Home Publications $90K wake up call for employers: Sexual harassment under the Fair Work Act

$90K wake up call for employers: Sexual harassment under the Fair Work Act

7 May 2026

Employment, Industrial Relations & Safety

Employers have a primary duty of care to ensure the health and safety of their workers while at work. Traditionally, this obligation has been associated with physical hazards such as slips, trips and falls, and manual handling injuries.

Recent legislative reforms have added a less visible, but significant, statutory liability under the Fair Work Act 2009 (Cth) (Fair Work Act) for sexual harassment in connection with work.

Section 527D of the Fair Work Act

Section 527D was incorporated into the Fair Work Act to expressly prohibit sexual harassment of a worker, prospective worker, or person conducting a business or undertaking. The term ‘worker’ has been widely defined and includes an individual who performs work in any capacity including:

an employee;
a contractor;
a subcontractor;
an outworker;
an apprentice;
a trainee;
a volunteer; and
a student gaining work experience.¹

Sexual harassment in the Fair Work Act adopts the definition in section 28A of the Sex Discrimination Act 1984 (Cth) (SDA): ‘unwelcome sexual advance or an unwelcome request for sexual favours or other unwelcome conduct of a sexual nature in circumstances in which a reasonable person, having regard to all the circumstances, would have anticipated the possibility that the person harassed would be offended, humiliated or intimidated’.

Sexual harassment under the Fair Work Act in practice

Mejia v Capital City Café-Bar [2026] FedCFamC2G 468 (Mejia) is the first case before the courts to apply the new section 527D of the Fair Work Act. In Mejia, one of the directors of a café made unwelcome sexual advances and engaged in unwelcome conduct of a sexual nature by hugging and kissing a 23-year-old waitress. The director also made lewd comments to the employee. The Federal Circuit and Family Court of Australia held the director liable under section 527D of the Fair Work Act for sexually harassing the employee (in addition to other breaches of the Fair Work Act relating to other employment matters). In assessing damages, the director was ordered to pay $90,000 in civil penalties as follows:

$9,390 (50% of the maximum penalty) for breaches of section 527D of the Fair Work Act;
$50,000 for non-economic compensation for hurt, distress, and humiliation arising from the breach of section 527D of the Fair Work Act; and
$30,610 for other employment related breaches of the Fair Work Act.

In awarding damages for non-economic loss, the Court accepted the claimant suffered hurt, distress, and humiliation from the sexual harassment. This approach is consistent with the reforms, which recognise the serious psychological and emotional impact sexual harassment can have on victims, and how the courts consider this impact in assessing damages.

Importantly, Mejia illustrates that even a single, isolated incident of sexual harassment can result in courts awarding significant compensation for non-economic loss, namely psychological harm, for sexual harassment in connection with work.

Sexual harassment under the Sex Discrimination Act and vicarious liability

In 2022, the Anti Discrimination and Human Rights Legislation Amendment (Respect at Work) Act 2022 (Cth) implemented a positive duty on employers to provide a workplace free from sexual harassment under section 47C of the SDA. Employers are obliged to ‘take reasonable and proportionate measures’ to eradicate, as far as possible, sexual harassment in connection with work.² Proactive action is required before the sexual harassment occurs.

In Kerkofs v Abdullah (Human Rights) [2019] VCAT 259, the Victorian Civil and Administrative Tribunal held the employer vicariously liable for the sexual harassment of an employee by a coworker. The employer failed to demonstrate that it had taken reasonable steps to prevent the sexual harassment. The employer was liable to pay the complainant $130,000 and an additional $20,000 in aggravated damages for pain and suffering for failing to undertake an independent investigation.

Similarly, the new sexual harassment laws under the Fair Work Act attract vicarious liability.³ However, an employer will not be vicariously liable if they took all reasonable steps to prevent the employee or agent from doing acts that would contravene section 527D(1) of the Fair Work Act.⁴

Steps for employers

Employers should ensure they are being proactive and taking all reasonable steps to prevent sexual harassment in the workplace. Implementing a sexual harassment policy and training is unlikely to be sufficient.⁵

Employers should consider:

developing, refining, and monitoring their sexual harassment policies referring to the obligations of bystanders and state disciplinary action will be taken against workers who engage in sexual harassment;
conducting regular comprehensive training tailored to roles and seniority;
developing a complaints handling procedure for recipients of complaints to follow in the event of sexual harassment; and
monitoring workplace culture to ensure workers understand and comply with sexual harassment policies and training.

Lavan’s experienced Employment, Safety and Education team can assist employers in developing tools to assist with their new obligations regarding sexual harassment under the Fair Work Act.

Disclaimer

The information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.