A contractor and a customer have been ordered to pay $116,000 after sexually harassing a worker.
The unique part?
Neither of them worked as an employee for the employer.
The decision of Eklom v Marshall [2026] FedCFamC2G 772 is one of the first significant decisions considering the workplace sexual harassment provisions introduced into the Fair Work Act as part of the Respect@Work reforms.
While the compensation and penalties imposed by the Court are noteworthy ($116,000 awarded against the individuals), the broader significance of the case lies in what it tells employers about the expanding reach of workplace sexual harassment laws and the increasing expectation that organisations proactively manage these risks.
The Facts
The applicant was employed as a site manager at a storage facility, namely the well-known Storage company, Storage King.
Over a period of months, he was subjected to repeated homophobic and sexualised comments by a contractor engaged by the business and a regular customer who had become a frequent presence at the workplace.
The conduct included:
- derogatory comments,
- sexualised remarks about ordinary workplace activities including when he had to bend over to clean spaces or duck under a lock up door,
- unwanted physical contact,
- repeated references to the employee as “the gay boy”, “storage queen” (a play on words of the employer, Storage King) and “office boy”.
The Court found that the two men reinforced and escalated each other’s conduct, describing the behaviour as almost becoming a game.
Importantly, the case was not concerned with whether the employee was homosexual. The Court made it clear that this was irrelevant.
The issue was whether the conduct constituted sexual harassment connected with work.
The Court concluded that it did.
The employee provided medical evidence establishing he had developed anxiety, stress and depressive symptoms as a result of the ongoing conduct. The Court described the behaviour as a very serious example of sexual harassment at work.
Initially, the Employer was also roped into the application, with an argument of vicarious liability. However, this was not pursued further in the application at hearing.
Compensation of $90,000 was awarded to the employee, with a further $13,000 penalty imposed on each respondent.
The total financial consequence exceeded $116,000.
Why This Decision Matters
Most employers understand that they can face significant risks when employees sexually harass other employees.
What many organisations have not yet fully appreciated is how far workplace sexual harassment obligations now extend beyond traditional employment relationships.
The decision highlights the operation of section 527D of the Fair Work Act, which prohibits sexual harassment occurring in connection with work.
The provision is deliberately broad.
It is deliberately not confined to employees.
It can apply to workers, contractors, labour hire personnel, prospective workers and individuals conducting businesses or undertakings.
The Court observed that if a customer sexually harasses a worker in the course of their employment, the worker may still be protected under the legislation because the conduct occurred in connection with work.
Some of the industries where CEO’s, executives, owners, board members and HR professionals will need to assess these risks include
- retail,
- hospitality,
- health,
- local government,
- professional services, and
- other customer-facing businesses.
The workplace sexual harassment risk profile is no longer limited to the conduct of employees.
The Shift From Complaints To Prevention
For many years, workplace sexual harassment was largely approached as an investigation issue.
A complaint would be made.
An investigation would follow.
The organisation would respond.
That approach now requires more scrutiny and improvement.
The Respect@Work reforms, together with evolving workplace health and safety obligations such as psychosocial risks and hazards, have fundamentally shifted the focus towards prevention.
Regulators, courts and employees are increasingly asking a different question:
What steps were taken to prevent the conduct from occurring in the first place?
The answer can no longer simply be a policy sitting on an intranet or a training module completed several years ago. Or even worse:
“I don’t know” or “Nothing”.
Organisations are expected to identify risks, assess the risks, implement controls and actively monitor workplace behaviour.
The focus is moving from reaction to prevention.
The Growing Connection Between Employment Law and Safety
One of the most important developments over the past decade has been the increasing overlap between employment law and workplace health and safety.
Sexual harassment is no longer viewed solely as a human resources issue.
It is increasingly recognised as a psychosocial hazard capable of causing significant psychological harm.
In Eklom, the employee’s medical evidence established anxiety, stress and depression arising from the conduct.
That outcome is consistent with what regulators across Australia have been emphasising for several years.
Sexual harassment is not simply misconduct.
It is also a workplace health and safety risk.
That distinction is important as safety obligations require employers to take proactive steps to eliminate or minimise risks before harm occurs.
3 Questions Every Employer Should Consider
This decision provides a useful opportunity for employers to assess their own systems and practices.
First, have you identified situations where workers may be exposed to inappropriate conduct from customers, contractors, suppliers or other third parties?
Secondly, can you demonstrate meaningful and recent training that reflects the actual risks within your workplace?
Thirdly, if a regulator requested evidence tomorrow, could you show the practical steps your organisation has taken to prevent workplace sexual harassment?
These questions are becoming increasingly important as regulators continue to focus on proactive compliance rather than reactive responses.
What Employers Should Be Doing Now
Employers should consider whether their current framework adequately addresses modern workplace risks.
This includes ensuring that:
- sexual harassment is clearly identified as serious misconduct within workplace policies;
- training is practical, regular and relevant to the risks employees actually encounter;
- psychosocial hazard assessments specifically address sexual harassment risks;
- managers understand their obligations to identify and respond to concerns early;
- customer and contractor interactions are included within workplace risk assessments; and
- records are maintained demonstrating the preventative steps taken by the organisation.
The organisations most exposed are often not those without policies.
They are the organisations that assume policies alone are enough.
The Broader Lesson
The most significant aspect of Eklom is not the amount of compensation awarded.
It is the reminder that workplace sexual harassment risks are no longer confined to the organisational chart.
The Court was not dealing with managers, executives or employees.
It was dealing with a contractor and a customer.
Yet the conduct still fell squarely within the workplace sexual harassment provisions of the Fair Work Act.
For employers, CEO’s, Owners, Board members and HR teams and executives, that serves as a reminder that workplace risk extends beyond direct employees.
Increasingly, courts, regulators and workers are examining the entire workplace environment and everyone who operates within it.
The question for employers is whether their prevention strategies have evolved at the same pace as the law.
Need Assistance?
South Geldard Lawyers regularly assists employers, HR teams and executives with:
- Sexual harassment prevention frameworks
- Respect@Work compliance reviews
- Workplace investigations
- Psychosocial hazard management
- Manager and leadership training
- Employment law and workplace safety audits
If you would like to discuss your organisation’s current approach to preventing workplace sexual harassment, contact our Employment Law Team.
