Australia's first ban on NDAs in sexual harassment claims introduced

NDAs are confidentiality or non-disparagement obligations in settlement agreements between employers and workers. In December 2022, following the implementation of the positive duty to eliminate sexual harassment in the workplace which requires employers to take reasonable steps to eliminate sexual harassment in the workplace, some employers have moved away from using NDAs to settle sexual harassment claims. However, statistics from 2024 revealed that 75% of legal professionals still reported never having reached a settlement without strict NDA terms.

Under the new law, employers will now have six months to ensure their use of NDAs is compliant with the new laws, which only apply to employees who “usually” work in or are based in the state of Victoria. As a result, employers should re-evaluate their use of NDAs to ensure that the significant benefits of transparency and fostering a ‘speak-up’ culture help keep the workplace free from sexual harassment. 

The Restricting Non-Disclosure Agreements (Sexual Harassment at Work) Bill 2025 is the first of its kind introduced in Australia. Introduced to foster a more transparent workplace culture by ensuring that sexual harassment matters are not kept secret and complainants are not silenced, it promotes transparency; sends a clear message that sexual harassing behaviour will not be tolerated; helps to prevent future incidents; and helps employers build a safer, more respectful work environment.

In June 2025, the Australian Human Rights Commission formally recommended restricting the use of NDAs and confidentiality agreements. The recommendation was based on reports which found that NDAs silence victims, deepen harm caused by sexual harassment, and erode trust between employers and employees. 

The laws bring Victoria into line with other jurisdictions such as the US, the UK, Ireland and Canada, which all restrict the use of NDAs in sexual harassment cases to varying extents.  Using NDAs no longer meets community standards and may be counter to the positive duty to eliminate sexual harassment in the workplace. 

Benefits of NDAs in sexual harassment matters have, in the past, included a victim-centric approach by protecting the confidentiality and privacy of victims and helping to provide closure. Despite this, victims of sexual harassment have reported feeling silenced and isolated. Victims are also concerned that NDAs contribute to a culture of secrecy, enabling perpetrators to move to another workplace and re-offend, and letting employers avoid action to prevent further sexual harassment from occurring in their workplaces. 

Now that the legislation has become law, employers in Victoria will be restricted in what they can offer and agree to with employees in terms of confidentiality and non-disparagement after sexual harassment allegations are made. While it will not impact existing NDAs, employers will be required to change their general practice when resolving sexual harassment claims, unless they have already ceased using NDAs in these circumstances.

The laws set preconditions before an NDA can be entered into, including: 

• the complainant must have requested the NDA, and that it is their express wish and preference to enter into the NDA; 
•  the complainant has a 21-day cooling off period to review the agreement before they can sign the agreement, although they can agree to a shorter period or waive the cooling off period altogether; and
• employers and respondents are prohibited from influencing or pressuring an employee to enter into the NDA. 

The new law requires an information statement to be prepared and made available by the Victorian government, which must be given to the complainant before they sign an NDA.

The law also ensures that an NDA cannot prevent a complainant from talking about the alleged workplace sexual harassment to authorities such as Victoria Police or medical and legal professionals. However, the complainant cannot disclose the identity of the respondent if they are under the age of 18 or the amount of financial compensation they received in relation to the workplace sexual harassment.

The law also allows a complainant to end an NDA after 12 months, with seven days notice to the other party, without impacting the entitlement to compensation. The terms of the NDA will be unenforceable against the complainant if it would prevent them from disclosing information about the workplace sexual harassment, including the identity of the respondent. 

The law will apply to a complainant who “usually works in Victoria”. If the complainant doesn’t usually work in Victoria, but doesn’t usually work in another jurisdiction, the law could still apply if they are based in Victoria for the purposes of work, if the employer’s principal place of business is Victoria, or the alleged sexual harassment occurred within the state.

The Victorian Magistrates Court will handle disputes about alleged breaches of the preconditions or prohibitions of the law once it comes into effect.

Employers should be complying with these guidelines now, and only use confidentiality and non-disparagement clauses in sexual harassment cases in very limited circumstances.