparably. In the age of social media and instant information sharing, negative news spreads fast. Public perception plays a crucial role in a company’s success – and a tarnished reputation can lead to decreased customer trust, difficulty attracting top talent, and a decline in market share.

The true cost of unlawful behaviour in workplaces is multi-faceted and extends beyond financial and legal considerations.

Think about this in the context of your organisation. Do you feel safe and look forward to being at your workplace? If the answer is no, how can you help make a difference as a leader, manager, or team member?

Occupational health and safety legislation asserts that employers and employees have a legal responsibility to comply with any measures that promote health and safety in the workplace. Employers are mandated to eliminate or reduce the risks to employees’ health and safety.

This significant issue has encouraged training organisations to explore innovative and engaging ways to raise awareness about unlawful behaviour in workplaces.

Many organisations have taken positive steps to prevent unlawful behaviour through planning, clear policies and procedures, robust training programs, fostering a culture of accountability, and addressing incidents swiftly and sensitively. One of the proven keys to success is being proactive rather than reactive.

Organisations that initiate effective preventative measures can reap rewards such as a positive work environment, improved employee wellbeing, increased productivity, lower employee turnover, and enhanced reputation. In doing so, they avoid the true cost of unlawful behaviour and contribute to the creation of a healthier, more conducive work environment for all.

And that’s something we can all play a part in.

Franca Sala Tenna is a lawyer and expert on workplace behaviours and compliance. She is also the founder and director of EEO Specialists.