As employers plan their response and application of the forthcoming best practice principles for the use of non-disclosure agreements (NDAs) in workplace sexual harassment matters from the [email protected] Council, there is an opportunity to utilise NDAs in a manner which is directed to systemically preventing sexual harassment in the workplace and demonstrating compliance with the anticipated positive duty recently announced by the Federal Attorney General.
The Federal Attorney General has confirmed that the government will act on all recommendations of the landmark [email protected] report, including the recommendation to impose in the Sex Discrimination Act (SD Act) a positive duty on employers to take reasonable and proportionate measures to eliminate sex discrimination, sexual harassment and victimisation, as far as possible.
Regulation under the current federal human rights framework relies on those impacted by sexual harassment to report sexual harassment after it has occurred. We know that there is significant under-reporting of sexual harassment in Australia. In this context, the Australian Human Rights Commission articulated in the [email protected] report the key benefit of the positive duty as 'shift[ing] the burden from individuals making complaints to employers taking proactive and preventative action. As the positive duty is an ongoing duty, it shifts the emphasis from a complaints-based model to one where employers must continuously assess and evaluate whether they are meeting the requirements of the duty. This would provide employers with a greater incentive to take proactive and preventative measures to comply with the duty and would significantly improve the effectiveness of the SD Act to contribute to broader systemic and cultural change…' (Page 479).
Complying with the positive duty will involve employers revisiting their policies and processes for responding to sexual harassment and, most importantly, the level of transparency as to how sexual harassment will be dealt with through a lens of prevention and cultural change.
In this regard, the traditional use of NDAs has involved the payment by organisations of financial incentives to those impacted by sexual harassment in exchange for a release of liability and their ongoing silence over the matter. There is now deep evidence in our country, based on numerous inquiries into sexual harassment, that this gagging effect is a significant barrier to the systemic prevention of sexual harassment. It has enabled perpetrators to move on to repeat the behaviour, based on a belief that they will not be held accountable. Without greater transparency, organisations have lost the ability to assess trends, learn from the experience and, critically, create trust in the workplace that this behaviour will not be tolerated, and that the organisation will deal with sexual harassment appropriately. The gagging effect can also significantly affect the ability of those impacted by sexual harassment to recover from the experience.
The need for a changed approach to the use of NDAs to enable the prevention of sexual harassment is now recognised in Australia and internationally. For instance, in addition to the best practice guidance to be issued by the [email protected] Council, the Victorian Government has recently announced its commitment to reform the use of NDAs by employers.
In my discussions with senior business and government leaders, I have advocated for a new form NDA, which entrenches respectful transparency by putting those impacted by the conduct, and which enables the systemic prevention of sexual harassment, at the centre of the response. Respectful transparency strikes the balance between providing confidentiality (at the request of the complainant) with transparency. A new form NDA in practice:
- would only include confidentiality clauses if the person impacted agreed and gave their informed consent
- would be clear on the limits of that confidentiality, including as to engaging with regulators on the matter
- would protect the complainant's identity and privacy should that be their wish
- could make the amount of any settlement payment to the person impacted confidential and
- would not preclude the person impacted from speaking about the matter if and when they choose to do so.
A new form NDA would expressly carve out the right of the organisation to disclose (in a de-identified way), both internally and externally, that a complaint had been made and how it had been dealt with, including any substantiated outcomes. Then, the data can be aggregated and reported at executive and board level so the organisation can learn from the events, assess any systemic issues and take action to prevent sexual harassment occurring again.
It would also carve out the right to disclose the perpetrator's identity where there is a legitimate public or stakeholder interest, and an investigation has found that the allegations are substantiated.
These carve-outs are essential for ensuring adequate transparency to build the trust in an organisation that enables the systemic prevention of sexual harassment and to ensure the organisation fulfils its duty of care to all its people. Transforming the use of NDAs in this way will be important to employers fulfilling the positive duty to prevent sexual harassment.
Extract from [email protected] on positive duty and NDAs
Recommendation 17: Amend the Sex Discrimination Act to introduce a positive duty on all employers to take reasonable and proportionate measures to eliminate sex discrimination, sexual harassment and victimisation, as far as possible. In determining whether a measure is reasonable and proportionate, the Act should prescribe the factors that must be considered including, but not limited to:
a. the size of the person’s business or operations
b. the nature and circumstances of the person’s business or operations
c. the person’s resources
d. the person’s business and operational priorities
e. the practicability and the cost of the measures
f. all other relevant facts and circumstances.
Recommendation 18: The Commission be given the function of assessing compliance with the positive duty, and for enforcement. This may include providing the Commission with the power to:
a. undertake assessments of the extent to which an organisation has complied with the duty, and issue compliance notices if it considers that an organisation has failed to comply
b. enter into agreements/enforceable undertakings with the organisation
c. apply to the Court for an order requiring compliance with the duty.
Recommendation 38: The Commission, in conjunction with the Workplace Sexual Harassment Council, develop a practice note or guideline that identifies best practice principles for the use of NDAs in workplace sexual harassment matters to inform the development of regulation on NDAs.
Source: [email protected]: Sexual Harassment National Inquiry Report (2020)