The Importance of Positive Duty Compliance in the Mad Mex Case
Case name: Magar v Khan [2025] FCA 874
In a landmark Federal Court decision, Ms Magar was awarded $305,000 in damages after experiencing persistent sexual harassment and victimisation while working at a Sydney Mad Mex franchise.
This decision is significant because it reflects the Court’s increasing willingness to award substantial compensation for sexual harassment-related harm, and it reinforces that individual directors can be personally liable for unlawful conduct at work.
CASE BACKGROUND
The case involved Ms Magar, a former employee of a Mad Mex franchise (Mexicali Enterprises Pty Ltd), and the company’s director, Mr Sher Khan.
Ms Magar was a 22-year-old student from Nepal on a student visa. She worked at the franchise between 2021 and 2023. The Court noted a strong power imbalance in the relationship, including Ms Magar’s age, visa status and reliance on her employment.
INCIDENT DESCRIPTION
The Court heard evidence that Mr Khan engaged in a pattern of inappropriate and sexualised conduct towards Ms Magar at work.
This conduct included:
- Making intrusive sexual comments towards Ms Magar
- Questioning her about a “hickey” on her neck
- Showing her pornography
- Isolating her in his car and directing sexual conversations at her
When Ms Magar raised concerns, the Court found she was then subjected to victimisation, including Mr Khan sending defamation letters which were intended to intimidate her and deter her from pursuing her complaint.
LEGAL PROCEEDINGS AND DECISION
Ms Magar brought proceedings in the Federal Court alleging unlawful conduct under the Sex Discrimination Act 1984 (Cth).
The Court found Mr Khan’s conduct violated:
- Sexual harassment; and
- Victimisation under the Sex Discrimination Act 1984 (Cth).
The Court also considered the newer sex-based harassment provisions introduced following the Respect@Work reforms.
The decision reinforces that relying on policies that exist in writing but are not actively implemented, monitored and enforced can significantly increase legal risk, particularly where inappropriate conduct is tolerated or allowed to become normalised within workplace culture.
OUTCOME
The Federal Court held both Mexicali Enterprises and Mr Khan liable for the unlawful conduct.
The award represents one of the highest damages amounts made under the Sex Discrimination Act 1984 (Cth), reflecting the seriousness of the conduct and the harm caused.
DAMAGES AWARDED
The Federal Court awarded Ms Magar a total of $305,000 in damages. The award included substantial compensation for psychological injury and loss of enjoyment of life, economic loss arising from the impact of the unlawful conduct on her employment and future earning capacity, as well as additional damages reflecting the seriousness of the harassment and subsequent victimisation.
VICARIOUS LIABILITY AUSTRALIA: LESSONS FOR EMPLOYERS
Recent decisions of the Federal Court reflect an increasing judicial willingness to award substantial compensation in cases involving sustained sexual harassment and victimisation, particularly where there is an abuse of authority or a failure by the employer to respond appropriately.
Employers must recognise the legal risks of inadequate responses and ensure compliance with positive duty requirements to create a safe and respectful workplace.
In high-risk environments, like retail and fast-food franchises, comprehensive prevention strategies are essential. It also highlights that directors and senior leaders can face personal legal exposure, and that businesses must act early to address inappropriate workplace behaviours before they become embedded as workplace culture.
KEY LESSONS
- Directors can be personally liable: Unlawful conduct is not “just a business risk” : individuals can be named and held responsible.
- Damages are increasing: Courts are awarding higher amounts for distress, psychological harm and economic loss.
- Prompt Response: Employers must act quickly and decisively when complaints are raised to avoid legal repercussions and protect employee well-being.
- Victimisation is a serious breach: Retaliatory conduct (including intimidation) can significantly increase exposure.
- Recognition of Subtle Harassment: Actions that may not appear overtly sexual can collectively constitute sexual harassment, highlighting the importance of addressing all forms of inappropriate conduct.
- Proactive Risk Management: Employers should proactively manage sexual harassment risks by fostering a supportive workplace culture, promoting diversity, and ensuring legal compliance.
CONCLUSION
The decision in Magar v Khan shows the very real consequences of failing to prevent and address sexual harassment in the workplace : including record-setting damages and personal liability for leaders.
By emphasising the need for proactive measures and thorough investigations, this case underscores the importance of robust policies, comprehensive training and supportive frameworks to prevent and address sexual harassment.
Reference
Details of this case are published via the Federal Court decision: Magar v Khan [2025] FCA 874 (AustLII).
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Legal Disclaimer:
This case summary is provided for general information purposes only and does not constitute legal advice. Organisations should obtain independent legal advice regarding their specific obligations under the Sex Discrimination Act 1984 (Cth) and related workplace legislation.