The Victorian Government yesterday launched a discussion paper and 4-week consultation period on restricting non-disclosure agreements (NDAs) in workplace sexual harassment cases. The Government’s announcement focuses on the ‘silencing’ effect of NDAs, which is a major concern among victim-survivor advocates.
As outlined in our previous in-depth examination of the use of NDAs in workplace sexual harassment claims, there is no homogenous view on the use of NDAs in settling workplace sexual harassment claims, and certainly no one-size-fits-all solution to meeting the varying interests of parties in such matters. NDAs can be moulded to the facts of a case, but the current prevailing trend of using strict NDAs as standard practice is problematic – as reflected in the Victorian Government’s announcement – and has the potential to run counter to an employer’s positive duty to prevent workplace sexual harassment.
Importantly, the positive duty on employers to prevent workplace sexual harassment in section 47C of the Sex Discrimination Act 1984 (Cth) means that employers must act proactively to stop instances of sexual harassment and address systemic issues contributing to an environment where sexual harassment can occur, not just react after incidents occur.
As to the use of NDAs, organisations need to think carefully about balancing the use of confidentiality terms with the need to examine what the sexual harassment says about the company and its state of compliance with the positive duty. Reflecting on the potential elements of the Victorian reforms may present an opportunity to consider your organisation’s policy position on the use and design of NDAs, along with consulting and engaging stakeholders to align policies with actual practice.
Given the early, exploratory status of the Government’s consultation process, it remains to be seen how reforms may be crafted to strike a balance between complainant protection and the preservation of other non-harassment related confidentiality protections (for example, those under separation agreements and post-employment confidentiality policies).
What could the NDA reforms look like?
The discussion paper contemplates various potential elements (including retrospective application) which could form a legislative framework for restrictions on the use of NDAs, including:
- A prohibition on NDAs unless requested by the complainant
- A requirement that a complainant is offered independent legal advice – which may be at the employer’s expense – prior to entering into an NDA
- Mechanisms to ensure no attempts are made to unduly pressure or influence a complainant to enter into an NDA
- A requirement that the NDA does not adversely affect others (for example, to ensure employers can still take appropriate action to address sexual harassment in the workplace)
- A confidentiality ‘waiver option’ for complainants
- Time limitations on the duration of NDAs, whether by legislation or as agreed by parties to an NDA
- Pre-signing review periods, and cooling off periods for complainants
- Permitted disclosures of information about the relevant complaint to certain individuals and bodies, to ensure the complainant can seek support and advice
- A prescribed form of NDA or certain mandatory clauses
Where to from here in Victoria?
The Government is inviting feedback on the proposed legislative reforms, by way of submissions and survey responses, from now until 8 September 2024. The Government is encouraging submissions from people who have experience of sexual harassment in the workplace, employers, employees, and their respective representatives, among other groups and stakeholders.
We will keep across the progress of the reforms.
The broader context
From a Victorian context, this consultation period follows the Victorian Government’s acceptance, in principle, of a 2022 recommendation of the Ministerial Taskforce on Workplace Sexual Harassment that the State legislate to restrict the use of NDAs, using the Irish Employment Equality (Amendment) (Non-Disclosure Agreements) Bill 2021 and lessons from jurisdictions such as the UK and US as a model for reform.
More broadly, this latest chapter in approaches to the use and regulation of NDAs in Australia also comes after the March 2024 release of the ‘Let’s talk about confidentiality’ report led by practitioners at the Human Rights Law Centre and Redfern Legal Centre, which investigated the use of NDAs in sexual harassment settlements since the release of the 2020 Respect@Work report (the latter of which cautioned the use of NDAs could “contribute to a culture of silence”). Based on a survey of sexual harassment legal practitioners across Australia, the 2024 report found that approximately 75% of the profession had never settled a sexual harassment complaint without a rigorous NDA, though there are some signs this practice is evolving.
