In a recent decision by the Federal Court of Australia a claimant has been awarded $305,000, regarding claims of workplace sexual harassment, making it one of the highest awards ordered under the Federal Sex Discrimination Act 1984 (Cth) ('SDA').
The case of Magar v Khan [ 2025] FCA 874 is the first to consider the meaning of 'sex-based harassment', one of the recent inclusions to the SDA. While the allegations of sex based harassment were not upheld, the decision sheds some light on how the provision will operate.
This case continued the trend by Courts to award substantial damages in sexual harassment cases. This case illustrates the importance of taking proactive measures to prevent harassment from taking place.
Background:
Ms Magar now a former employee of Mexicali Enterprise Pty Ltd, was employed by Mr Khan, an owner and operator of their franchise restaurant, Mad Mex inSydney's Hills District. Ms Magar who was 21 at the time, came to Australia on a student visa from Nepal in 2021 and began working in September of that year. It wasn't until 2023 where she began experiencing the alleged sexual conduct from her employer Mr Khan. The court heard that Mr Khan showed Ms Magar inappropriate videos at work, made intrusive comments about her sex life and asked her extremely personal and suggestive questions.
Application of new Section 28AA of the Sex Discrimination Act
The Federal Court considered for the first time the application of the newly introduced section 28AA of the SDA, which prohibits harassment on the ground of sex. Unlike sexual harassment, this refers to demeaning behaviour connected to a person's sex, even if it isn't sexual in nature -for example, making sexist jokes or comments about a colleague.
Justice Bromwich acknowledged the lack of precedent in interpreting section 28AA and focused on the meaning of the phrase "in relation to." While the provision does not require the conduct to be directly addressed to the affected person, it must have a clear nexus to them. The Court considered factors such as Ms Magar's youth, her junior position, and the male dominated workplace, noting the significant power imbalance between her and Mr Khan. However, ultimately found that the behaviour, though inappropriate, was not sufficiently connected to Ms Magar personally to meet the threshold under section 28AA.
Instead, liability were established under section 28A, which deals with sexual harassment. The Court found Mr Khan's had engaged in unwelcome sexual conduct in contravention of the SDA towards Ms Magar's which was supported by various text messages. While the claim under section 28AA failed, the judgment sets an important precedent for future cases involving harassment on the ground of sex.
Damages:
Ms Magar was awarded a record breaking sum in general damages for sexual harassment, receiving $160,000, $130,000 for economic loss, which consisted of $90,000 for past loss and $40,000 for future loss.
Ms Magar was also awarded additional compensation in light of Mr Khan's conduct in response to her complaint and throughout the proceedings. The Court found that Mr Khan had twice threatened defamation action in an attempt to dissuade her from pursuing her claims, a familiar tactic the Court recognised as a form of victimisation. For this, Justice Bromwich awarded a further $10,000 in general damages. In addition, Mr Khan's conduct during the litigation was found to have intensified Ms Magar's distress. His behaviour was described by the Court as improper, unjustifiable, and lacking in good faith, leading to an award of $5,000 in aggravated damages.
In total, the Court awarded $305,000 in compensation against Mr Khan. The Court also indicated it would likely order costs against him, pending further submissions.
This case sets a precedent for how courts may approach future claims under section 28AA, and it invites employers and employees to be more conscious of how indirect, systemic, or cultural sexism can manifest in the workplace.
Since December 2022, the SDA has imposed a positive duty on employers to actively prevent sexual harassment and harassment on the grounds of sex.This means it's no longer enough to simply respond to complaints after the fact and businesses must take proactive and meaningful steps to stamp out these behaviours before they occur.
Sexual harassment complaints can carry heavy legal, reputational and financial consequences and this case showed that victimising a complainant can make matters far worse. Employers must ensure complaints are handled lawfully, sensitively, and without retaliation.
Should you wish to speak further on this, please contact Michael Bishop or Amelita Hensman of our Employment Law Team.
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