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Preventing the cover up: curbing the use of non-disclosure agreements in workplace discrimination and harassment cases

9 August 2019

Preventing the cover up: curbing the use of non-disclosure agreements in workplace discrimination and harassment cases

Roxanne Fisch, Senior Associate

The UK will soon be legislating to prohibit the use of non-disclosure agreement (“NDAs”) in preventing people from disclosing information to the police, health care professionals and legal professionals. This follows a consultation process launched by the UK government into the use of confidentiality clauses in the employment context.

How the UK is tackling the abuse of NDAs

While it is recognised that many employers do use NDAs for valid purposes, such as ensuring employees do not disclose financial information, business plans or intellectual property to others, they can sometimes be used to cover up criminal conduct in the workplace. This follows some recent high-profile cases in the UK, as well as a recent UK Parliamentary inquiry which investigated the use of NDAs in workplace discrimination and harassment cases in an effort to challenge the ‘cover-up’ culture of victims being silenced.

How are NDAs being misused?

Non-disclosure agreements (“NDAs”) (or confidentiality clauses as they are more commonly known in Australia), are sometimes used in settlement agreements following disputes relating to alleged discrimination, harassment or unlawful conduct in the workplace. While, for many employers, this attempts to ensure the resolution of the matter, the NDAs effectively prevent or limit the employee from disclosing the alleged behaviour or disparaging the alleged perpetrator or employer. According to the UK Women & Equalities Committee, this in turn has a detrimental effect on the victims of such conduct, with many suffering emotional and psychological damage, suffering financially as a result of losing their job and affecting their ability to work in the same sector again thereby impacting on their future job prospects. It also “allows management behaviour and organisational culture to go unchallenged and unchanged” and “perpetuates a culture of secrecy and discrimination”.1

While we are yet to see the detail of how these laws will be framed and put into practice in the employment context, in its report into the use of NDAs, the Women & Equalities Committee called for the UK Government to:

  • ensure NDAs do not prevent legitimate discussion of allegations of unlawful discrimination or harassment, and stop their use to cover up allegations of unlawful discrimination;
  • require standard, plain English confidentiality, non-derogatory clauses and ensure that such clauses are specific about what information can and cannot be shared and with whom;
  • strengthen corporate governance requirements to require employers to meet their responsibilities to employees in protecting them from discrimination and harassment; and
  • require named senior managers at Board level to oversee anti-discrimination and harassment policies and procedures and the use of NDAs in discrimination and harassment cases.

A number of these recommendations have since been addressed in the UK’s consultation response.

Will Australia take a similar stance?

Unfortunately, the use of NDAs is not foreign to many Australian employers, HR professionals and legal advisors who are all too familiar with instances of employers agreeing to part ways with an employee following an investigation process in exchange for the employee agreeing not to take the matter further. What is concerning is the use of NDAs in circumstances where the allegations or complaint have not been properly investigated or where they are being used to avoid the need to conduct a proper investigation. The report raises important questions as to whether in their attempts to resolve workplace disputes, employers and their advisors are thereby complicit in covering up a “culture of discrimination”.

While the use of NDAs is yet to be the subject of its own parliamentary inquiry on Australian shores, it is not foreign to Australia’s Sex Discrimination Commissioner, Kate Jenkins, who last year announced the First National Inquiry into sexual harassment in Australian workplaces. This was following a national survey undertaken by the Australian Human Rights Commission between April and June 2018, which investigated the prevalence, nature and reporting of sexual harassment in Australian workplaces and the community more broadly. An extensive consultation and submission process has since been underway across the country covering a wide-range of industries and sectors.

In November 2018, Commissioner Jenkins also called for companies to grant a limited waiver of NDAs for those who wanted to participate in the Inquiry, which ultimately led to around 40 organisations agreeing to issue a limited waiver. In May 2019, Commissioner Jenkins spoke to The New York Times on the issue noting that the use of NDAs “was contributing to an ecosystem that was relying on silence to protect reputation, and still does”.

Where to from here?

Internationally, combatting violence and harassment in the workplace is still very much a matter of concern. Last month in Geneva, at the recent International Labour Conference a new Convention (the Violence and Harassment Convention, 2019) and Recommendation has, remarkably for the first time, been adopted to combat violence and harassment in the workplace. After two member States ratify the Convention, it will take effect 12 months later, with the Recommendations providing guidance as to how the Convention could be applied.

Australia’s use (or misuse) of NDAs will likely become clearer once the National Inquiry is complete and we have a greater understanding as to what regulations are required to protect victims of unlawful workplace conduct. It remains to be seen what, if any, legislative outcomes will arise as a result of this Inquiry and, in particular, if similar recommendations will be made with respect to legislating about the use of NDAs in the context of workplace discrimination and harassment cases.

1. “The Use of non-disclosure agreements in discrimination cases”, House of Commons Women and Equalities Committee, Ninth Report of Session 2017-19, 11 June 2019.

Posted in Strateg-Eyes.
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