Workplace sexual harassment law is no longer confined to misconduct between employees behind office doors. Courts are increasingly applying protections to conduct arising through broader workplace interactions, including those involving contractors, customers and other third parties where harassment occurs in connection with work.

That shift was placed into sharp focus in a recent Federal Circuit and Family Court case where a storage warehouse site manager was awarded $90,000 in compensation after they were subjected to sustained sexualised and homophobic harassment by a contractor and regular customer.

The conduct involved in the case included degrading comments, sexualised “jokes”, implied threats of sexual violence and unwanted physical contact. Over time, the behaviour escalated into what Judge Vasta described as a “two against one” dynamic, where the worker became “the butt of the joke”. The worker ultimately developed a depressive disorder.

The decision is significant not merely because of the damages awarded, but because of what it reveals about the expanding legal perimeter of workplace sexual harassment obligations in Australia.

The expanding reach of workplace sexual harassment laws

Section 527D of the Fair Work Act, which prohibits sexual harassment “in connection with work”, is not confined to traditional employment relationships. It can apply where a worker is sexually harassed by non-employees, including contractors, customers and other third parties, provided the conduct occurs in connection with work.

Judge Vasta addressed the point directly, observing:

“It really does not matter who the first person is, as long as the second person is a worker.”

His Honour then gave the example of a waitress being sexually harassed by a restaurant patron, reinforcing that the provision is intended to operate broadly across workplace interactions, not merely within reporting lines or formal employment structures.

Historically, many organisations focused their compliance frameworks primarily on employee misconduct. This case is a reminder that workplace sexual harassment risk may also arise through the broader ecosystem of interactions surrounding work. Operational distinctions such as contractor, customer or visitor status do not remove the need to identify and manage foreseeable workplace risks where conduct occurs in connection with work.

A dangerous defence: “It was only banter” 

Another notable feature of the judgment was the Court’s treatment of repeated sexualised joking. Australian workplaces have long struggled with the line between “banter” and unlawful conduct, particularly in operational and customer-facing environments where crude humour has historically been normalised. 

Courts are showing decreasing tolerance for that argument. Judge Vasta expressly rejected any suggestion that the worker’s actual sexual orientation was determinative, observing: 

“The fact is that he is harassed and he has suffered because of it.” 

The observation reflects the broader shift away from analysing intent and toward examining the nature of the conduct, workplace context and resulting harm.

Damages continue to trend upward 

The broader trajectory of Australia’s workplace sexual harassment approach has been moving in this direction for some time.

In 2014, the Full Court substantially increased damages for pain and suffering, observing that historically low awards in sexual harassment matters no longer reflected prevailing community standards. In a 2015 decision, the court demonstrated a willingness to award substantial damages where conduct is psychologically harmful, humiliating or compounded by organisational failures.

Importantly, modern damages assessments reflect not only compensation, but deterrence and public denunciation. 

The practical takeaway for employers

The lesson from this case is not merely that workplace sexual harassment remains unlawful. That has been clear for decades. What is changing is the scope of organisational exposure.

Businesses can no longer treat sexual harassment as a contained HR issue dealt with after a complaint lands on someone’s desk.

Modern legal risk turns on whether an organisation: 

• identified harmful conduct as a foreseeable psychosocial hazard;  
• implemented credible reporting and escalation pathways;  
• trained leaders to intervene appropriately; and  
• proactively managed contractor and customer behaviour, not just employee conduct.  

 From a WHS perspective, the question is not: ‘Who employed the perpetrator?’ 

But rather: ‘Did the organisation reasonably identify and manage the foreseeable risk of psychological harm?’ 

As psychosocial regulation matures, organisational systems and surrounding workplace culture are becoming increasingly relevant to legal risk analysis.  

In that environment, the real legal risk is often not the first inappropriate comment. It is the workplace culture that allowed the conduct to become normalised in the first place. 

How Business Chamber Queensland can help 

Business Chamber Queensland supports organisations to proactively manage workplace sexual harassment risk through practical, compliance-focused solutions aligned with current legislative and psychosocial hazard obligations.

Our Workplace Relations team delivers tailored sexual harassment training for leaders, managers and employees to build awareness of legal duties, strengthen bystander intervention capability, and ensure appropriate responses to complaints and third-party conduct.

In addition, we assist businesses in developing and implementing sexual harassment prevention plans that integrate with broader WHS psychosocial risk management frameworks, ensuring organisations are not only compliant but also actively reducing exposure to foreseeable harm in the workplace. 

 Case: Eklom v Marshall & Anor [2026] FedCFamC2G 772