international employment law firm alliance L&E Global

Australia: Silence is No Longer Golden: The Use of NDAs in Workplace Sexual Harassment Matters

Authors: Amy Zhang, Mariam Chalak and Emer Gilmore

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 undisclosed 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 was 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, disempowerment of victims, concealment of unlawful conduct, and facilitate repeat offences. 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:

  1. Consider the need for a confidentiality clause on a case-by-case basis.
  2. The scope and duration of the confidentiality clause should be as limited as possible.
  3. Confidentiality clauses should not prevent organisations from responding to systemic issues and providing a safer workplace.
  4. All clauses in a settlement agreement should be clear, fair, in plain English, and, where necessary, translated and/or interpreted.
  5. The person who made the allegation should have access to independent support or advice to ensure they fully understand the meaning and impact of the settlement agreement, including any confidentiality clause.
  6. Negotiations about the terms of a settlement agreement should ensure, so far as possible, the wellbeing and safety of the person who made the allegation and be trauma-informed, culturally sensitive, and intersectional.

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 complaint-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 of using NDAs in a manner aimed at proactively preventing sexual harassment in the workplace. This may be achieved by:

  • considering whether the complainant has requested an NDA;
  • tailoring the NDA clause to suit the specific circumstances;
  • clearly carving out any exceptions to the NDA provisions, including engaging with regulators on the matter; and
  • ensuring that any NDA that is implemented reflects the organisation’s long-term approach to tackling sexual harassment in the workplace.

Key Issue

The use of non-disclosure arrangements in workplace sexual harassment matters.