Section 527D of the Fair Work Act 2009 (Cth), introduced as part of the 2022 reforms, protects workers from sexual harassment in the workplace, regardless of the identity of the perpetrators.
In the recent case of Eklom v Marshall [2026] FedCFamC2G 772, the Federal Circuit and Family Court of Australia emphasised that workplace sexual harassment is unlawful, even when committed by contractors or customers rather than direct employers or supervisors, and may result in substantial compensation and penalties.
Facts
In Eklom v Marshall, an employee worked as a site manager at a storage facility, overseeing daily operations. The second respondent, Mr Marshall, was the business’s first customer and was also engaged as a contractor to assist with cleaning and maintenance at various sites, including the one managed by the employee.
The employee claimed that between late 2024 and early 2025, Mr Marshall started making homophobic and sexualised remarks, including comments such as ‘Oh, the gay boy is cleaning again’ and referring to him as ‘office boy’. Mr Marshall also engaged in unwanted physical contact, such as shoving or bumping the employee, which he claims was dismissed as joking.
Later, the employee stated that the third respondent, Mr Mitchell, became a ‘consistent feature of the workplace’ as a regular customer whose accounts were managed by the employee. Mr Mitchell became friendly with Mr Marshall and began making similar remarks, including saying the employee was ‘Getting tied up and left in a shed’, to which Mr Marshall responded, ‘He is probably used to it’.
Mr Marshall and Mr Mitchell exchanged further comments of a sexual or fetish nature, often in mocking or derogatory tones, which caused the employee to feel degraded and hurt by the implication that his work tasks had a sexual motive.
After multiple incidents, the employee believed the company held a negative view of his work and made a complaint. He supported his claim by providing a recording of the exchanges, but was told he had contravened the Invasion of Privacy Act 1971 (Qld) due to the use of a listening device. The employee then took personal leave and was subsequently dismissed.
The employee submitted that, under section 545(2)(b) of the Fair Work Act, the Court should order compensation for the loss he suffered as a result of the workplace contravention of section 527D.
Prohibition on sexual harassment in connection with work
Section 527D of the Fair Work Act provides that a person must not sexually harass another person who is:
- a worker in a business or undertaking
- seeking to become a worker in a particular business or undertaking
- a person conducting a business or undertaking
if the harassment occurs in connection with the work.
This means that, for example, if a patron at a restaurant sexually harasses an employee, the employee is protected under section 527D because the harassment occurred in connection with their role as a worker.
In considering compensation under section 545(2)(b), the Court’s focus is limited to the loss the employee suffered as a result of the contravention.
Compensation for loss suffered
In considering the loss suffered by the employee, the Court noted that the employee’s sexual orientation was irrelevant. Instead, the Court was required to consider whether the employee suffered harassment and whether it occurred in connection with him being a worker in the workplace.
The employee provided a medical certificate confirming diagnoses of anxiety, stress and depressive disorder, which originated from the ongoing harassment he experienced from Mr Marshall and Mr Mitchell. The Court also noted the isolation and sense of degradation resulting from their actions.
While the Court found that such actions did not cause past or future economic loss, as those matters were attributable to the actions of the employer, it noted that the seriousness of the contravention justified a significant compensation award.
The Court stated that, since Mr Marshall was a contractor who partly reported to the employee and Mr Mitchell was a customer, the harassment did not involve the aggravating factor of a superior harassing a subordinate. Nevertheless, this did not lessen the impact on the employee, and the Court still found the conduct to be a ‘very serious example of sexual harassment at work’.
The Court ordered Mr Marshall and Mr Mitchell to be jointly and severally liable to pay the employee $90,000 in compensation for the harassment.
The Court also considered pecuniary penalties and the public interest in deterring future contraventions. Since Mr Marshall and Mr Mitchell did not participate in the court process or show any remorse to mitigate the penalty, the Court imposed an additional pecuniary penalty of $13,000 each.
Key takeaways for employers
- Sexual harassment protections extend beyond employees to include contractors and even customers if harassment occurs in the workplace.
- Sexual harassment in the workplace is a serious contravention, regardless of the harasser’s position or any power imbalance, and can cause significant harm to the victim.
- Under the Work Health and Safety Act 2011, employers must take all reasonably practicable steps to protect workers from health and safety risks, including sexual and sex- or gender-based harassment. Failure to do so may result in penalties.
- Employers must ensure complaints of sexual harassment are taken seriously and properly investigated.
- Harassment by non-employees can still lead to substantial compensation awards and pecuniary penalties.
Call to action
If you have any questions about the issues raised in this article or would like assistance with matters related to sexual harassment in the workplace, please contact our workplace relations and safety team.
