By Dr Laura Sowden, Partner, Anna Ly, Senior Associate and Aidan Naine, Lawyer

Warning: This article contains descriptions of sexual harassment. The content may be distressing or triggering for some readers. Please take care when reading, and consider whether this material is appropriate for you at this time.

We have recently seen a significant workplace relations case, Magar v Khan [2025] FCA 874, determined by the Federal Court of Australia which will have an impact on all employers and employees.

On 1 August 2025 Australia saw its first detailed exploration of the differences and relationship between harassment on the ground of sex and sexual harassment.

Decision

An employee of Mexicali Enterprises Pty Ltd (Mexicali), a franchisee of Mad Mex Franchising Pty Ltd, based in Norwest Sydney, received a $305,000 payout against Mr Khan, who sexually harassed and victimised her. Mr Khan who was a senior colleague of the employee, was also the owner and controller of Mexicali.

The conduct alleged was found to be sexual harassment and victimisation BUT did not satisfy the criteria for harassment based on sex. This was the Australian-first judicial consideration of harassment on the ground of sex and the “in relation to” element of ss 288AA of the Sex Discrimination Act 1984 (Cth) (SDA).

What happened

The employee was subject to various conduct by Mr Khan, including asking her about her sex life, pointing out characteristics of her body such as hickeys and making links to sexual actions, showing her his sex toys and pornography and even suggesting they attend a massage parlour to watch pornography together.

Along with this, Mr Khan would lead discussions in the workplace about the bodies and sexuality of female customers and former employees – calling them vulgar language and commenting on their physical characteristics.

The employee claimed that Mr Khan harassed her on the grounds of sex, sexually harassed her, and victimised her.

What the Court said

Harassment based on sex  – Court disagrees

The Court determined whether the employee was harassed on the grounds of sex under s 28AA of the SDA. There was little if any prior judicial consideration of the “in relation to” phrase and element.

He observed that like sexual harassment, harassment based on sex:

“can be directed to the person harassed or be done in their presence, but it must still be in relation to that person”.

Mr Khan and other senior workers fostered a workplace culture that:

• tolerated and did not prevent sexist conduct,
• even at times facilitating the conduct; and
• its potential progression into sexual harassment,

However, the conduct did not meet the required criteria for harassment based on sex.

This “overt and outspoken sexist and boorish behaviour”, was not proven to be about, or otherwise directed at the employee. This meant it was not contrary to ss 28AA as it was not “in relation to” her.  This is significant and reminds us how important the wording of the law is in all cases.

Sexual harassment – Court accepts

The Court found that “any reasonable person would have anticipated the possibility – indeed virtual certainty,” that the employee would have felt offended, humiliated or intimidated by the Mr Khan’s conduct towards her.

Significantly, the employee:

“was a migrant with no family in Australia, that she suffered from mental health problems, that he owned the company that employed her, that she was 22 years old and that he was significantly older”

The Court determined that the Mr Khan had sexually harassed the employee and breached s28B(2) and (3) of the SDA.

Victimisation – Court agrees

Following the conduct, the employee made complaints to HR at Mad Mex. Following this, the Mr Khan’s legal representatives twice threatened the employee to bring defamation proceedings against her if the complaints were not withdrawn.

Evidence was also provided by the employee that following the sexual harassment, she became incapacitated at home, heavily dependant on her partner, experienced post-traumatic stress and major depressive disorders, and is even became afraid of working again.

The Court found that the Mr Khan’s threat of defamation proceedings amounted to victimisation, contravening s 47A of the SDA.

Compensation and damages

Because of the two substantiated allegations and the serious conduct a substantial award of money was granted. The Court orders $305,000 compensation and damages awarded to the employee made up of:

• $160,000 general damages for sexual harassment;
• $10,000 general damages for victimisation;
• $5,000 aggravated damages due to arguments put forward by Mr Khan’s representative during proceedings deemed to be “highly offensive”;
  • Mr Khan had submitted only in closing arguments (after the witness evidence) that the employee was addicted to pornography and the Court regarded this as a highly offensive argument.
• $90,000 for past economic loss; and
• $40,000 for future economic loss.

Key takeaways

• There is a difference between sexual harassment, and harassment based on sex. Harassment based on sex must be made directly “in relation to” the aggrieved individual.
• Fostering a workplace environment that normalises sexist and inappropriate behaviour can provide a “fertile ground” for the conduct to escalate into sexual harassment AND will breach the positive duty to prevent sexual harassment.
• Characteristics of individuals and what is known by the perpetrator can play a factor in workplace sexual harassment proceedings.
• The conduct of defence in the proceedings can impact the outcome, i.e. the $5,000 aggravated damages due to highly offensive argument of Mr Khan.