The Federal Court’s decision in Magar v Khan [2025] FCA 874 marks a pivotal moment in Australian employment law, reinforcing the community’s intolerance for workplace sexual harassment and sex-based discrimination. In awarding a record-breaking A$305,000 award of damages to Ms Magar, the Court not only recognised the profound psychological and economic harm suffered but also sent a clear message to employers: passive compliance is no longer acceptable. This case note explores the factual background, legal principles and broader implications of the judgment, including enforcement of the positive duty under the Sex Discrimination Act 1984 (Cth), the legal risks of victimisation and the heightened responsibilities owed to vulnerable employees.

The recent decision in Magar v Khan [2025] FCA 874 has sent a message to employers in Australia: ignoring sexual harassment and sex-based discrimination won’t be tolerated by Courts. The Federal Court’s ruling, which saw a record-breaking A$305,000 awarded to a young migrant worker, not only sets a new benchmark for damages but also provides critical lessons on an employer’s legal obligations and the real-world costs of a toxic and harassment filled workplace culture.

Case Note: The Facts of Magar v Khan [2025] FCA 874

The case involved Ms Magar, a young Nepalese student working at a prominent fast-food franchise, who was subjected to significant sexual harassment by her manager, the franchise-owner, Mr Khan, spanning across her two-years of employment. The harassment was severe, persistent and included:

1. lewd jokes and inappropriate comments, such as repeated probing about a “hickey” (and related, deeply personal remarks) to Ms Magar directly and in front of her colleagues;
2. isolating Ms Magar in his car while on supply runs, and then initiating and perpetuating conversations of an explicitly sexual and private nature; and
3. showing Ms Magar pornography.

Mr Khan made no attempt to address the nature of Ms Magar’s allegations, instead issuing a sweeping denial. The Court rejected Mr Khan’s “blanket and emphatic denials”, finding them lacking in credibility and categorically at odds with Ms Magar’s evidence, which was described as “not just truthful and reliable, but also evocative and compelling”.

After Ms Magar tried to escalate her complaint, Mr Khan’s legal representatives issued a Concerns Notice (which is a precursor to defamation proceedings). In a crucial aspect of the judgment, the Court was highly critical of Mr Khan in taking this type of action against Ms Magar and concluded that this was an attempt to silence her, constituting a serious breach and unlawful victimisation.

The Court had no difficulty finding that the workplace had a broader culture that was “disinterested in preventing sexist conduct”, and that the workplace environment allowed the manager’s behaviour to escalate unchecked.

The record-setting damages award of A$305,000 reflected the gravity of the harassment and the devastating impact it had on Ms Magar, who was left traumatised and unable to work for over two years. The amount was comprised of general and aggravated damages for the harassment in the amount of A$165,000, a separate amount for victimisation in the amount of A$10,000, and compensation for both past and future economic loss in the amount of A$130,000.

What does this decision mean for your business?

This case ought to be a wakeup call for every Australian employer that:

1. The positive duty is not optional

The positive duty under the Sex Discrimination Act 1984 (Cth) (SDA), which came into effect in late 2022, requires businesses to take proactive and meaningful steps to prevent sexual harassment from occurring at first instance. It’s no longer enough to merely have a policy floating in the background; employers must take real, active steps to foster a culture that eliminates sexual harassment and other unlawful conduct under the SDA.

2. Victimisation can carry heavy penalties

In this case, the Court agreed that Ms Magar was victimised by Mr Khan’s threats under defamation laws. The finding sets an important precedent and sends a clear warning that the use of legal tactics to intimidate or silence an employee who makes a complaint is unlawful and will not be tolerated. This can lead to a separate damages award on top of any compensation for the harassment or discrimination itself.

3. Vulnerable employees require specific vigilance

The Court took into account Ms Magar’s specific vulnerabilities as a young, migrant worker on a student visa with a complex mental health history. This highlights that business must be particularly vigilant of and have a heightened responsibility to protect employees who may face a more significant power imbalance due to their age, visa status, or cultural background (amongst other things).

4. The cost of getting it wrong can be substantial

The A$305,000 award of damages demonstrates that Courts are now willing to award significant damages for psychological and economic harm in like scenarios. The cost of poor workplace culture is now financially measurable and substantial, encompassing not just general and aggravated damages, but also an employee’s lost wages and future earning capacity.

What should your business keep in mind?

Businesses should act with urgency to:

• Review their policies and procedures – go beyond boilerplate policies. Ensure your sexual harassment, discrimination and victimisation policies are comprehensive but clear and
  up-to-date.
• Provide regular training – training shouldn’t be a one-off event. Regular training for all staff, especially managers and supervisors, on what constitutes sexual harassment and sex-based discrimination, the positive duty to prevent it, and how to respond to complaints with sensitivity and fairness, is imperative.
• Promote a culture of respect – leadership sets the tone. Actively discourage sexist jokes, derogatory comments, and any behaviour that could contribute to a hostile working environment. Employees should feel encouraged and supported to speak up. But, in order to do so freely and without fear of retaliation or victimisation, a positive working environment and system must be established.
• Appropriately handle all complaints – if a complaint is made, act promptly, fairly and in accordance with your businesses prescribed processes. It is imperative that all complaints of sexual harassment or other unlawful conduct – no matter the size or nature – be treated as equally as important as the next.