Victims of sexual harassment who bring a claim for compensation and, during that process, are involved in the negotiation of a settlement are, in our experience, often asked to sign a non-disclosure agreement (NDA).
NDAs, which may also be known as confidentiality clauses or agreements, are often assumed or even asserted to be a standard or 'usual' part of a settlement agreement. In reality, they are just another part of any settlement proposal that is not an essential term and is entirely up for negotiation.
It cannot be sensibly disputed that workplace sexual harassment is prevalent in Australian workplaces. According to the 'Time for respect: Fifth national survey on sexual harassment in Australian workplaces' report, one out of three people say that they have experienced workplace sexual harassment in the last five years. Women are more likely to experience workplace sexual harassment (41%) as compared to men (26%). In some sectors or industries, this number may be even higher.
What is sexual harassment?
Sexual harassment is defined as unwelcome conduct of a sexual nature in circumstances in which a reasonable person, having regard to all the circumstances, would have anticipated the possibility that the person harassed would be offended, humiliated or intimidated. Sexual harassment can be a single incident or repeated behaviour over a period of time.
It can include unwanted verbal conduct (for example, a request for sexual favours, sexual comments or offensive jokes) or physical behaviour of a sexual nature. Regardless of the intention of a perpetrator, sexual harassment is against the law.
Sexual harassment is prohibited in Australia by the Sex Discrimination Act 1984 (Cth) (SDA) as well as the Fair Work Act 2009. There are also state-based regimes and Commissions/Tribunals that regulate this area. Sexual harassment is prohibited in employment, educational institutions, and in the provision of goods, services and facilities, as well as in other settings.
Options for people subjected to workplace sexual harassment
If you have been sexually harassed in the workplace, you can:
- report the harassment to your manager or human resources department;
- seek help from your union for advice and assistance about your rights and entitlements;
- seek legal advice;
- apply to the FWC for a 'stop sexual harassment order';
- lodge a claim in the AHRC or the FWC (or with a state-based Tribunal).
If you suffer physical injury or develop a psychological illness due to workplace sexual harassment and you require medical treatment and/or time off work, you may also be eligible for worker's compensation.
Settling your claim by negotiation between the parties
When a person chooses to make a claim due to workplace sexual harassment under the SDA, they have the option to bring a claim in the Australian Human Rights Commission. The AHRC process may take a long time, and going to court can be stressful and involve significant legal costs. Because of this, many victims choose to first attempt to settle their claims by negotiation between the parties.
There are many advantages to settling a claim before it goes to the AHRC. These include a faster resolution of the matter and reduced costs, and you might be able to negotiate outcomes that would not otherwise be available to you if you proceeded to court.
As discussed above, there is the option of making a settlement private and confidential, which is often something that the defendant requests. This is where the use of NDAs comes in.
If you're being asked to sign a settlement deed that has an NDA, it is crucial that you seek advice before signing anything.
What is a non-disclosure agreement?
An NDA, or a confidentiality clause or agreement, is a legal contract between parties to a dispute. It outlines confidential material, knowledge, or information that the parties to the NDA agree will not be shared or discussed with anyone else.
Example - In a workplace context, a strict NDA would prevent both the employer and employee from discussing the fact that the sexual harassment occurred at all, with anyone else, including close family, friends or other colleagues. Employers will often seek NDAs to avoid reputational harm to their business, or to the person who was responsible for the sexual harassment, or both.
How common are non-disclosure agreements?
While the use of NDAs has been receiving more scrutiny in recent years, their use remains widespread. A research report (March 2024), "Let's talk about confidentiality: NDA use in sexual harassment settlements since the Respect@Work Report", indicates that many lawyers still view the inclusion of strict NDAs in settlements for sexual harassment as standard practice and insist that they form a part of a settlement.
According to the report, approximately 75% of the lawyers surveyed, being 69% of applicant and 79% of respondent lawyers, have never resolved a sexual harassment complaint without a strict NDA.It is, of course, concerning that the NDA use is seemingly so entrenched that many lawyers do not advise their clients of the option tonothave such a provision.Close to 30% of applicant lawyers and 50% of respondent lawyers have never provided this advice to clients.
The problems with non-disclosure agreements
Strict NDAs prevent those who have entered into a settlement deed from discussing any aspect of the matter with any other person, including family, friends and former colleagues. This may have significant negative impacts on a victim's attempt to achieve closure and also on their ongoing mental health. It prevents persons from being able to share their story, if they so choose, and also, for example, from being part of a campaign against sexual harassment in the future.
The Legal Services Board in the United Kingdom noted one survey that suggested that 95% of those who have signed NDAs said that they have ongoing impacts on their mental health.
While NDAs are often sought by employers, they may also have a negative impact on their business in the long term. This is because they may prevent the employer from appropriately dealing with the underlying culture or behaviours that led to the incident in the first place, and thereby increases the risk of the misconduct reoccurring.
Trends in the regulation of NDAs
There has been some interest in limiting the use of NDAs in workplace sexual harassment settlements both in Australia and worldwide.
In Victoria, the Victorian Ministerial Taskforce on Workplace Sexual Harassment recommended legislative change to restrict the use of NDAs in workplace sexual harassment claims. We are yet to see any of the recommended changes being introduced.
In Ireland, the Employment Equality (Amendment) (Non-Disclosure Agreements) Bill 2021 has been proposed. If enacted, it would allow employers to enter into an NDA only if it is the express wish and preference of the employee and where certain other stringent conditions are met. Similar legislation exists in some Canadian jurisdictions.
Do I have to sign an NDA?
The treatment of NDAs as standard in workplace sexual harassment settlements is no longer considered to be best practice. It is inconsistent with recent guidelines released by the Australian Human Rights Commission, which set out the following recommended approach to the use of confidentiality clauses:
- consider the need for a confidentiality clause on a case-by-case basis;
- the scope and duration of the confidentiality clause should be as limited as possible;
- confidentiality clauses should not prevent organisations from responding to systemic issues and providing a safer workplace;
- all clauses in a settlement agreement should be clear, fair, in plain English and, where necessary, translated and/or interpreted;
- the person who made the allegation should have access to independent support or advice to ensure they fully understand the meaning and impact of the settlement agreement, including any confidentiality clause; and
- negotiations about the terms of a settlement agreement should ensure, so far as possible, the well-being and safety of the person who made the allegation and be trauma-informed, culturally sensitive and intersectional.
If you have been provided a settlement deed in relation to workplace sexual harassment, you should seek advice before signing it, particularly if it contains an NDA.
The authors of the Let's Talk About Confidentiality Report suggest that lawyers failing to advise their client that an NDA may not be included in a settlement could constitute a breach of professional legal obligations, which require clear and timely advice so that clients can make informed choices in their instructions.
What this means is that neither an employee nor employer should just assume that a strict NDA will be part of a sexual harassment settlement. NDAs are optional and should be negotiated just like any other part of your settlement. Even if an NDA is sought, its terms should, at the very least, in our view, allow the victim to talk about their experiences with their treating health professional and with close friends and family.
Lawyers acting for employers should advise their clients to consider whether having an NDA as part of a settlement is in the long-term interests of their business, especially since employers now have a positive duty to prevent sexual harassment in the workplace.
What happens if I breach an NDA after settling my sexual harassment claim?
An NDA is a contract, and, like any contract, breaching it could lead to an employer bringing a claim for any harm that they might have suffered as a consequence. This could include financial or reputational harm.
The potential consequences of breaching an NDA can be serious, which means that it is vital that the NDA is properly drafted and reviewed by your union or by a lawyer acting on your behalf.
Get help from an employment lawyer
If you or someone you know is experiencing sexual harassment in the workplace and you'd like advice or assistance about your legal options, including with respect to compensation, non-disclosure agreements, confidentiality clauses or settlement generally, our employment law teams across the country are able to assist.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
