The use of non-disclosure agreements (better known as “NDAs”) has received significant public attention in recent years, particularly in the context of sexual harassment matters.

NDAs create a legally enforceable agreement that ensures certain information, often of a sensitive nature, remains undisclosable to certain unauthorised third parties. This would generally include the factual circumstances that constitute the alleged sexual harassment. In Australia, this tends to be achieved by using confidentiality and non-disparagement terms in settlement agreements. These types of clauses prevent parties from disclosing the circumstances leading to a settlement and the settlement itself. The parties will also be prevented from saying or writing anything that adversely impacts the reputation of the other party.

The use of NDAs in sexual harassment matters became topical as a result of the #MeToo movement back in 2017 and remains a hotly debated topic. In 2020, Australia’s Human Rights Commission (“AHRC”) published the “Respect@Work: National Inquiry into Sexual Harassment in Australian Workplaces” report which made 55 recommendations for Australia to improve prevention of and response to sexual harassment in workplaces.

The report acknowledged that the use of NDAs can be highly valuable in that they provide complainants, employers, respondents and other parties involved with anonymity to protect their reputation, professional standing or workplace wellbeing. It also acknowledged that NDAs can be used to provide complainants with bargaining power to negotiate a more favourable settlement.

However, the Respect@Work report identified a range of concerns relating to the use of NDAs including that they can contribute to a culture of silence, disempower victims, conceal unlawful conduct and facilitate repeat offending. Recommendation 38 of the report specifically addressed these concerns and stated:

“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”.

The AHRC subsequently introduced a set of guidelines in December 2022 to inform the use of confidentiality clauses in workplace sexual harassment settlement agreements, as follows:

The above is consistent with the shift in Australia from a complaints-based approach to sexual harassment to one focused on an employer’s positive action and proactive approach to sexual harassment prevention.

Despite this guidance from the AHRC, the “Let’s Talk About Confidentiality: NDA Use in Sexual Harassment Settlements Since the Respect@Work Report”, published by human rights practitioners in March 2024, suggests that NDAs continue to be “used, misused and over-used” in Australia.

In fact, the report reveals that 75% of legal professionals have never reached a sexual harassment settlement without strict NDA terms. The report did hint that progress was being made, confirming that one-third of applicant lawyers and one-fifth of respondent lawyers have resolved sexual harassment matters with varied NDA clauses. This signifies a slow shift from the “one-size-fits-all” approach to a more nuanced approach in respect of the application of NDAs in sexual harassment cases.

Key Action points for Human Resources and In-House Counsel
Section 47C of the Sex Discrimination Act 1984 (Cth) now imposes a positive duty on employers to prevent workplace sexual harassment. This represents a change from a complaints-based model to one that requires positive action. The AHRC now has the power to enforce compliance with this positive duty.

In order to be compliant with this positive duty, employers should be cognisant to use NDAs in a manner aimed at proactively preventing sexual harassment in the workplace. This may be achieved by: