Should non-disclosure agreements be restricted in cases of workplace sexual harassment? Here’s what reforms need to get right
- Written by Lisa Heap, Senior Researcher Centre for Future Work at the Australia Institute; Sessional Academic RMIT University, The Australia Institute
Non-disclosure agreements (NDAs) are again in the spotlight – mostly because of how they can affect the way companies deal with sexual harassment allegations.
Last week, class action lawsuits were launched against mining giants BHP and Rio Tinto, alleging widespread and systemic sexual harassment on their worksites in Australia.
The law firm leading the class actions, JGA Saddler, alleges NDAs have been used routinely in the mining industry to prevent women from speaking out about sexual harassment.
In response, both BHP and Rio Tinto have stated they take all sexual harassment allegations seriously. Both companies also say they no longer use NDAs when dealing with sexual harassment allegations, and won’t enforce past confidentiality terms.
A push to restrict NDAs across the business world is gaining momentum. The Victorian government is currently considering legislation to limit their use.
The effectiveness of any changes will depend on how much they put victim-survivors in the driver’s seat about when – and how – NDAs can be used.
What is a non-disclosure agreement?
When an employee makes a sexual harassment claim at work that is substantiated, one possible outcome is an agreement between the worker and the organisation over how the claim can be “settled”.
Such a settlement may also involve both parties entering a contract that sets out “compensation” for the victim-survivor.
Often, to receive the agreed compensation, the victim-survivor must agree not to say anything about what happened (hence the name, “non-disclosure agreement”).
In addition, they often agree not to say anything negative about their employer.
The impacts of secrecy
Companies typically use NDAs to protect their image or brand. They’re aware the reputational damage from sexual harassment claims can be large.
But this silencing can also protect perpetrators. Australian academics Dominique Allen and Alysia Blackham have documented the extent to which secrecy has become ingrained in these practices and processes.
Secrecy around sexual harassment claims can lead to victim-survivors feeling isolated and stigmatised. It can also enable some perpetrators to remain in the same workplace or move within industries and continue harassing others.
Meanwhile, the lack of transparency means businesses can treat instances as separate and isolated. They can portray sexual harassment as the occasional action of a single “bad apple”. This ignores how the culture, systems and processes at work create the conditions for bad behaviour to flourish.
The Victorian Legal Services Board, the body that monitors the conduct of lawyers, recently warned legal practitioners that inserting confidentiality clauses into sexual harassment settlements could cross ethical boundaries.
Why do victim-survivors sign NDAs?
Facing the threat of lengthy, costly and exhausting litigation, settlement is often the most attractive option for victim-survivors. They may want to stay anonymous. The prospect of having their experience aired in public can be daunting.
Victim-survivors may be afraid to report their experience. They often handle the problem by themselves, while still processing the trauma they have experienced.
Once they have made a claim, the business may see them as a “problem” that needs to be dealt with and treat them with hostility.
There is also a power imbalance between victim-survivors and the businesses they are making claims against. So, businesses often have the upper hand over whether NDAs are used and also what conditions they contain.
Contrary to the belief that NDAs may enable higher settlements for victim-survivors, there is no independent research demonstrating this link.
An appetite for change
Following the Respect@Work Inquiry by the Australian Human Rights Commission (AHRC), voluntary guidelines were published on the use of confidentiality clauses.
Yet, there are reports these voluntary guidelines have had limited impact.
There is an appetite both in Australia and overseas for legislated, tighter restrictions on the use of NDAs. A key feature of good policy in this area is transparency. At the same time, we need to give victim-survivors more agency regarding if and how NDAs are used.
A range of policy reforms could move us in that direction.
Protecting the right to speak out
First, the use of NDAs could be limited by creating a legislative presumption that they are not necessary. Legislation could reserve confidentiality restrictions for specified circumstances.
Victim-survivors should retain the right to speak up. They shouldn’t be restricted from discussing their experience with others who can provide support and assistance.
Such groups could include friends, family, colleagues (including union officials and health and safety representatives), lawyers, medical or psychiatric professionals.
A standardised process
The government could also set out a prescribed format for NDAs in legislation, and require all NDAs to be registered with a central agency – such as the human rights commission.
NDAs that deviate from these requirements could be made unenforceable, unless the agency that registers them has reviewed changes and believes they are justifiable.
Finally, businesses could be required to report on their use of NDAs on an annual basis, allowing regulators to identify and investigate where multiple NDAs are reported.
The National Sexual Assault, Family and Domestic Violence Counselling Line – 1800 RESPECT (1800 737 732) – is available 24 hours a day, seven days a week for any Australian who has experienced, or is at risk of, family and domestic violence and/or sexual assault.
Authors: Lisa Heap, Senior Researcher Centre for Future Work at the Australia Institute; Sessional Academic RMIT University, The Australia Institute
