Victoria is set to restrict NDAs in harassment cases. What does this mean for the APS?

But NDAs - or, more typically, confidentially clauses in wider settlement agreements - are commonplace in Australian employment law. It would be rare, if ever, that we negotiate a settlement for a client that does not contain some form of confidentiality clause. These clauses are even frequent in settlement agreements negotiated with federal government departments. Accordingly, the Victorian proposal raises an interesting question: what does this mean for the APS?

First, some context. The Victorian proposal springs from a Ministerial Taskforce on Workplace Sexual Harassment, which was established last year. The taskforce found that NDAs "are often misused to silence victims, protect employer reputations and avoid full liability" and "can be used to hide serial offending and offenders". Accordingly, it recommended that the Victorian government introduce legislative amendments to restrict the use of NDAs in workplace sexual harassment cases in Victoria. The taskforce pointed to a draft bill in Ireland, and similar discussions in the United Kingdom and United States, as models for reform.

In its response to the taskforce, last month, the Victorian government accepted the recommendation "in principle, noting the complexity of NDAs and the other significant work required before any legislative amendments are made to regulate NDAs". The Victorian government indicated it would undertake further work, in consultation with stakeholders, to develop "appropriate options for restricting the use of NDAs in workplace sexual harassment cases".

It will, then, be some time before this proposal takes effect. For the moment, details remain sparse, and no timeframe has been expressed. The Irish bill identified as a potential model would prohibit employers from entering into NDAs with employees unless "such an agreement is the expressed wish and preference of the relevant employee concerned". Even in those circumstances, the NDA would only be enforceable if (i) the employee was offered independent legal advice, at the employer's expense; (ii) there were no undue attempts to influence the employee; (iii) the agreement does not adversely affect the health or safety of a third party or the public interest; and (iv) the NDA includes an opportunity for the relevant employee to waive their own confidentiality in the future.

Agreements made contrary to these requirements would be "null and void", and an employer who entered into an NDA despite the prohibition would be guilty of an offence. It should be noted, though, that the Irish bill arose as a private member's bill in 2021 and has not yet been enacted. In March, the Irish government released a research report into NDAs in sexual harassment cases, prompted by the bill, but has so far not committed to progressing the bill or introducing its own bill. Similar discussions have been taking place in other jurisdictions, and there is a global campaign, "Can't Buy My Silence", led by, among others, former Weinstein assistant Zelda Perkins (who was herself subject to an NDA in her settlement agreement with the producer).

So what does all this mean for the APS? The first point to make is that harassment, including sexual harassment, is undeniably a problem in the public sector. A survey by the union, the CPSU, last year found that one in five female respondents said that they had experienced bullying or harassment in the prior 12 months, and 16 per cent of respondents said that they had been sexually harassed at their current workplace. The last APS State of the Service report, meanwhile, indicated that about 100 public servants had been found to have breached s 13(3) of the Code of Conduct, which requires APS employees to "treat everyone with respect and courtesy, and without harassment". How many of those breaches involved sexual harassment is not known.

It necessarily follows that federal government departments are, from time to time, being sued for sexual harassment under the vicarious liability provisions of the Sex Discrimination Act 1984 (Cth). In turn, it can be anticipated that such departments will be settling at least some of those cases and, no doubt, the settlement agreements will sometimes, if not always, contain NDA clauses. Should they be insisting upon them?

In February, the APS Commissioner issued a direction around NDAs. It requires that agency heads consult with the commissioner "before entering into an agreement with an APS employee that includes a confidentiality or non-disclosure provision" in cases relating to sexual harassment. The direction added: "This is to ensure that there is accountability and assurance across the APS in the use of confidentiality and non-disclosure provisions in such agreements."

NDAs were also a subject of consideration in the Sex Discrimination Commissioner's landmark Respect@Work report, which recommended the development of a practice note that "identifies best practice principles for the use of NDAs in workplace sexual harassment matters to inform the development of regulation on NDAs". We understand this to be ongoing and may well influence APS practice.

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If Victoria proceeds to enact restrictions on NDA use in that state, a complex, constitutional question might arise as to its application to settlement agreements between federal public servants located in Victoria and the Commonwealth. The High Court has developed a doctrine of intergovernmental immunities that limit the ability of the states to bind the federal government, and vice versa. The immunity does not typically apply to regulation of general law (such as regulation of the law of contract, of which NDAs form part). But it does prevent regulation where it might have an impact on the capacity of state, including engagement of staff and so on. It is not clear where on that spectrum a court might consider NDA regulation to fall, and hence whether Victoria's intervention might be applicable to the APS.

That may remain an academic question; it's unclear if the Victorian government would seek to apply the law to the federal government in any event. But Victoria's landmark proposal gives further momentum to an important wider discussion on appropriately balancing confidentiality in cases of sexual harassment. The APS Commissioner's direction is a welcome start, but is unlikely to remain sufficient - particularly once Victoria enacts its regulation of NDAs.

The challenge will be in appropriately balancing varying interests. Confidentiality is often sought by complainants, who would prefer incidents do not become public. But the converse argument is that the law should not be used to silence those who wish to speak up, particularly in situations of considerable institutional power imbalance (such as between a public servant and a department). It is also unclear whether an NDA ban might have unintended consequences, such as decreasing compensation sums payable as part of settlement agreements or minding employers not to settle sex discrimination claims before hearing. These questions and more will have to be considered, and addressed, as Victoria and the APS grapple with the use and abuse of NDAs.