The full bench of the Federal Court has dismissed an appeal from workplace health insurer Comcare, which had argued the woman's motel room tryst had nothing to do with her job.
However, the court said it did not matter whether she spent her evenings having sex or ''playing a game of cards'', she was still, in effect, at work.
The case, which has involved three legal appeals, is likely to have significant repercussions for employers, as it clarifies when they are responsible for staff.
The woman, who worked for a federal government agency, was sent on a work trip to an office in regional NSW in November 2007.
Her employer booked her a motel, where she arranged to meet and dine with a male friend after work.
They returned to her room and had sex, during which a glass light fitting above the bed was pulled off its mount and fell onto her face.
It injured her nose and mouth and she suffered from depression and anxiety afterwards, rendering her unable to work.
The Federal Court suppressed the woman's name during an earlier appeal, saying she was unprepared to continue with the case ''if a consequence of doing so is that her true identity will be made public''.
Comcare initially accepted her claim but later revoked her compensation, saying the injury happened outside the course of her official duties.
Three judges ruled last week that the woman's ''lawful sexual activity'' was not misconduct and she should not, therefore, be punished for it.
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