Ask a founder about their sexual harassment obligations and the answer is usually some version of “we have a policy in the handbook, and if something happens we’ll deal with it”. Under Australian law since December 2022, that answer describes non-compliance. The Sex Discrimination Act 1984 (Cth) now imposes a positive duty: an obligation to take reasonable and proportionate measures to eliminate sexual harassment and related conduct before anyone complains. Having a policy and waiting is precisely the reactive model the reform was designed to kill — and the Australian Human Rights Commission has enforcement powers to match.
Startups tend to assume this is big-company law. It isn’t. The duty applies from your first hire — arguably from your first contractor — and the Commission’s compliance framework expressly scales to small business. What changes with size is what “reasonable and proportionate” demands, not whether the duty exists.
Where the Duty Comes From
The positive duty is section 47C of the Sex Discrimination Act, inserted by the Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Act 2022 — the legislative response to the Commission’s 2020 Respect@Work report. It requires employers and persons conducting a business or undertaking (PCBUs, borrowing the work health and safety concept) to take reasonable and proportionate measures to eliminate, as far as possible:
- sexual harassment in connection with work;
- sex-based harassment — demeaning conduct on the ground of sex that isn’t sexual in nature;
- sex discrimination in the work context;
- hostile workplace environments on the ground of sex — the section 28M prohibition on conduct that makes a workplace offensive, humiliating or intimidating for people of one sex, even where no individual is targeted; and
- victimisation of people who raise or might raise complaints.
Two features matter for startups. First, the duty protects your whole workforce in the expanded sense — employees, contractors, interns, volunteers and job applicants — so a “we’re all contractors right now” structure gives you no cover. Second, because the duty attaches to PCBUs as well as employers, it reaches the company from the moment there is a business being conducted, not from the moment you cross some headcount threshold.
“Reasonable and Proportionate” Scales — It Doesn’t Excuse
Section 47C lists the factors that calibrate the duty: the size, nature and circumstances of the business; its resources, financial or otherwise; the practicability and cost of measures; and anything else relevant. A ten-person startup is not expected to run the compliance apparatus of a bank. But the calibration runs both ways — a venture-backed company that can fund a sales kickoff in Queenstown will struggle to argue that respectful-behaviour training was disproportionate to its resources.
The Commission’s Guidelines for Complying with the Positive Duty (August 2023) set out seven standards it uses to assess compliance: leadership, culture, knowledge, risk management, support, reporting and response, and monitoring, evaluation and transparency. The Guidelines aren’t legally binding, but they are the yardstick the regulator has said it will measure you against — treat them as the spec.
Startups also carry a risk profile the Commission’s guidance flags directly. Young workforces, steep power gradients between founders and junior staff, alcohol-centred socialising, offsites, and always-on messaging channels are all recognised risk factors. A hostile workplace environment doesn’t require conduct aimed at anyone in particular — the running “joke” channel in Slack can qualify. And in a company where the alleged harasser is a founder who controls the complainant’s equity vesting and career, the power imbalance the reforms target is at its sharpest.
What Enforcement Actually Looks Like
Since 12 December 2023, the Commission has had power under the Australian Human Rights Commission Act 1986 (Cth) to enforce the duty without waiting for a complaint. If it reasonably suspects non-compliance it can conduct an inquiry, issue a compliance notice specifying what you must do or stop doing, accept an enforceable undertaking, and apply to the federal courts to enforce a compliance notice. Your consent is not required for an inquiry to start.
There is currently no civil penalty attached directly to breaching the positive duty — the exposure is regulatory intervention, court-ordered compliance and the reputational damage of being the startup named in an AHRC inquiry. But don’t read that as toothless, for three reasons:
- The Commission is using the powers. It commenced formal inquiries in the 2024–25 year across retail, hospitality, finance and transport, and has published compliance priorities targeting high-risk industries — alongside public calls for civil penalties to be added to the regime.
- The underlying conduct is independently actionable. Sexual harassment remains unlawful under the Sex Discrimination Act, with employers vicariously liable under section 106 unless they took all reasonable steps to prevent it — and since 6 March 2023 it is separately prohibited “in connection with work” under the Fair Work Act 2009 (Cth), a civil remedy provision carrying penalties and uncapped compensation, with the Fair Work Commission able to make stop sexual harassment orders and deal with disputes. Your positive-duty program is your “reasonable steps” defence.
- Claims got cheaper to bring. The Australian Human Rights Commission Amendment (Costs Protection) Act 2024 introduced an equal-access costs model for federal discrimination claims: broadly, a successful applicant recovers their costs, while an unsuccessful one generally doesn’t pay the respondent’s. The historical costs risk that deterred harassment claims is largely gone.
Add the parallel work health and safety regime — psychosocial hazard regulations in most jurisdictions treat sexual harassment as a hazard to be managed like any other, with WHS penalties attached — and the picture is a web of overlapping duties, of which section 47C is the preventative centre.
A Compliant Program at Startup Scale
Mapped against the seven standards, a defensible program for a seed-to-Series-B company is genuinely modest:
- Leadership and culture. A founder owns this, visibly. Say at onboarding and all-hands what the company’s standards are; act consistently with them at the offsite. In a 15-person company, culture is founder behaviour.
- Knowledge. A short, plain-English respectful behaviour policy covering the five categories of conduct — including online conduct and work social events — plus training that is actually delivered, not a link in a wiki. Refresh it; a policy nobody has read since the seed round fails this standard.
- Risk management. A one-page risk assessment, treating harassment like any other hazard: where are our risks (alcohol at events, remote channels, power imbalances, client-facing staff), and what controls do we run against each?
- Support and reporting. At least two reporting pathways, so nobody must report to the person harassing them — critical where that person may be a founder. Name an external option (an adviser, an EAP, a board member). Decide in advance how you’ll handle a complaint fairly and confidentially, rather than improvising mid-crisis.
- Monitoring. Revisit annually and after any incident. Keep records — if the Commission inquires, the file you can produce is your compliance case.
For most startups this is a few days of work and some standing discipline. It is also, increasingly, a diligence item: acquirers and later-stage investors now routinely ask for harassment policies, training records and complaint histories, and a #MeToo-style incident with no program behind it is the kind of finding that reprices deals.
The Bottom Line
The positive duty inverted the model: the law no longer asks what you did after harassment happened, but what you did to stop it happening. For a startup the honest gap analysis is usually short — no risk assessment, no training, one reporting line that runs through a founder. Those are cheap to fix now and expensive to explain later, whether to the AHRC, the Fair Work Commission, or an acquirer’s diligence team. Prevention was always the better culture strategy; it is now also the legal baseline.
This article is general information only, not legal advice — what “reasonable and proportionate” requires depends on your business’s size, resources and risks. Viridian Lawyers advises Australian startups on employment documents, workplace policies and governance. If your handbook hasn’t caught up with Respect@Work, get in touch.
