Victoria to limit non-disclosure agreements in workplace sexual harassment cases

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Victoria will be the first Australian jurisdiction to prohibit non-disclosure agreements (NDAs), sometimes described as "gag orders", in relation to workplace sexual harassment.

On 11 July 2022 the Minister for Workplace Safety in Victoria, Ingrid Stitt MP, released the recommendations of the Ministerial Taskforce on Workplace Sexual Harassment, as well as the Victorian Government's responses to those recommendations. The Taskforce was established in March 2021 to develop reforms to better prevent and respond to sexual harassment in workplaces.

The Taskforce made 26 recommendations, 21 of which were accepted in full, in part or in principle by the Victorian Government. One of the key recommendations was to restrict the use of NDAs in relation to workplace sexual harassment in Victoria.

This article considers several of the Taskforce's recommendations and discusses what restricting NDAs in relation to workplace sexual harassment may look like in Victoria based on similar models implemented overseas.

Restrictions on non-disclosure agreements in Victoria

The Taskforce recommended for the Victorian Government to enact legislative amendments to restrict the use of NDAs in the settlement of workplace sexual harassment cases in Victoria.

The Taskforce noted that NDAs can be misused to silence victims, protect employer reputations, avoid full liability and hide serial offending and offenders. In some circumstances, NDAs may also cause further harm to victim-survivors of sexual harassment if they were prevented from being able to speak openly about their personal experiences.

Accepting the recommendation in principle, the Victorian Government noted that significant further work would be required before any legislative amendments can be made to regulate NDAs due to their complexity. This work would include wide and careful consultation about the appropriate model with unions, employer associations, victim-survivors and the legal profession, as well as analysis of models used in international jurisdictions (some of which are considered below). For this reason, no timeframe has been set for implementing legislative amendments relating to NDAs.

In the meantime, employers are encouraged to be cautious in their use of NDAs in relation to sexual harassment cases. This could involve limiting confidentiality to the crucial parts of a settlement agreement (for example, the settlement sum paid) without preventing victim-survivors from discussing their experiences, or considering on a case-by-case basis whether an NDA is in fact required.

International models on restrictions relating to sexual harassment

While legislation restricting the use of NDAs in sexual harassment matters does not exist in any Australian jurisdiction, insights into the type of model that may be implemented by the Victorian Government may be gathered from those used overseas.

In Ireland, the Employment Equality (Amendment) (Non-Disclosure Agreements) Bill 2021, if enacted, will prevent employers from entering into 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 into at the employee's preference will not apply in relation to communications between the employee and specified persons (including medical professionals, mental health professionals and the employee's friends and family). Further, such an NDA will only be enforceable if certain other criteria are met, including that:

  • the employer has offered the employee independent written legal advice, at the employer's expense
  • 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

The Bill provides that an employer entering into an NDA that is not made in accordance with the above criteria will be guilty of an offence, and the NDA will be null and void. Further, the Bill proposes to apply retrospectively, such that NDAs entered into before the legislation is enacted will only be enforceable if made in accordance with the criteria in the proposed legislation.

In the province of Prince Edward Island in Canada, the Non-Disclosure Agreements Act came into effect in June 2022. The Act largely reflects the Irish Bill, although its retrospective application is limited to permitting certain disclosures (for example, to family and friends) despite a person having entered into an NDA prior to the commencement of the legislation. There are also indications that a Federal Bill will be introduced in Canada to prevent NDAs being used to conceal evidence of abuse or harassment, and to allow them only where the complainant has requested privacy.

In California, Senate Bill No. 331 (also known as the "Silenced No More Act") came into effect on 1 January 2022. The amendments made by the Act prohibit provisions being included in settlement agreements that prevent or restrict the disclosure of factual information related to a claim or complaint regarding workplace harassment or discrimination. Any such provisions entered into on or after 1 January 2019 are also void.

The Taskforce's recommendations reflect the Irish Bill as the model to be considered by the Victorian Government. Although it remains unclear whether any proposed legislative amendments are intended to apply retrospectively, if this is the case employers should consider immediate updates to their practices regarding NDAs and their template settlement agreements.

Other significant changes for Victoria

As set out above, the Taskforce made a total of 26 recommendations regarding sexual harassment. Other significant recommendations and government responses included the following.

  • An overarching recommendation that sexual harassment be treated as an occupational health and safety issue, so that:
    • obligations under occupational health and safety legislation apply equally to sexual harassment (including that employers identify and eliminate any risks and hazards relating to sexual harassment so far as reasonably practicable)
    • as the occupational health and safety regulator, WorkSafe Victoria's prevention and enforcement functions can be applied in relation to workplace sexual harassment.

This recommendation was accepted by the Victorian Government, confirming that it supports the treatment of sexual harassment as an occupational health and safety matter.

  • Increased funding for WorkSafe to enable it to provide employers with practical tools to prevent sexual harassment in the workplace through the WorkWell program.
  • A new Compliance Code to support the psychological health amendments to the Occupational Health and Safety Regulations 2017 (Vic) (OHS Regulations), which will include guidance on internal reporting, complaints handling and investigations, as well as industry-specific guidance for high-risk industries.
  • Inclusion in the psychological health amendments to the OHS Regulations of de-identified reporting requirements for psychological health hazards including work-related gendered violence and sexual harassment. The de-identified data will be used to inform WorkSafe's targeted prevention and enforcement activities and reported on publicly through WorkSafe's annual reporting.

See more on the Victorian Government's proposed psychological health amendments to the OHS Regulations, which we expect to come into force in Victoria imminently, here.

The Law Institute of Victoria intends to participate in consultation about the proposed reforms.

For more information on the proposed changes outlined above and how they may impact your organisation, please contact a member of our Workplace Relations & Safety team.

Photo by Nguyen Dang Hoang Nhu on Unsplash.

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