Victoria has recently unveiled plans for a new form of non-disclosure agreement that puts more power in survivor’s hands. Will other states and territories follow suit?

Five years have passed since the #MeToo movement exposed the use and some say abuse of non-disclosure agreements (NDAs) by employers to cover up sexual harassment by silencing the voice of survivors.  

Despite the pleas for reform by survivors, unions, employer associations and the community at large, many Australian jurisdictions still allow this practice to continue. Indeed, NDAs have, for many years, been standard practice for employers dealing with sexual harassment complaints in Australia.

However, a recent legislative proposal from the Victorian government could soon change things. More on that in a moment. First, let’s look into the ways in which NDAs have been potentially misused in the past.

What is an NDA?

In the context of sexual harassment complaints, a non-disclosure agreement is a legally enforceable confidentiality agreement whereby a financial sum is provided to the complainant by the organisation in settlement of the matter. In exchange, the complainant agrees not to discuss the matter publicly or take legal action against the organisation. 

NDAs have historically been attractive to employers to avoid short-term reputational issues, maintain share price and minimise liability. Longer term, however, they are increasingly being recognised as a way to mask the often toxic company culture that enabled the harassment to take place.

Unless deliberate strategies and culture change projects are deployed to address this, such behaviours will permeate and dysfunction will perpetuate. Further, repeat offenders are emboldened and hidden behind closed doors – often kept in the same or similar position with limited consequences for their actions.  

Voiceless victims, no transparency and inability to work

There are myriad concerns to arise from the use of NDAs in sexual harassment claims. The most apparent issue is that victims are silenced in perpetuity. 

They do not have agency over the narrative of what happened to them, even where allegations have been substantiated, and are unable to talk to colleagues, friends, family or prospective employers about the harassment should they wish to.  

“If passed, [Victoria] will be the first Australian jurisdiction to implement such prohibition to ‘break the silence’ of victims of sexual harassment in the workplace. 

This often leaves them feeling isolated and distressed. By silencing the discussion, awareness of the prevalence of sexual harassment is reduced and social change is inhibited. Employers in turn often miss the opportunity to fix systemic and long-term work health and safety challenges presented by the misconduct and to send a clear message about inappropriate behaviour to employees, stakeholders and the broader community. 

Separately, some survivors claim it is difficult for them to find employment following the use of NDAs as they are unable to disclose the real reason they left the organisation, sometimes with only a short period of service. This can look like a blemish on their record and employers might assume they’re “flighty” or lack loyalty.         

This may drive women out of the workforce, given the gendered nature of sexual harassment (in the Victoria Equal Opportunity and Human Rights Commission inquiry into sexual harassment, 92.5 per cent of respondents were female).  

Victoria unveils new form of NDA

In a ground-breaking moment in Australian history, the Victorian Government has accepted in principle the recommendation made by Ministerial Taskforce on Workplace Sexual Harassment (Taskforce), prohibiting the use of a non-disclosure agreement in workplace sexual harassment matters.  

If passed, this will be the first Australian jurisdiction to implement such prohibition to ‘break the silence’ of victims of sexual harassment in the workplace. 

The Taskforce recommended Victoria adopt a similar approach to Ireland’s model contained in the Employment Equality (Amendment) (Non-Disclosure Agreements) Bill 2021 (Irish Bill). 

Although not yet enacted, the Irish Bill prevents employers from entering NDAs in circumstances where an employee has experienced or made allegations of sexual harassment or unlawful discrimination, other than where this is the expressed wish and preference of the employee.  

An NDA entered at the employee’s preference will not apply in relation to communications between the employee and specified persons (including legal professionals, medical professionals, mental health professionals, prospective employers and the employee’s friends and family). To be enforceable, the following criteria must be satisfied:

• The employer has offered the employee independent written legal advice, at the employer’s expense
• The employer has not made undue attempts to influence the relevant employee in respect to the decision to include a confidentiality clause
• The NDA does not adversely affect the future health or safety of a third party or the public interest 
• The NDA includes an opportunity for the relevant employee to decide to waive their own confidentiality in the future
• The NDA is of a set and limited duration.

Allowing the victim to tell their story and not imposing a blanket prohibition on its disclosure, means they have agency to decide whether they sign an NDA should they wish to maintain their privacy, or feel doing so is in their personal best interest. The choice they have to sign an NDA, posing an increased risk of conduct being exposed publicly, may also deter some harassers.

Champions of Change Coalition further suggested that a new form of NDA should expressly carve out the right of the organisation to disclose, in a de-identified way, that a complaint has been made and how it had been dealt with, as well as any substantiated outcomes to increase transparency and accountability. 

As this form NDA is relatively new, therefore there is limited information on how common its use is by employers in Australia. Nevertheless, once the Victorian legislation is passed, there will be increased pressure on all States and Territories to follow suit.

Ending the silence

In light of the strong stance against sexual harassment taken by Victoria and reports such as Respect@Work and Set the Standard, Australian employers should proceed with caution when using NDAs in sexual harassment matters.  

Employers may be proactive and amend their NDAs to permit survivors to discuss their experiences and only seek confidentiality on key sections of a settlement agreement, such as the terms of settlement, including payments made.

Employers are beginning to consider and accept that the voices of survivors need to be heard to eliminate sexual harassment in the workplace and to hold perpetrators accountable. 

The proposed Victorian legislation will mark an important first step in breaking the culture of silence in Australia. If other states do not introduce similar laws, it may be that employers pivot to effectively nationalise the proposed Victorian NDAs in their workplaces by implementing national policies that reflect the Victorian laws.

If they do not, the unpalatable result will be that survivors in Victoria will have more agency while survivors in other jurisdictions will remain silenced. 

Fay Calderone is a Partner at Hall and Wilcox law firm.

Creating a new non-disclosure agreement process is just one way to fight against sexual harassment at work. AHRI’s short course on bullying and harassment will equip you with more preventative tools. Sign up for the next course on 8 September.