Project Description

Non-Disclosure Agreements with John Wilson and Judith Bessant

In this episode, we’re discussing non-disclosure agreements, which are now very common when employment ends in contentious circumstances for a variety of reasons but are they fair, and reasonable? Do they prevent us from having discussions about workplace issues that might, in fact, be in everyone’s interest, and under what circumstances should you sign one?

Our host, Genevieve Jacobs is joined by Bradley Allen Love lawyer, John Wilson and Professor Judith Bessant from the RMIT School of Global Urban and Social Studies. Judith made a submission to the National Inquiry into Sexual Harassment in Australian Workplaces, by the Australian Human Rights Commission on this topic. 

For more resources, see our HR Breakfast Club resources below. If you have a topic that you would like us to discuss, we would be happy to hear from you, please contact us!

Some topics we cover:

  • What is the non-disclosure clause, and where would it be used
  • Concerns around how non-disclosure agreements are used in some circumstances
  • If people can’t talk about what happened in the workplace, then there’s no airing of the issues, which can cause further issues
  • What are the consequences of not signing the agreement
  • You need legislation that’s well designed but you also need a cultural change in the workplace
  • Is there a better framework for how non-disclosure agreements can be applied

Genevieve Jacobs: This is the HR Breakfast Club podcast, my name is Genevieve Jacobs, and our focus in this series is on the world of work in Australia with a legal spin. In every episode, we look at a variety of HR issues that you might be dealing with, in the workplace. We hope that you’ll go away armed with some new perspectives, and some new information about how to tackle complicated issues. Our website is hrbreakfastclub.com.au. If you’d like to make contact with some questions we can respond to those too.

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Genevieve: In this episode, we’re talking about non-disclosure agreements, now, very common when employment ends in contentious circumstances for a variety of reasons but are they fair, reasonable, do they prevent us from having discussions about workplace issues that might, in fact, be in everyone’s interest, and under what circumstances ought you to sign one? My guests are Professor Judith Bessant from RMIT School of Global Urban and Social Studies.

She made a submission to the national inquiry into sexual harassment in Australian workplaces, by the Australian Human Rights Commission on this topic, and Bradley Allen Love lawyer, John Wilson. Welcome to you both. John, to definitions first, what is the non-disclosure clause, and where would it be used?

John Wilson: Genevieve, in all litigious matters, the matter either gets to trial or it doesn’t. Prior to trial, there’s always a process whereby the courts or the tribunal direct that the parties confer with a view to settling it between themselves. If the matter is settled, it’s recorded almost always in some form of instrument or rather commonly the instruments called a deed of release. It contains a non-disclosure or a confidentiality clause, which simply says that the parties are required to keep the terms of the settlement confidential to themselves.

Sometimes you might have some exceptions to that that they might be able to tell family members, or their accountant, or their legal representative for those purposes, but otherwise, the effect of the clause is that neither party is allowed to tell anybody what the terms of the settlement was.

Genevieve: Now, how is the usage developed in recent years because as I said a moment ago, it’s now to a point where it’s seen as quite normal in some circumstances, what’s happened in recent years?

John: I don’t know that there’s been a great development, it’s always been a feature certainly since the time I’ve been practising for 30 years of settlement agreements, both in commercial and employment-related areas. That they do contain confidentiality clauses essentially because one, or both parties want to keep not only the terms of settlement that is what money might be paid, or other arrangements that go to settling it.

Also, it’s usual for a deed of release at least to recite the circumstances that led to the controversy and its resolution, and one or both parties will want that kept confidential too.

Genevieve: Judith, you’ve got some concerns about how non-disclosure agreements are used in some circumstances, talk to me about what worries you about this practice.

Judith Bessant: A few things, one of them is that it actually prevents people within the organisation, and outside from knowing what happened. There is what some people might call an anti-learning mechanism or an early warning mechanism. That prevents any corrective action taken on the part of managers within an organisation. It’s also a form of secondary victimization and intimidation for people who have been subject to sexual harassment, or other kinds of harmful workplace behavior to be required to sign off on one of these.

There’s usually a significant power imbalance between the employee and the employer, and if they don’t sign off on it then usually any agreement proceeding is unlikely.

Within the organisation, it prevents the executive also and the managers from knowing what happened, in some sense it’s a protective mechanism for them, in the sense that they can always deny liability because they didn’t know.

Things are not aired that should be aired during the public interest, and we have a veil of secrecy. In fact, I would argue that in many circumstances it encourages a form of rule for blindness, or what some people might call contrived ignorance. It also diminishes any prospect for remedial action therefore because managers or the executive can say, “We didn’t know anything about it.”

Genevieve: John, I’ll just get you to respond to that because, of course, you’re having clients who are in termination negotiations, would a lawyer advise their client to sign a deed of release without a non-disclosure agreement?

John: Commonly if we’re talking about sexual harassment complaints, you have an employer, and the perpetrator on one side, and the victim on the other side. Really, the action is taken against the employer. I have never seen in my practice a deed of release without confidentiality provisions. It’s commonly raised by your client if you’re acting for the employer before you’ve even mentioned it.

I hazard an opinion that if the client didn’t mention it, and the lawyer did not advise the client about it, or about the fact that confidentiality provisions were generally a feature of such instruments and the agreement didn’t contain one that on the status of because of its commonality and unexceptional use that in face of a complaint from the client, if the terms of the settlement were broadcast, you would have a difficulty in convincing the regulatory body that it wasn’t something you should have advised the client about.

When you’re acting for the employee, it would also be something that I at least would advise the employee about if it didn’t come up, because I would want to, for essentially the same reasons, satisfy myself that the employee did not want one themselves in the agreement.

Genevieve: I think that’s actually a really important point at whose volition this takes place, and what the employee’s own wishes are. Judith, my sense is that you think that perhaps sometimes these can be quite unethical on the part of an employer who’s keen to cover up matters that genuinely deserve a little bit of fresh air. Is it possible that non-disclosures mitigate against effective workplace change simply because nobody knows what went wrong?

Judith: Precisely. If people can’t talk about what happened in the workplace, then there’s no airing of the issues. Not only as I said before, for the senior managers within the organisation, they need to know the non-confidentiality agreements in that sense can protect or prevent the executive from knowing what’s going on, and therefore, create a culture of change, and to make a workplace more healthy.

Genevieve: John, what do people face if they don’t sign the agreement, if they as an employee say, “Look, I’m not going to go there, I’ll take my chances, thank you.” What are the consequences?

John: The consequences of not reaching a settlement and that would include if one party was insistent upon the execution of terms of settlement, the stark choice facing the complainant is whether to continue past the conciliation or mediation stage and take it to trial or not. If matters are taken to trial, of course, we have open justice here. In some sexual harassment cases you would succeed in obtaining orders that would prevent the publication of the names of the parties, but generally speaking, such an order is not granted, and so all of the allegations and, of course, the court’s findings in relation to them become public documents.

Genevieve: It’s a matter of you’d be taking a very deep breath, and considering the circumstances very seriously if you were choosing not to go down the path of the non-disclosure agreement. 

You’re listening to the HR Breakfast Club podcast with me Genevieve Jacobs. My guests are Professor Judith Bessant from RMIT School of Global Urban and Social Studies, and Bradley Allen Love, lawyer John Wilson. We are talking about non-disclosure agreements and their use in the workplace. John, I wonder whether legislation will solve this though particularly with regard to sexual harassment, for example, these are essentially issues around culture, and they rather than the workings of the law.

John: My views as to legislating for the requirement to there not be non-disclosure causes, and not as well considered as Judith’s by any means, Genevieve. I would say just as a slight digression, there is a form of legislative dealing with harassment and bullying of which sexual harassment is one aspect. Here in the ICT, there’s a legislative instrument under the Work Health and Safety Act that requires employers to have a process in place that’s set out in the instrument about managing complaints of harassment or bullying which as I said, includes sexual harassment.

Theoretically, at least, if there is sexual harassment in the workplace then it can be dealt with legislatively in the form of a prosecution under the Work Health and Safety Act. I said theoretically because I’m unaware of any prosecution in the ICT under the Work Health and Safety Act. There are a number of things that I consider culturally can be done but to answer your question, and it’s probably something to throw to Judith, as to whether the legislation would cure the problem which as I say is to eliminate sexual harassment in the workplace. I’m not sure if I shortly put it that not enabling non-disclosure provisions will achieve that.

Genevieve: Judith, just to you on that, how do you respond to that? This is a cultural issue in workplaces. Is it something that can be fixed by changing legislation or looking for different legislative instruments?

Judith: I think you need both. You need legislation that’s well designed but you also need cultural change. We do have legislation that prohibits, as John said, bullying and sexual harassment but that alone is not enough. I think that there has to be a cultural shift but then the two need to go hand in hand. Also, in these issues, one of the things that people can consider is actually reporting the offense if it’s a criminal offense to the police because a criminal offense trumps civil action and that actually can fast track and prevent even the need for a nondisclosure agreement. If something has happened that’s unlawful, then report it to the police.

Genevieve: Judith, your submission to the Australian Human Rights Commission recommended legislation that would prohibit the use of non-disclosure agreements in a way that prevents public discussion but you also suggested data collection and perhaps even an inquiry. I just wondered if you could talk to the value of those two-letter steps while we’re trying to think of other ways around this issue.

Judith: In some jurisdictions, it is unlawful. In New York, for example, unless the person, the woman usually actually requires or request one, they’re unlawful. The House of Commons has also– I don’t know if you’ve seen that they’ve just put out a report on the use of non-disclosure agreements and have a number of recommendations that are quite helpful. I’ve forgotten the rest of [crosstalk].

Genevieve: [laughs] That’s okay. Data collection and an inquiry.

Judith: Data collection, yes. That’s important because there’s not very much research about this in Australia. Even for the individual person to be able to understand what the situation is in making a decision about what they should do, they need to have some credible evidence at hand. If getting access to that information is difficult because of the non-disclosure agreements and there’s very little research on it then where do they go? We do, I think, for the people concerned but also for policymaking and also for good management within the organisation. We do need some credible data on what’s exactly going on.

Genevieve: John, do you think there are possibilities for reform by alternate means? Is there a better framework for how non-disclosure agreements are applied or perhaps the students suggesting we don’t fully understand how widely they’re used and what their impact is?

John: I think Judith’s points are well made. I just wanted to pick up on a couple of points that Judith made. First, following up on my reference to the Work Health and Safety Act, Judith mentioned that the authorities, if I understood it correctly, should be more vigilant in prosecuting incidents of sexual harassment. These factors to bear on on that issue, in my experience, most complaints of sexual harassment by the time they’re made they’re in the hands of lawyers and what is sought is both apology and recognition but also crudely put money.

The crudity or hasten to where it is not in the seeking of money because that’s entirely understandable. In most sexual harassment complaints, the victim has suffered a personal injury in the form of a mental injury and occasion to loss as a result of that. They will also alongside the mental injury commonly have lost wages because they’ve been off work for a while or they’ve left the employment, got another job but it pays less. If there is a prosecution for the same conduct that will, as I see it, inevitably delay the progress of the complaint.

Secondly, one concern I have with the non-disclosure prohibition is that it could mind the employer to take it all the way and take its chances. Everything will be fact-specific in that regard but good number of sexual harassment complaints, the employer takes the position either that the conduct didn’t occur or that it shouldn’t be characterized as sexual harassment or even if it’s admitted or accepted, that it did or could have occurred, the employer’s responses that it took all reasonable steps to prohibit the harassment.

If the prohibition is there, it goes back to the point I made before, it forces the victim of the conduct to make that stock choice between expanding their resources unless they can get a lawyer who’s willing to run the case on a pro bono basis. That will largely depend on which legislation the complaint is made under. If it’s made under the Fair Work Act, even if they win, they have little prospect of getting their legal costs back. If the employer takes that decision will in a number of instances put the victim in an unenviable position where they themselves may want to settle the matter and not go to trial.

Genevieve: Everyone is taking their chances. I just want to ask you both finally to raise the possibility of restorative justice as a potentially more useful approach. Now, bearing in mind, John’s just mentioned that often really, people do want money to compensate for what they’ve been through. Judith, what are your thoughts about restorative justice and its usefulness in this situation?

Judith: I think restorative justice done well is terrific. The difficulty is that what exactly do people mean by restorative justice. I understand it means restoring the person to the situation they were in before the treatment happened. Again, with restorative justice, if it’s inside the organisation you still got a power imbalance. The question too is, who is the actual culprit? Is the culprit an employee within the organisation or is the culprit an executive or senior managers? I think ideally, it’s great. There are questions around its enforcement. The enforcement of action, the actual process in the way in which it’s done and also of the agreement.

Now, I know myself from my own work of some situations where restorative justice has been promised and the people involved or let’s call them the victim has been waiting for six years for a restorative justice process. There needs to be a proper restorative justice process and it’s not always clear what that is and who will facilitate it, and then how any outcome will be reinforced.

Genevieve: I think that’s very fair points that if it were to be done, it needs to be done effectively, swiftly and properly. John, your response to that is a different method of approaching.

John: Restorative justice is a process whereby parties with a stake in a specific offense collectively resolve how to deal with the aftermath of the offense, Genevieve, and its implications for the future. The first point to make is that as it presently occurs in Australia an offense has been proved. If that’s the case, restorative justice here does require either admission of the behavior or a finding that it’s occurred.

Genevieve: Neither of those things, usually, characterizing the non-disclosure agreement process.

John: Restorative justice, as it’s presently understood would require– If we’re talking about settlement an admission that the conduct had occurred and then a process in effect after that admission to determine that if it goes to trial and there’s a finding that the behavior occurred, then it would require that process.

In Australia, it’s only used generally in youth justice and also family violence cases. The law reform commission has already made the point that it doubts whether it’s effective in sexual assault cases without being fully across the reasons why the commission sees that, a hazard, a guess that it is perhaps not an effective process and only something that could be achieved at conciliation stage.  

Genevieve: Much to ponder here. Judith, did you want to quickly just add something there?

Judith: I agree. There needs to be a goodwill in entering into it and also an acknowledgment that there has been serious harm. I think that ideally, it promises a lot, but whether or not it can be achieved within an organisation is another question.

Genevieve: Thank you both for your time and for a conversation, which we certainly didn’t solve anything but we’ve discussed some really interesting contested ideas. My guests have been John Wilson and Judith Bessant Thank you both so much for your time.

Judith:  Thanks, Genevieve.

John: Thanks, Judith.

Genevieve: Thanks for your time too. I’m Genevieve Jacobs. We’ve been discussing nondisclosure agreements. Look for us online @hrbreakfastclub.com.au. We have a series of conversations with HR people and lawyers about current issues in the HR and employment field. If you’d like to ask some questions, suggest an idea or perhaps offer yourself up as a talent for the series, we’d love to hear from you.

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