Australia: Briefing note - New laws in Victoria restrict NDAs in workplace sexual harassment cases

‘Workplace non-disclosure agreements’ are agreements which:

• prevent a party from disclosing certain information. This includes both ‘non-disparagement’ and ‘non-disclosure’ clauses;
• relate to the disclosure of ‘material information’ about workplace sexual harassment which is ‘connected to Victoria’. On this:
  • ‘sexual harassment’ has the same definition as in section 92 of the Equal Opportunity Act 2010 (Vic);
  • ‘material information’ incudes the identity of the respondent and any details about the relevant conduct;
  • the sexual harassment must have occurred to a ‘worker’, which includes employees, contractors and unpaid volunteers; and
  • sexual harassment will be ‘connected to Victoria’ including if the complainant ‘usually works in Victoria’ (i.e. it could include sexual harassment that occurred outside of Victoria if the worker otherwise usually works in Victoria); and
• are between the complainant and at least either of their employer and the respondent. An entity is an ‘employer’ of its employees and any person it has engaged under a contract for services.

The Act provides that a ’workplace non-disclosure agreement’ entered with a complainant is only enforceable if all the following preconditions are met before the agreement is entered into:

• the complainant requested to enter the ‘non-disclosure agreement’ (or however they describe it), which was their express wish and preference; 
• before entering into the agreement:
  • the employer provided the complainant with a ‘workplace non-disclosure agreement information statement’ (which is a statement that will be published by the relevant Secretary);
  • the complainant was allowed 21 days to review the agreement before entering it (noting that the complainant can request for this period to be waived or shortened); and
  • each party to the agreement acknowledged that the above preconditions were all met (noting that this must be done in a form approved by the relevant Secretary); and
• the complainant’s employer (or their representative) or the respondent (or their representative) do not exert undue influence or pressure on the complainant regarding their decision to request or enter a ‘workplace non-disclosure agreement’. This includes an employer offering a complainant a higher settlement amount in exchange for a non-disclosure agreement.

Once a ‘workplace non-disclosure agreement’ has been entered, the Act provides a process where a complainant can issue a ‘breach notice’ to the other party where they can effectively dispute compliance with the preconditions (e.g. the complainant can assert that they did not request to enter into the non-disclosure agreement).

After the ‘breach notice’ has been issued to an employer, the employer can make an application to the Magistrates’ Court for an order that the preconditions were met. If the employer does not do so within 30 days of receiving the ‘breach notice’, then the ‘workplace non-disclosure agreement’ will not be enforceable. 

The Act provides the complainant with the ability to terminate a ‘workplace non-disclosure agreement’ once 12 months has passed from when the agreement was entered. If the complainant exercises this right, they must provide at least seven days’ notice and do so in the form approved by the relevant Secretary.

The ‘termination’ of the agreement is only to the extent it seeks to limit a party’s ability to disclose information about workplace sexual harassment. All other terms of the agreement remain enforceable. 

The Act provides that a non-disclosure agreement entered with a respondent is not enforceable to the extent that it has the effect of preventing the employer from:

• investigating workplace sexual harassment; or
• disclosing material information about the workplace sexual harassment to a prospective employer of the respondent. This only applies if the employer has determined that the allegations of workplace sexual harassment have been substantiated.