Record $305,000 awarded in landmark sexual harassment case

The Federal Court has awarded $305,000 in damages to a former fast-food worker after finding her employer’s director sexually harassed her and then victimised her when she pursued complaints. The decision in Magar v Khan [2025] FCA 874 constitutes the highest compensation payout ever awarded in a sexual harassment claim, and offers important guidance for employers, HR managers and business owners on workplace culture, management responsibilities, and legal exposure under the Sex Discrimination Act 1984 (Cth) (SD Act).

Here, our experts unpack the details of this case, discuss the serious nature of breaching sexual harassment laws, and explain the Federal Court’s decision.

The facts of the case

Ms Biplavi Jarga Magar, aged 22 at the relevant time, was employed at a Mad Mex franchise operated by Mexicali Enterprises Pty Ltd, owned and managed by Mr Sher Khan. She alleged:

1. Sexual harassment – including an incident where Mr Khan made sexualised comments about a visible ‘hickey’ on her neck, and a series of ‘Car Incidents’ where he made explicit sexual remarks, showed her pornography, and touched her with sex toys.
2. Harassment on the ground of sex – alleging a culture of sexualised and demeaning talk about women in the workplace.
3. Victimisation – alleging that after she pursued her complaints, Mr Khan sent her defamation ‘concerns notices’ intended to deter her from proceeding with her complaints.

Mr Khan denied all allegations, arguing that the events did not occur and that his medical condition, which included being impotent, made the alleged conduct implausible.

The Court’s findings

Justice Bromwich found:

• Sexual harassment proven – the Court accepted Ms Magar’s evidence about the Hickey Incident and four of the five Car Incidents. The conduct met the definition in s 28A of the SD Act as unwelcome sexual conduct in circumstances where a reasonable person would expect offence, humiliation, or intimidation.
• Harassment on the ground of sex not proven – while the Court accepted there was a sexist and boorish workplace culture, it found the ‘Group Behaviour’ (sexualised talk about other women among the staff) was not ‘in relation to’ Ms Magar as required under s 28AA. The nexus was missing because the women targeted were not present, and the conduct was not directed at her.
• Victimisation proven – the Court found that the concerns notices sent by Mr Khan’s lawyers after she indicated she would pursue legal action were a detriment within s 47A of the SD Act and were sent because she had alleged unlawful conduct.

Breaking down the damages

The Court awarded:

• General damages (sexual harassment) – $160,000
• General damages (victimisation) – $10,000
• Aggravated damages – $5,000, for the way Mr Khan’s legal case was run, including offensive submissions about Ms Magar’s tolerance for sexual conduct.
• Past economic loss – $90,000 (28 months of lost wages)
• Future economic loss – $40,000 (expected gradual return to work by 2026)

Altogether, the total amounted to $305,000 plus legal costs.

Six key learnings about sexual harassment laws for every business owner

1. Workplace culture as context
   Even where sexist ‘background conduct’ is not itself actionable harassment under s 28AA, it can provide important context, making later sexual harassment allegations more plausible. Tolerating such conduct risks escalation and liability.
2. Scope of ‘in relation to’ in s 28AA
   The decision underscores that harassment on the ground of sex requires a clear nexus between the conduct and the complainant. Mere overhearing or workplace gossip about others may not meet the statutory threshold unless directed at or in the presence of the complainant.
3. Temporal and locational flexibility of s 28B
   Following Ewin v Vergara, the Court confirmed that sexual harassment need not occur during rostered hours or in the workplace. Conduct in a car park or on work-related errands can still fall within the ‘workplace nexus’.
4. Victimisation through legal threats
   Threatening defamation proceedings in response to a sexual harassment complaint can constitute victimisation under s 47A if the threat is causally connected to the complaint. The decision is a clear warning against using legal processes to deter complainants.
5. Credibility and vulnerability
   The Court accepted Ms Magar’s evidence despite her mental health history and limited recollection of dates. Vulnerability can increase the seriousness of the contravention, and employers aware of such vulnerabilities may be more harshly judged.
6. Damages assessment trends
   Awards for sexual harassment have risen in recent years, reflecting community expectations. The Court referred to Richardson v Oracle and Taylor v August, but emphasised that damages must be tailored to the proven impact on the individual.

Takeaway lessons for employers and HR professionals

• Create and enforce zero-tolerance policies for sexual and sexist conduct, including ‘background banter’.
• Train managers, particularly owner-operators, on their obligations and appropriate workplace behaviour.
• Act promptly and transparently when complaints are made and ensure confidentiality commitments are honoured.
• Avoid retaliatory action, including legal threats, against complainants. Such action risks separate liability for victimisation.
• Consider vulnerabilities, including age, migrant status, and mental health, in assessing risk and impact.
• Document policies, training, and complaint handling to demonstrate compliance if challenged.

Employers must recognise the serious consequences of failing to uphold employment laws

Beyond the damages to workplace morale and reputation, legal breaches can result in substantial financial penalties. This case serves as a stark reminder that HR managers, business owners, and directors can be held personally liable under the SD Act for their own conduct. A poor workplace culture, lack of HR oversight, and mishandled complaints can lead to significant legal, financial, and reputational consequences.

If any of this information has raised any questions about sexual harassment and victimisation, or if you have another workplace matter you need assistance with, please reach out to our Citation Legal team for a confidential discussion.

About our author

Nicole Visedo is a Senior Associate and Workplace Mediator at Citation Legal. Based in our Brisbane office, she has over 25 years’ experience in Human Resources, having held several senior HR management roles in both large national and international organisations. Nicole has extensive experience working for large organisations in strategic human resource management, workplace relations, organisation change, process and systems improvement and project management. Drawing on her dual expertise in HR and law, Nicole is a skilled legal advocate in workplace relations matters, representing clients in the Fair Work Commission and other tribunals. Her practical background enables her to balance legal arguments with commercial and organisational realities, making her a highly effective workplace relations lawyer.