Caution is Required with Non-Disclosure Agreements’ Reform

A few weeks ago, Victoria’s Daniel Andrews Labor Government announced it is implementing recommendations from its workplace sexual harassment taskforce, including restricting the use of non-disclosure agreements. I was relieved to see some caution around its implementation by having further consultation. Although Australia’s record on eradicating sexual harassment from the workplace is not a source of pride, we need to be mindful of making changes which, on the face of it, seem to improve the situation but in the end throw up more concerns for complainants.

If there is a dispute resolution process that leads to the settlement of sexual harassment claims, it is documented; the document generally expressly states that no admission of liability is made and contains confidentiality and non-disparagement provisions.  The latter two elements are colloquially described as non-disclosure agreements or provisions.

Such documents generally involve the payment of money to a complainant.

Given that such dispute resolution is directed towards parties not merely asserting their rights but considering what’s in both their interests, it generally involves a pragmatic resolution.  If a too heavy-handed approach is taken to the use of non-disclosure provisions by the Victorian Government, it might find that employers become less inclined to settle a complaint if there is no confidentiality clause.

It might also mean that a complainant who wants their complaint dealt with, and an acknowledgement of what was done to them, but has no desire to make it public knowledge, is put in a situation where settlement becomes more problematic and they are exposed to a process where they have to tell their story on multiple occasions, including in a witness box and be cross examined about their recollections and motivations. Is that a satisfactory outcome for most complainants?  Probably not.

There are some who point to the more egregious examples of sexual harassment to argue these people should be shamed in the court of public opinion, to say nothing of the courts. But I suspect there are many complainants who also dread their experiences going public. As such, I believe it would be a mistake to base a policy response on an extreme set of circumstances.

So, what’s the solution? In the UK, there is a requirement to seek external legal advice (at the cost to the company) and have the lawyer sign off that the advice was provided. Perhaps in Australia we should implement a similar approach. This would ensure that anybody signing the agreement is effectively briefed and their various options considered. It would also hold organisations to account, knowing that an external third party will review the terms of the agreement.

On the issue of the scope of non-disparagement provisions, a way to address these concerns is to have an agreed communication approach and wording for the parties post agreement. This would allow the complainant to agree to what can be disclosed but still allow for the limiting of disparaging commentary by the other person. I have certainly used agreed communication approaches in other circumstances where people are leaving the organisation, and I think this approach can be re-worked to address examples of sexual harassment.

One of the most difficult things that employers face is the confidentiality required during and post any investigation. Some forward-thinking companies address this in their policy statements.  They make  it clear in their harassment and discrimination policies that if they think there is a broader benefit in disclosing cases of sexual harassment that they will do this in their communications. However, this can only assist after a rigorous investigation has taken place. It does not stop the ongoing commentary that can take place during the process. I recall a situation where a very senior member of the team provided ongoing commentary about how unfair it was that an individual was being investigated, that it was a “witch hunt”, etc, without knowing the facts of the case nor the organisation being able to address it effectively. It is here that the mutual non-disparagement can assist. Once finalised the agreement requires the organisation to take reasonable steps to address any disparagement. In that instance we were able to instruct the individual to make no further comments about the matter (especially given that he had no knowledge, other than his friend’s account of the allegations). This helped to protect the reputation and standing of the individual who had been subjected to this behaviour. Although I recognise that many people reading this may assert that one needs to change the behaviour of these bystanders, the first priority must be to devise practical solutions that protect those that have had to deal with bad behaviour.

Change on this topic needs to start with us – as a community and nation. However we need to ensure the steps we are taking are not a knee-jerk reaction to the worst instances of sexual harassment and inadvertently making the cure worse than the ailment it is seeking to address.

Lindall West | Managing Director
+61 412 728 828

Scroll to Top