Court Confirms Sexual Harassment Liability but Rejects Sex-Based Discrimination in Mad Mex Case

The Federal Court has recently awarded a fast-food employee $305,000 in compensation and damages after finding her employer guilty of sexual harassment and victimisation, but drew an important line by finding that the conduct had fallen short of sex-based harassment.

Sex-based harassment, as well as sex discrimination, sexual harassment, certain acts of vicitmisation and acts subjecting workers to a hostile work environment on the basis of sex were recently introduced into the Sex Discrimination Act (Cth) as part of amendments following the Respect@Work report. These amendments introduce a positive duty on employers to eliminate such acts in the workplace, as far as possible. While these duties may overlap, there are also relevant distinctions between each category.

In the recent case, the employee who worked at a Mad Mex franchise, commenced proceedings against her employer for sexual harassment, sex-based harassment and victimisation within the meaning of the Sex Discrimination Act.

The Court found that franchise owner’s conduct, including making sexualised comments to the employee about a hickey and showing her pornography, constituted sexual harassment.

The Court noted that the franchise owner’s position as an employer was significant because of the power imbalance. This was reinforced by the employee’s evidence that she felt like she “had to agree” with the franchise owner and other male employees to avoid having a “hard time” at work.

Further, the Court that the franchise owner had victimised the employee by sending her notices threatening to commence defamation proceedings against her after receiving the complaints she made about his conduct.

However, the Court did not agree that the employee had been subject to sex-based harassment. The critical difference found by the Court was that, while the employee had identified a number of “sexist and boorish” behaviours on behalf of the franchise owner and other male employees which might have met the threshold for sex-based harassment, they did not occur directly ‘in relation to’ the employee. Instead, the alleged behaviours related to other staff or female customers at the store, and there was “no suggestion that any of these women were present at the time that the conduct took place”.

Offending conduct must be ‘in relation to’ the victim

The threshold identified by the Court was that the offending conduct needed to be “proven to be about, or otherwise directed at” the person being harassed, or “communicated directly (or indirectly) to them or in such a way that they were able to hear or perceive the alleged contravening conduct”.

Elements of sex-based harassment

The Court also comprehensively identified the elements of sex-based harassment, being that:

1. That the perpetrator engages in conduct of a demeaning nature ‘in relation to’ the person harassed, for reasons to do with characteristics of the victim’s sex, and
2. That the conduct is unwelcome to the victim, and
3. That a reasonable person would anticipate that the victim would be offended, humiliated or intimidated by the perpetrator’s conduct; taking into account the victim’s circumstances. This includes the relationship between the victim and perpetrator, including any power imbalances.

HR Legal offers comprehensive Respect@Work training to organisations, to ensure employers meet their obligations under the Sex Discrimination Act and other legislation. If your business or organisation requires assistance, please contact HR Legal’s experienced team today.

Source: Magar v Khan [2025] FCA 874

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This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.