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Sexual harassment cases are attracting higher awards for general damages because of a willingness on the part of courts to translate systemic workplace failures, misuse of power, and poor responses to complaints into materially higher awards of compensation.
Recent updates to the Sex Discrimination Act
The Sex Discrimination Act 1984 (Cth) (Act) has been the subject of major updates recently. The biggest change? A positive duty. That means employers and Persons Conducting a Business or Undertaking now take reasonable and proportionate steps to prevent, as far as possible, sexual harassment, sex-based harassment, hostile workplace environments and victimisation. It is about being proactive, not just waiting for a complaint.
This proactive obligation has consequential implications for damages in sexual harassment litigation. Where employers fail to identify or address these risks, courts are increasingly prepared to characterise resulting harm as more serious. Courts are looking at power imbalances, vulnerability of complainants, cultural or visa dependency, and patterns of behaviour over time - not just isolated incidents. These principles now form the lens through which courts assess not only liability, but also the seriousness of the conduct, credibility, and ultimately the quantum of damages.
Another major change was the introduction of another new cause of action: sex-based harassment under section 28AA of the Act. Sex-based harassment is any unwelcome conduct aimed at someone because of their sex, where a reasonable person would expect it could offend, humiliate, or intimidate.
Magar v Khan
Since the reforms, only a handful of decisions have dealt with sexual harassment, including Magar v Khan [2025] FCA 874. This case also dealt with sex-based harassment. In Magar the Court awarded one of the largest sexual harassment awards Australia has seen, $305,000, including $160,000 for general damages.
The decision provides a useful case study for employers and EPL insurers as to how courts are applying the amendments to the Act in practice, particularly in assessing workplace culture, vulnerability, and damages.
Ms Magar was employed as a shift supervisor at a Mad Mex franchise from 7 September 2021 until 17 February 2023. The franchise was managed by Mr Khan. By the time of the hearing, the franchise company was in liquidation and the proceedings therefore continued against Mr Khan personally, as the sole respondent.
Sex‑based harassment
Ms Magar alleged that Mr Khan and another senior manager were ringleaders within a group of male employees that engaged in routine sexist and derogatory commentary about women, including customers and former staff. This conduct included sexualised remarks about women's bodies and clothing and the use of offensive epithets.
Ms Magar gave evidence that she tolerated this behaviour to avoid being seen as difficult in the workplace. She also alleged that a manager criticised her clothing as "immodest". When she raised the issue with Mr Khan, he directed her to comply with a purported dress code, rather than addressing the manager's conduct.
Justice Bromwich found that the evidence demonstrated a pattern of "sexist and boorish" conduct and a workplace culture that was tolerant of, or even conducive, to sexist behaviour. However, his Honour held that this conduct was not established to be "in relation to" Ms Magar, as required by section 28AA of the Act.
The failure of the sex‑based harassment claim reflected the absence of a sufficient nexus to Ms Magar personally, rather than any minimisation of the conduct itself. Justice Bromwich noted that similar conduct would likely have constituted sex‑based harassment had it been directed at Ms Magar herself.
In assessing the impugned conduct, the Court gave weight to Ms Magar's personal circumstances. In 2022, she had experienced a brief episode of psychosis requiring hospitalisation. Expert psychiatric evidence established that this episode did not affect her recollection of events in 2023, but it did contribute to her vulnerability and the power imbalance between the parties, particularly as Mr Khan was aware of her mental health history. Ms Magar was 22 years old at the time and had only been in Australia since 2021, holding either a student or bridging visa.
Sexual harassment
In contrast to the sex‑based harassment claim, the Court had no difficulty finding that Mr Khan's conduct toward Ms Magar constituted sexual harassment. The Court found that Mr Khan engaged in unlawful serious sexual harassment over several months. The conduct included crude sexual comments, intrusive questioning about Ms Magar's sex life, showing her pornography, displaying and using sex toys in her presence, and repeated invitations to attend hotels or massage parlours with him.
The Court rejected Mr Khan's denials and preferred Ms Magar's evidence, despite her mental health history. Justice Bromwich observed that economic necessity, social isolation, and Mr Khan's position of authority explained why Ms Magar continued working notwithstanding the harassment.
Damages
The Court awarded Ms Magar $305,000 plus costs, comprising $130,000 for economic loss, $160,000 for general damages, $10,000 for victimisation, and $5,000 in aggravated damages. The size of the award places it at the upper end of damages for sexual harassment matters and reflects an emerging judicial readiness to order substantial compensation where sexual harassment is compounded by vulnerability and misuse of power.
In awarding $160,000 for hurt and humiliation, Justice Bromwich accepted that Ms Magar's psychiatric history exacerbated the harm suffered and applied the principle that a wrongdoer must take the victim as found, particularly where the vulnerability was known.
In the last two years, awards for general damages have increased steadily. In Taylor v August and Pemberton Pty Ltd [2023] FCA 1313 the Federal Court made an award for $140,000, compared to the $160,000 in Magar. Before that, in Hill v Hughes [2019] FCCA 1267, an order of $120,000, was made.
Key takeaways for employers
The decision provides early guidance on the operation of section 28AA of the Act and underscores the breadth of conduct capable of constituting sex‑based harassment. It also highlights that failures in complaint handling can increase the exposure of employers (and insurers), particularly where courts consider such conduct indicative of a broader cultural or governance failure.
Important steps employers can take to prevent sexual harassment claims include:
- Ensure policies and procedures set standards for respectful behaviour, including prohibiting sexual harassment
- Ensure employment agreements impose an obligation on employees to comply with sexual harassment and discrimination policies (but without incorporating such policies into the contract.)
- Have mechanisms in place for employees to report complaints of sexual harassment
- Encourage leaders and managers to call out disrespectful behaviour, especially that of a sexual nature (including behaviour of third parties)
- Educate employees and managers about the importance of modelling respectful behaviour and the contexts of sexual harassment and discrimination policies
- Ensure internal and external support options are made available to employees, such as Employee Assistance Programs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
