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The judgment in Mejia v Capital City Cafe-Bar [2026] FedCFamC2G 468 is a significant development in Australian employment law, marking the first final judgment under the sexual harassment jurisdiction introduced into the Fair Work Act 2009 (Cth) (FWA) in 2023. The case provides early judicial guidance on the operation of s 527D of the FWA, which prohibits sexual harassment “in connection with work”, and clarifies how courts may approach the assessment of penalties and compensation under this new regime.  The judgment also highlights the expanding role of the FWA in addressing workplace sexual harassment, alongside existing remedies available under anti-discrimination legislation.

Background

The applicant, a casual hospitality worker, commenced proceedings against her former employer, Capital City Café-Bar, and its sole director. By the time the matter came before the Court, the corporate employer had entered liquidation, leaving the director as the principal respondent.

The director made a number of key admissions. These included multiple contraventions of the FWA relating to underpayment and record-keeping failures, as well as accessorial liability under s 550. Importantly, the director also admitted to conduct amounting to sexual harassment contrary to s 527D.

The admitted conduct arose from a workplace incident involving unwelcome physical contact initiated by the director, including kissing the employee without her consent. The incident occurred in the workplace and within the context of the employment relationship, giving rise to a power imbalance. The applicant’s evidence also pointed to feelings of shock and fear following the incident, particularly given her personal circumstances as a young migrant worker with limited support networks.

Following the incident, the director sent a series of messages to the applicant expressing regret and encouraging her to return to work. However, the Court expressed a degree of doubt as to the motivation behind those communications.

Legal framework

Section 527D of the FWA was introduced following the Respect@Work reforms and creates a statutory prohibition on sexual harassment “in connection with work”. The provision is broader than earlier workplace protections, extending beyond conduct occurring strictly “at work” and capturing a wider range of work-related interactions.

As this was the published judgment under s 527D, there was limited authority as to how compensation should be assessed. The Court drew guidance from established principles in anti-discrimination law, particularly in relation to awards for non-economic loss.

In addition to the sexual harassment claim, the Court was also required to determine penalties for admitted contraventions relating to underpayments and non-compliance with record-keeping obligations.

Consideration and findings

Justice Mansfield accepted that the admitted conduct constituted sexual harassment within the meaning of s 527D. In assessing the seriousness of the contravention, the Court considered both objective and subjective factors.

A key consideration was the applicant’s vulnerability. The Court accepted that she was a relatively young worker, a migrant, and in a financially and socially precarious position. These factors heightened the seriousness of the conduct and its impact.

The Court balanced this with factors including that the harassment involved a single incident, and there was no evidence of a broader pattern of misconduct or a workplace culture that condoned such behaviour.

The respondent’s expressions of remorse were also examined. While the director had apologised in communications with the applicant shortly after the incident, the Court found that these messages were at least partly motivated by a desire to avoid disclosure and personal consequences, rather than reflecting genuine accountability. The Court placed weight on the fact that full admissions were not made until the day of the hearing.

Penalties and compensation

The parties reached agreement as to the appropriate quantum of penalties and compensation, and the Court ultimately accepted those figures as appropriate in the circumstances. Penalties were imposed as follows:

• $30,610 for contraventions relating to underpayment and record-keeping breaches; and
• $9,390 for the breach of s 527D.

In addition, the Court awarded $50,000 in damages to compensate the applicant for non-economic loss arising from the sexual harassment. In approving the agreed compensation figure, Justice Mansfield emphasised that awards for non-economic loss are inherently discretionary and fact-specific, and not amenable to precise calculation. Consistent with anti-discrimination case law, the Court reiterated that prior awards do not operate as strict precedents, and each case must be assessed on its own facts. All penalties and compensation were ordered to be paid to the applicant, notwithstanding the liquidation of the corporate employer.

This judgment is notable as the first judicial consideration of s 527D, and it provides important guidance on how courts may approach sexual harassment claims under the FWA. The case confirms that the new jurisdiction operates as a meaningful alternative pathway for workers seeking redress, complementing the existing framework under the Sex Discrimination Act 1984 (Cth).  This may be significant in cases in which applicants seek to pursue civil penalties in addition to compensation. The judgment further demonstrates that even a single incident of sexual harassment can result in substantial financial consequences, particularly where the worker is vulnerable or there is a clear imbalance of power.

The case also underscores the exposure of individual directors and managers to personal liability. The operation of s 550 of the Act means that individuals involved in contraventions may be held accountable, particularly where corporate employers are unable to meet their obligations due to insolvency. Finally, the Court’s reasoning highlights the importance of genuine contrition and early admissions. Attempts to minimise or conceal misconduct may be viewed unfavourably and can influence the Court’s assessment of penalties.

As further cases emerge, this judgment is likely to serve as a key authority in shaping the development of this evolving area of employment law. The judgment signals that courts are prepared to apply the new provisions in a manner consistent with the broader objectives of the Respect@Work reforms, ensuring that workers have access to effective remedies and that employers are held to account for unlawful conduct.

This article was published on 8 April, 2026 by Carroll & O’Dea Lawyers and is based on the relevant state of the law (legislation, regulations and case law) at that date for the jurisdiction in which it is published. Please note this article does not constitute legal advice. If you ever need legal advice or want to discuss a legal problem, please contact us to see if we can help. You can reach us on 1800 059 278 or via the Contact us page on our website. (www.codea.com.au).