Record-Breaking Sexual Harassment Payout – Key Lessons for Employers

| August 18, 2025

A worker has been awarded $160,000 in general damages as part of one of the largest sexual harassment payouts in Australia.

The Federal Court’s decision in Magar v Khan [2025] FCA 874 sends a clear message about the serious and lasting impacts of sexual harassment and the legal risks for employers who retaliate against complaints.

Background of the Case

Ms Magar, a 21-year-old Nepalese citizen, began working at a Mad Mex franchise in September 2021. The business was owned and operated by Mr Sher (“Sonny”) Khan.  

Ms Magar alleged that during her employment: 

• Mr Khan and other male colleagues made sexual and derogatory comments about female employees and customers; and  
• Mr Khan committed specific acts of sexual harassment, including:  
• Made sexual comments about her; 
• Showed her pornographic material and sex toys; and 
• Invited her to hotels and massage parlours.  

Court’s Findings

This was a largely “word against word” case. Mr Khan denied all allegations and did not offer another version of events. His representative focused on questioning Ms Magar’s credibility, pointing to a mental health episode in early 2022.   

However, Justice Bromwich found Ms Magar to be a credible and genuine witness based on both expert psychiatric evidence and the way Ms Magar presented in court.  

The Court drew an important distinction between: 

• General sexist behaviour in the workplace, while unacceptable, does not necessarily meet the legal test for harassment unless directed at the complainant; and 

• The specific incidents of sexual harassment against Ms Magar which were proven on the evidence. 

Victimisation Through Defamation Threats

After Ms Magar complained to Mad Mex head office in April 2023, Mr Khan’s lawyers issued two defamation “concerns notices”.  

These “concerns notices” demanded Ms Magar withdraw her allegations, apologise and pay compensation, warning of legal action if she did not comply.  

The Court ruled this was victimisation under the Sex Discrimination Act, because the threats were made to pressure her into dropping her complaint. Justice Bromwich noted that the notices cause real distress, beyond a minor inconvenience.  

Record-Breaking Damages Award

The Court ordered Mr Khan to pay $305,000 in total: 

• $160,000 in general damages for sexual harassment, 
• $10,000 in general damages for victimisation, 
• $5,000 aggravated damages for the way Mr Khan’s case was run, and 
• $130,000 for past and future economic loss. 

Justice Bromwich emphasised that compensation in such cases should reflect the full impact on the victim and not be artificially restrained. 

Key Legal Takeaways

• Proving “In Relation To” Requirement: The decision clarifies that harassment on the ground of sex requires conduct to occur “in relation to” the complainant. General sexist workplace behaviour, while unacceptable, may not satisfy this legal test unless specifically directed at or affecting the complainant. 

• Rethinking Defamation in Discrimination Cases: The victimisation finding sends a strong warning about using defamation threats to silence sexual harassment complainants. Justice Bromwich noted that lawyers advising such tactics should recognise this as “a dangerous course unless comfortably satisfied that the allegations are baseless.” 

• Potential for Substantial Awards: The total award signals courts’ willingness to make substantial compensation orders reflecting the serious psychological and economic impacts of workplace sexual harassment. This may encourage more complainants to pursue claims while deterring potential perpetrators. 

• Review workplace policies and process: Employers must have clear policies, regular training, and effective complaint-handling procedures.  

Final Thoughts

Sexual harassment complaints can carry heavy legal and financial consequences, and that victimising a complainant can make matters far worse. Employers must ensure complaints are handled lawfully, sensitively, and without retaliation. 

At IRiQ Law, we help organisations build safer, compliant workplaces through policy design, investigation support, and legal guidance. If you’re reviewing your procedures or responding to a complaint, contact our team today.