Landmark $305,000 Payout in Workplace Sexual Harassment Case: What Employers Need to Know

KEY TAKEAWAYS:

• The Federal Court of Australia recently handed down its largest damages award for a workplace sexual harassment claim.
• The new harassment on the grounds of sex provision under the Sex Discrimination Act 1984 (Cth) was tried for the first time.
• Employers have a positive and ongoing duty to their employees to ensure compliance with the provisions of the Sex Discrimination Act 1984 (Cth), including to eliminate a hostile work environment.

Introduction

In August 2025, the Federal Court of Australia delivered its largest award of damages to date for a workplace sexual harassment claim in the amount of $305,000. The case of Magar v Khan [2025] FCA 874 signifies a landmark decision from the Court and issues a stern warning to employers in the context of workplace sexual harassment, harassment on the grounds of sex, victimisation and hostile work environments.

The Facts

The Court found that during her employment at a fast-food franchise, Ms Magar (‘the Applicant’) was subjected to sexual harassment by the owner of the franchise, Mr Khan (‘the Respondent’). The Respondent’s conduct consisted of the discussion of sexual matters and the showing of pornography to the Applicant, which the Court found breached section 28A of the Sex Discrimination Act 1984 (Cth) (‘SDA’). In the Applicant’s submissions, it was also argued that the behaviour of management and her male coworkers constituted harassment on the grounds of sex. Notably, this was the first instance of the Court interpreting the recently inserted section 28AA of the SDA.

What is Harassment on the Grounds of Sex?

Following the Respect@Work Inquiry in 2020, harassment on the grounds of sex was inserted into the SDA, which targets harassing behaviour that is not necessarily sexual in nature. The new provision looks to demeaning and unwelcoming conduct, including oral and written statements made to or in the presence of a person, which is due to the sex of the person or a characteristic generally associated with people of that sex.

Although the Court was not satisfied that this provision applied to the circumstances of the Magar v Khan [2025] FCA 874 case, it was noted that the behaviour of management and male coworkers provided futile grounds for the escalation of poor behaviour, which eventually led to more serious conduct. It was further noted that the culture normalised within this workplace constituted overt and outspoken sexist behaviour and was tolerant to its continuation.

Hostile Workplace Environment

The new hostile workplace environment provision of the SDA under section 28M was not tested in this case, as it was not in effect at the relevant time of the conduct occurring. However, that does not undermine the importance of the provision and raises questions as to whether there would have been a different outcome if it had applied. Under this new section, employers have a positive duty to take reasonable and proportionate measures to eliminate hostile conduct in the workplace that occurs on the grounds of sex, like the one described above. Workplaces need to ensure that they are not fostering offensive, intimidating or humiliating environments for employees because of their sex. The new section looks to recognise that sex discrimination is not always the result of conduct directed at specific people and is not always overtly sexual in nature, emphasising the need for employers to ensure all employees can work in a safe and inclusive environment.

The Court’s Findings

As stated, the Court found that the Applicant had been sexually harassed by the Respondent, but they also found that she had been victimised under section 47A of the SDA. Victimisation occurs where an employee proposes to or raises a complaint to the relevant authority and, as a consequence, is treated adversely. This provision protects employees to be able to exercise their workplace rights and seek due process without the risk of adverse action from employers. In this case, the Applicant had been sent a Concerns Notice by the Respondent’s solicitor, which alleged that the Applicant had defamed the Respondent in the process of pursuing her complaint. The Court found that this constituted victimisation, marking another important decision in this Judgment by the Court.

How can Coutts Help?

The award of damages to the Applicant included damages for the sexual harassment, victimisation, aggravated damages as a result of the conduct of the Respondent during the trial and for past and future economic loss of the Applicant as a result of the mental harm she had faced, leaving her unable to work. This is a stern warning to employers, regardless of the size or nature of your business, that there is an ongoing recognition of the vast nature of sex discrimination in the workplace, and it needs to be taken seriously.

Coutts has a specialist team of Employment and Commercial Lawyers who can draft, review and advise your business on its workplace policies, including any workplace harassment policies. Get in touch with our team today so that we can assist your business in ensuring it is meeting its positive duties under the SDA and other relevant legislation.

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