The first decision on workplace sexual harassment under the Fair Work Act: Mejia v Capital City Cafe-Bar [2026] FedCFamC2G 468

Mejia v Capital City Cafe-Bar is the first decision to apply s 527D of the Fair Work Act, the standalone prohibition on sexual harassment connected with work. Judge Mansfield awarded $50,000 in compensation and $40,000 in personal penalties against the company's sole director, confirming that a single incident is enough to found a claim and that a psychiatric diagnosis is not needed to recover substantial damages.

Case note: Valeria Mejia v Capital City Cafe-Bar Pty Limited & Anor [2026] FedCFamC2G 468

Jurisdiction: Federal Circuit and Family Court of Australia (Division 2)

Decision-maker: Judge Mansfield

Date: 26 March 2026

Quick takeaways

• Mejia v Capital City Cafe-Bar Pty Limited & Anor [2026] FedCFamC2G 468 is the first published decision applying s 527D of the Fair Work Act 2009 (Cth), the standalone sexual harassment prohibition that commenced 6 March 2023.

• A single incident of sexual harassment is enough to contravene s 527D — the conduct does not need to be repeated or part of a pattern.

• The applicant recovered $50,000 for hurt, distress and humiliation without a diagnosed psychiatric injury or illness.

• The director was ordered to pay $40,000 in pecuniary penalties personally, on top of the compensation, after the corporate employer went into liquidation.

• Courts will treat awards from sex discrimination cases, including Richardson v Oracle Corporation Australia [2014] FCAFC 82, as yardsticks for compensation under s 527D.

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Introduction

When Parliament inserted Part 3-5A into the Fair Work Act 2009 (Cth), it created a standalone prohibition on sexual harassment in connection with work. The provision — s 527D — commenced on 6 March 2023 and implements Recommendation 28 of the Respect@Work Report. For three years, it sat on the statute book without a published decision applying it.

Mejia v Capital City Cafe-Bar is that first decision.

It is a significant one. Not because the law it applies is novel in its reasoning, but because it sets the opening reference point for how courts will assess compensation and penalties for sexual harassment under the Fair Work scheme — and because of what it confirms about who is exposed and what a worker needs to prove.

So, what does this mean for everyday practice?

Why this case matters

This decision matters for several reasons:

it is the first published decision on s 527D of the Fair Work Act, and so the first time a court has assessed compensation and pecuniary penalties under the new prohibition;

it confirms that a single incident of sexual harassment is enough to contravene s 527D — the conduct does not need to be repeated or part of a pattern;

it confirms that a worker can recover substantial compensation for hurt, distress and humiliation without proving a diagnosed psychiatric injury or illness; and

it confirms that the body of damages authority developed under sex discrimination law is directly relevant to assessing compensation under the Fair Work Act, and that an individual — here, a company director — can be personally liable, both for the harassment itself and, as an accessory, for the employer's wider contraventions.

It should be read alongside its companion decision, Eklom v Marshall [2026] FedCFamC2G 772, handed down five days later, which extends the reach of s 527D beyond the employer to a contractor and a customer. Together, the two decisions begin to map the boundaries of the new jurisdiction.

What kind of case was this?

This was not a contested liability hearing. By the time the matter came before Judge Mansfield, the second respondent — Mr Kehal, the sole director of the café operator — admitted both the company's contraventions and his own accessorial liability, and admitted that he had sexually harassed the applicant contrary to s 527D.

The parties also jointly proposed the compensation and penalty figures. That left a narrow but important question: whether the agreed amounts were appropriate. As the Court made clear, a joint proposal does not relieve the Court of its task. The Court must still be satisfied that any compensation order is for loss suffered because of the contravention and that the order is appropriate, and that any penalty is within the permissible range and serves the objects of deterrence.

Two procedural features shaped the orders. First, the corporate employer (the first respondent) had a liquidator appointed on the eve of hearing, so the proceeding against the company could not proceed and was discontinued; the applicant indicated she would lodge a proof of debt for her unpaid entitlements. Second, liability fell to be determined against the director personally — both directly for the harassment and, by way of s 550, as an accessory to the company's failures on pay slips, information statements, award entitlements, superannuation and record-keeping.

Key facts

The applicant was a 23-year-old casual waitress. She had recently arrived in Australia from Colombia, held a bridging visa while awaiting the outcome of a student visa application, and had limited financial resources and social supports. She was employed at a Canberra café managed by Mr Kehal and his wife.

On the day in question, the applicant had earlier tried to raise a concern that she could not reconcile her pay against the hours she had worked. Mr Kehal avoided the issue and instead offered to "help" by telling her to go shopping and that he would pay for whatever she wanted.

Later that afternoon, the applicant was alone in the kitchen with Mr Kehal and the chef. Mr Kehal sent the chef out to take the bins out — a task usually done by the applicant. On the applicant's unchallenged evidence, Mr Kehal then came up behind her at the sink, wrapped both arms around her, pinned her against the sink, held an open wallet in front of her and pressed her to take money. She was frozen and frightened. She took the smallest note to get him to step back, pushed his arm away, and as she moved he leaned in and kissed her on the lips without her consent. She did not return to work.

In the days that followed, Mr Kehal sent a series of messages apologising and asking her not to disclose what had happened, and his wife messaged offering to pay her extra. The Court did not treat those messages as genuine remorse; it found they were motivated by a desire to keep the incident undisclosed and avoid consequences.

Running alongside the harassment was a comprehensive disregard for the employer's obligations: no Fair Work Information Statement or Casual Employment Information Statement, no pay slips within time, false and misleading pay slips later provided to the Fair Work Ombudsman, underpayments totalling approximately $6,079.08, unpaid superannuation, and failures to keep and produce records.

The orders

The Court declared that Mr Kehal had contravened s 527D by sexually harassing the applicant, and that he was accessorily liable for the company's other contraventions. By consent, it ordered:

• $50,000 compensation for hurt, distress and humiliation arising from the sexual harassment, under s 545(2)(b);

• a $9,390 pecuniary penalty for the s 527D contravention; and

• a $30,610 pecuniary penalty for the balance of the contraventions.

The penalties were ordered to be paid to the applicant, and the total of $90,000 was payable within 60 days.

Compensation: hurt, distress and humiliation without a diagnosis

The most practically useful aspect of the decision for practitioners is its treatment of compensation.

The compensation was expressly for non-economic loss — hurt, distress and humiliation. The evidence on that loss was, in the Court's own description, relatively limited. The applicant had attended her GP once to discuss the impact on her mental health, but did not receive psychological intervention and did not appear to have returned for further consultation. She had also found new employment about three weeks after her last shift. The respondent relied on those features to argue that the level of injury should be measured in that context.

The Court accepted both the applicant's and the respondent's characterisations as reasonable summaries of the evidence and still made the $50,000 award. The point for practitioners is clear: a worker does not need to prove a diagnosed psychiatric injury or illness to recover meaningful general damages under s 527D. Hurt, distress and humiliation flowing from the contravention are compensable in their own right.

In reaching that conclusion, the Court adopted the applicant's submissions on approach and authority — and those submissions drew directly on sex discrimination law. The Court referred to Richardson v Oracle Corporation Australia [2014] FCAFC 82, and the principle that compensation must reflect "general standards prevailing in the community," which have shifted towards a greater appreciation of the seriousness of sexual harassment. It accepted that, because s 527D is designed to complement the anti-discrimination jurisdiction, awards should sit broadly in line with comparable cases under that jurisdiction. And it accepted, following Bromwich J in Magar v Khan [2025] FCA 874, that prior awards are not precedents but can act as yardsticks, because the assessment of general damages is not a science and each case turns on its own facts.

The Court also accepted that sexual harassment is not mitigated by the fact that it occurred on a single occasion. The contravention here was a single incident, with no evidence of prior inappropriate behaviour or a permissive culture — and that did not stand in the way of a substantial award.

The aggravating and mitigating features

Although the figures were agreed, the Court worked through the relevant subjective factors, because they bear on whether the amounts were appropriate.

On the harassment, the factors pointing towards a serious view were the applicant's vulnerability — young, female, a migrant, of limited financial resources and limited social supports, all readily observable — and Mr Kehal's position of authority, which he sought to leverage by holding out a financial inducement. The single-incident character of the conduct, and the absence of any prior contraventions, pulled the other way. The Court declined to treat the post-incident messages as genuine acceptance of responsibility.

On the balance of the contraventions, the objective seriousness lay in a near-complete disregard for the obligations of a national system employer. The false and misleading pay slips were treated as more culpable, because that conduct was designed to avoid detection by deception. The Court was not deflected by the fact that Mr Kehal's wife had handled aspects of the employment: as sole director, he was the controlling mind of the company.

Implications for practice

A new, parallel pathway with real teeth

Mejia confirms that s 527D gives workers a genuine alternative to the anti-discrimination jurisdiction, with access to both compensation and pecuniary penalties. The penalty component is significant — here, $9,390 for the harassment alone, at 50 per cent of the maximum, payable to the applicant. For advisers acting for workers, the availability of penalties payable to the applicant, on top of compensation, is a feature worth weighing when choosing a forum.

Personal and accessorial exposure

The decision is a pointed reminder that liability under s 527D attaches to the individual who harasses, and that directors and managers can be personally pursued as accessories under s 550 for the business's wider Fair Work contraventions — exposure that survives even where the corporate employer collapses into liquidation. Where a company is insolvent, the individual may be the only meaningful respondent left standing.

Damages authority is borrowed from sex discrimination law

Until a body of s 527D-specific authority develops, practitioners should expect courts to reason from the established sex discrimination cases — Richardson v Oracle and the line of decisions applying community standards — and to use prior awards as yardsticks rather than tariffs.

Practical steps for practitioners

• For workers: A diagnosed psychiatric injury is not a precondition to substantial general damages. Evidence of hurt, distress and humiliation — sleeplessness, rumination, feeling unsafe, withdrawal from work — can support a meaningful award. That said, the quantum available rises with the strength of the evidence, so contemporaneous medical and lay evidence should still be gathered.

• For employers and their advisers: Treat s 527D as a live, penalty-bearing exposure for the business and for the individuals who control it. Compliance with the surrounding Fair Work obligations — information statements, pay slips, award entitlements, superannuation, record-keeping — is not a separate silo; in Mejia those failures attracted the larger share of the penalties.

• On settlement: A joint proposal on quantum does not bind the Court. Where parties agree compensation and penalties, the material should still establish that the compensation is for loss caused by the contravention and that the figures are appropriate, or the Court may decline to make the orders sought.

Concluding thoughts

Mejia is the first word, not the last, on s 527D. But it is a clear one. A single incident is enough. A worker need not produce a diagnosis to be compensated for the hurt and humiliation that harassment causes. The damages thinking developed under sex discrimination law carries across. And the people who harass — and the directors who preside over businesses that flout their obligations — can be made to pay personally.

Read with its companion decision in Eklom v Marshall, which takes the prohibition beyond the employer altogether, the message for practice is that the Respect@Work reforms have given workers a real and well-resourced route to redress — and given everyone connected to a workplace a reason to take the prohibition seriously.

Related reading: Harassment beyond the boss: Eklom v Marshall [2026] FedCFamC2G 772