A Federal Court has awarded $305,000 to a former Mad Mex employee in what represents Australia’s largest sexual harassment compensation payout under the Sex Discrimination Act 1984.

The case, Magar v Khan [2025] FCA 874, involved Biplavi Magar, a 25-year-old Nepalese student who worked casually at a Mad Mex franchise in Sydney’s northwest while on a student visa. The court found her manager, Sher Khan, had subjected her to sustained sexual harassment between September 2021 and February 2023.

Court Findings

Federal Court Judge Robert Bromwich found Khan had engaged in multiple instances of sexual harassment, including making sexualized comments about a hickey on Magar’s neck in front of colleagues, asking inappropriate questions about her sexual experiences, and showing her pornographic material on his iPad during work-related trips to purchase supplies.

The court heard evidence that Khan had touched Magar’s inner thigh with a sex toy while she was in his vehicle, and repeatedly asked invasive questions about her sexual preferences and experiences. Magar testified she felt “frozen” during these incidents and “just wanted to vomit.”

Khan denied all allegations, with his legal team suggesting Magar’s accounts may have been “the product of false beliefs arising out of distorted perceptions of reality.” Judge Bromwich rejected these arguments as unsupported.

Victimization Finding

The case also established important legal precedent regarding victimization. When Magar reported the harassment to Mad Mex management in April 2023, Khan’s lawyers sent her a concerns notice threatening defamation action and demanding monetary compensation and an apology.

Judge Bromwich found this constituted unlawful victimization, describing the defamation threats as “a dangerous course” and warning that such tactics against harassment complainants are only appropriate when “comfortably satisfied that the allegations are baseless.”

Compensation Breakdown

The $305,000 award comprises:

• $160,000 for sexual harassment
• $10,000 for victimization
• $5,000 in aggravated damages
• $130,000 for past and future economic loss

The court heard Magar was unable to work for more than two years following the harassment due to psychological trauma.

Legal Significance

The ruling represents the Federal Court’s first decision on harassment based on sex, a prohibition introduced through 2021 amendments to the Sex Discrimination Act. This differs from sexual harassment in that the conduct does not need to be sexual in nature, but must be demeaning and unwelcome.

The case also reinforces employers’ positive duty under the Sex Discrimination Act to prevent harassment and respond effectively to complaints.

Industry Impact

Seri Feldman-Gubbay from Redfern Legal Centre, who represented Magar, described the result as a “landmark decision” that should serve as a warning to employers who “tolerate sexist workplace cultures” or “threaten defamation proceedings against employees who speak up about sexual harassment.”

The case highlights particular risks faced by migrant workers, who statistics show are more likely to experience harassment but less likely to report it due to their vulnerable employment status.

Key Takeaways

The ruling establishes that:

• Threatening defamation action against harassment complainants can constitute victimization
• Employers cannot rely on workers’ immigration status or perceived vulnerability to avoid accountability
• Record compensation awards reflect the serious view courts take of workplace sexual harassment
• The positive duty on employers to prevent harassment applies regardless of business size

The decision sends a clear message that Australian workplaces must maintain safe environments free from harassment, regardless of workers’ visa status, background, or employment type.