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Workplace harassment NDAs under increasing scrutiny in Australia

Out-Law Analysis | 04 Feb 2019 | 2:06 pm | 2 min. read

ANALYSIS: The #MeToo movement in the UK has put the spotlight on the use of secrecy clauses in agreements to settle allegations of harassment. Their use in Australia is coming under increasing scrutiny.

In Australia, it is common practice to include confidentiality provisions in a deed of settlement, including where the settlement involves a claim of sexual harassment in the workplace.

These clauses generally contain wording permitting disclosure "as required by law". While it is not usually explicitly stated in the agreement itself, Australian case law had made clear that such agreements cannot be used to prevent disclosures related to crimes and fraud, nor can they be used to obstruct the administration of justice.

Further, there are various regulatory bodies which may compel individuals to provide information regardless of the terms of a confidentiality agreement, such as the Australian Tax Office or Australian Securities and Investments Commission. Similarly, if Australia's proposed new whistleblowing laws are passed in their current form later this year[A1] , they will provide protection to whistleblowers from being sued for breach of a confidentiality clause.

There is otherwise minimal guidance on the manner in which secrecy clauses or non-disclosure agreements (NDAs) should be negotiated and drafted. But the use of NDAs has been highlighted by the National Inquiry into Sexual Harassment in Australian Workplaces, which is currently being undertaken by the Australian Human Rights Commission.

Late last year, Sex Discrimination Commissioner Kate Jenkins called on Australian employers to support the work of the Inquiry by agreeing to a waive confidentiality agreements so that complainants could disclose details of harassment allegations. In response, a number of organisations have granted limited waivers of confidentiality obligations in non-disclosure agreements.

Commissioner Jenkins has also raised the question of whether the use of secrecy clause in settlement clauses might be contributing to the increase in workplace sexual harassment which has been evidenced in Australia in recent years.

Depending on the findings of this Inquiry, there may be increased scrutiny of NDAs in the context of workplace sexual misconduct and calls for regulation. The Commission’s report is expected to be released in the second half of this year.

This is likely to extend to questions over the professional duties of solicitors when these agreements are drafted.

The use of NDAs has attracted significant attention worldwide in the wake of the #MeToo movement. It resulted in an inquiry by the UK parliament's Women and Equalities Committee. A number of witnesses gave evidence, including former assistant to Harvey Weinstein, Zelda Perkins, who described the NDA she signed as "morally lacking". Several employment lawyers also gave evidence and the role and responsibilities of lawyers in drafting these provisions received intense scrutiny.

Perkins told the Committee how the agreement she signed precluded her and her colleague from speaking to friends, colleagues and family about what happened. The NDA also contained provisions on Perkins speaking to a medical practitioner and placed requirements on her in case of any criminal legal process.

Unsurprisingly, the Committee's report found that there was "ample evidence... to suggest that law and practice around the use of NDAs needs to be tightened". The Committee concluded that the use of NDAs must be better controlled and regulated to ensure that they are not used unethically in cases alleging sexual harassment. The Solicitors Regulation Authority of England and Wales subsequently issued a warning notice on the use of NDAs and the Law Society has published a practice note intended to give advice to lawyers on how to avoid inappropriate use of NDAs.

These developments also coincided with the introduction of laws to restrict the use of NDAs in California and New York.

Katie Williams is an employment law expert at Pinsent Masons, the law firm behind Out-Law.com.