The Sex Discrimination Act 1984 (Cth) (SD Act) protects employees from sexual harassment, and as part of the Respect@Work amendments now prohibits sex-based harassment.
The recent decision of Magar v Khan [2025] FCA 874 is one of the first cases to consider an allegation of harassment on the ground of sex. In this decision, the Federal Court of Australia (FCA) ordered the operator of a former franchisee of Mad Mex Franchising Pty Ltd (Mad Mex) to pay $305,000 in damages to an employee who was sexually harassed and victimised in the workplace.
The employee, who was 21 years old and on a VISA at the time, was employed from 2021 to 2023 by the franchisee, Mexicali Enterprises Pty Ltd (Mexicali).
In April 2023, the employee made a complaint to Mad Mex about Mr Khan’s conduct and in December 2023, the employee lodged a complaint with the Australian Human Rights Commission (AHRC).The employee then commenced proceedings in the FCA against Mexicali and its owner, Mr Khan alleging breaches of the SD Act.
Mexicali fell into liquidation prior to the commencement of the matter, and so the allegations were confined to the claims brought against Mr Khan under the SD Act. Mr Khan denied any wrongdoing.
In the FCA, the employee alleged that:
- asking questions about and showing the employee sex toys;
- showing the employee pornographic videos and pictures and asking her to attend a “massage parlour” with him; and
- asking the employee questions of a sexual nature and making comments about his own sexual performance; and
In relation to the claims of harassment on the ground of sex, sexual harassment and victimisation, the FCA was required to first determine whether the events took place and to this end, the FCA generally favoured the employee’s evidence that the events took place as alleged.
In determining whether the employee had been harassed on the ground of sex, the FCA found that although the conduct had occurred, it could not be satisfied that the conduct went far enough to satisfy s28AA of the SD Act.
Providing initial commentary on the new ground of harassment under s28AA of the SD Act, the FCA clarified that although harassment on the ground of sex captured harassment of a broader nature, it still required some connection between the conduct and the person being harassed. The FCA noted that the mere fact the employee overheard sexualised discussions about other women did not satisfy the requirement that the conduct be “in relation to” the employee.
However, the FCA did find the poor behaviour by Mr Khan and the other employees made the other allegations more plausible and that the conduct indicated a workplace culture which normalised sexualised behaviour towards women and allowed the escalation into more serious conduct.
The FCA then turned to the allegations of sexual harassment against Mr Khan and found it did not have reason to doubt the employee’s submissions about the conduct directed towards her and found that the conduct undoubtably amounted to sexual harassment.
Finally, the FCA found that the purpose of the Concerns Notices alleging defamation were to intimidate the employee out of pursuing her complaint, and was satisfied that Mr Khan’s conduct amounted to victimisation under s47A of the SD Act.
Finding that Mr Khan had breached the SD Act, the FCA then considered the appropriate remedy.
The FCA made orders for Mr Khan to pay a total of $305,000 in damages to the employee for sexual harassment and victimisation in the workplace.
In relation to the past and future economic loss that the employee suffered as a result of Mr Khan’s conduct, the FCA awarded $130,000 in damages. The FCA found that the employee had not returned to work since lodging her complaint and would likely be unable to return to working at her prior capacity without serious psychiatric care.
The FCA awarded the employee $170,000 in general damages, stating that Mr Khan’s conduct had “drastically decreased her quality of life” and that she had developed multiple psychiatric conditions as a direct result of Mr Khan’s behaviour.
Finally, the FCA also awarded $5,000 in aggravated damages, commenting that Mr Khan’s conduct was “improper” and “unjustifiable”, and given he was in a position of power this worsened the employee’s distress.
In determining the damages awarded, the FCA made note that the employee was a “psychologically fragile and vulnerable young woman” at the time of the conduct and that this contributed to the impact that Mr Khan’s conduct had on her.
As seen in this decision, sexual harassment in the workplace may have very serious consequences.
Employers have a positive duty under anti-discrimination legislation to take reasonable and proportionate measures to ensure that workplaces are free from any form of harassment, including sexual harassment.
As part of this duty, employers should establish and implement robust anti-sexual harassment policies, ensure complaints are taken seriously and avoid engaging in any victimising conduct. It is also vital that employers enforce a workplace culture that minimises poor behaviour and discourages conduct that could give rise to a hostile work environment.
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