Restrictions on non-disclosure agreements to be imposed by the Victorian Government for sexual harassment claims in the workplace

The Victorian Government has announced that it will legislate to restrict the use of non-disclosure agreements (NDAs) in workplace sexual harassment cases, potentially changing the management and resolution of sexual harassment claims. The Government states that NDAs are “often misused to silence victim survivors, protect employer reputations, avoid full liability and hide serial offending”.

Employers and their insurers will need to consider the implications for the coverage of sexual harassment claims and how they are settled.

The announcement is part of the Government’s response to the recommendations made by the Ministerial Taskforce on Workplace Sexual Harassment. The Government also accepted recommendations that work-related gender violence and workplace sexual harassment should be treated as an occupational health and safety issue, and to increase the capacity of the OHS regulator, Worksafe, to take the lead role in preventing and responding to gendered violence and sexual harassment.

The Government will now consult with interested parties on the exact form of the restriction on NDAs. No start date has been set.

Implications

Whilst sexual harassment is unacceptable, and employers have duties to prevent and stop harassment, the restriction on the use of NDAs for workplace sexual harassment cases is likely to have implications for employer, employees and insurers, all depending on the exact form of the restriction, including:

  • With greater risk of publicity, some employers may be encouraged to take more active steps to prevent and stop sexual harassment, particularly at the early stages of a complaint;
  • Employees, with the risk of exposure, may be more discouraged from engaging in sexual misconduct;
  • Employers and insurers will need to adjust to settlements without confidentiality, and that may have implications on other settlement terms;
  • Some cases may be more difficult to settle, or take longer to settle, because a settlement will not include confidentiality;
  • As there may be cases that are not able to be settled without confidentiality, more claims may run through to verdict, increasing legal costs and the exposure of employers and insurers to legal costs.

Once the exact form of the restriction on NDAs is known, a further update will be issued.

Read other items in the Australian employment brief - July 2022