Lawyers said the Federal Court ruling - which found that the workplace "may be a fixed or moving location" - could have far-reaching ramifications in a digital age where people used laptops and smartphones as mobile workstations.

Chartered accountant Jemma Ewin, 36, was awarded damages of almost $500,000 by the Federal Court in December - one of Australia's largest-ever sexual harassment payouts. Claudio Vergara, 40, was found to have sexually harassed Ms Ewin four times in May 2009.

The harassment began at the CBD office that Ms Ewin and Mr Vergara shared. One night Mr Vergara turned the lights off, walked behind her in the dark and tried to touch her hand.

He told Ms Ewin that he would turn the light back on only if she agreed to talk with him, and they went to the Waterside Hotel, where Mr Vergara proposed in "crude and explicit terms" that they have an affair.

Ms Ewin, who is married, refused the offer, but Mr Vergara tried to kiss her outside Southern Cross train station.

The harassment mainly involved unwelcome advances before the pair became involved in a drunken sexual encounter after a work function at Melbourne Aquarium. Ms Ewin accused Mr Vergara of rape. He was not charged by police.

On Tuesday, the Federal Court dismissed an appeal by Mr Vergara, who argued that the Waterside Hotel could not be considered a workplace.

In a majority decision, the court found the pub met the statutory definition of ''workplace'' because they had gone there to talk about what happened at the office.

Sex Discrimination Commissioner Elizabeth Broderick said the ruling showed that sexual harassment could occur outside the physical workplace - in an office building's common areas, a taxi or a hotel - if there was a work connection.

"It's a reminder that we need to take sexual harassment with the utmost seriousness ... businesses need to train staff and make sure they understand that behaviour outside of the four walls of the organisation is also unlawful," she said.

Ms Broderick said businesses needed to stamp out sexual harassment from workplace culture.

Kerryn Tredwell, partner at law firm Hall & Wilcox, said the ruling was significant because the pair were not fellow employees - Mr Vergara was contracted through a labour-hire company.

"That's why it was so important to determine that the hotel was a workplace," she said.

Ms Tredwell said it showed that the workplace "could be anywhere you take your laptop - on the train, at a cafe, at a bar, day or night".

"There are no limits to the location of a workplace for the purposes of sexual harassment," she said.

Trish Low, national leader of equal opportunity and training at Herbert Smith Freehills, said employers had become increasingly aware of their liability for sexual harassment between employees outside the workplace. But Tuesday's judgment - involving an employee and a contractor - was a "good clarification" about the provisions of the law.

"Employers need to be conscious that this extends to their contractors, not just employees, and can extend to situations that occur outside of the typical workplace," she said.