Victorian Government seeks to restrict NDAs in workplace sexual harassment cases

The Victorian Government has introduced a bill to restrict any contractual term or clause, including those embedded in settlement agreements or employment contracts, that has the purpose or effect of preventing a party from disclosing certain information about workplace sexual harassment, i.e. a non-disclosure agreement (NDA). The purpose is to prevent explicit prohibition about communication of facts about harassment, or indirectly through non-disparagement or confidentiality provisions. The Government aims to “stop the practice of NDAs being used to silence workers and conceal sexual harassment in the workplace”.

If the proposed laws are enacted, after 6 months Victorian employers will only be able to require NDAs in sexual harassment settlements if the complainant specifically requests one. Employers would be obliged to:

provide the complainant with a detailed information statement;
ensure a 21-day review period before signing (although this period is subject to waiver); and
avoid exerting any undue pressure throughout the process.

An NDA must not prevent the complainant from disclosing material information to certain people or bodies such as the police, family and friends, mental health professionals and legal practitioners (for the purposes of obtaining legal advice). Complainants would be entitled to terminate an NDA after 12 months, ending the confidentiality obligations for both parties. Contractual terms that would sanction a complainant simply because the NDA was found unenforceable or was later terminated would be void.

When a complainant believes the statutory preconditions for entering into an NDA have not been met, they may issue a breach notice to the other party. Upon receiving such notice, the employer or other recipient would be afforded 30 days to apply to the Industrial Division of the Magistrates’ Court for a declaration that the preconditions were satisfied. If no application is made within this period, the agreement is deemed unenforceable to the relevant extent.

Similar laws operate in the United Kingdom and Ireland. In the United States, more than half the states, including California, New York and Washington, have enacted statutes prohibiting or severely restricting NDAs in sexual harassment settlements, while federal law such as the Speak Out Act, which came into effect in 2022, has set a national baseline for pre-dispute agreements.

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