Workplace sexual harassment and the culture of silence: Are non-disclosure agreements to blame?

Harvey Weinstein has been in the news for all the wrong reasons recently. The New York Times investigative article on 5 October 2017 exposed Weinstein’s 30-year history of alleged sexual harassment and assault of young actresses and female employees. Since this article, many other women have come forward with their stories relating to Weinstein and his inappropriate and unacceptable behaviour. Weinstein’s demise has been swift, with his removal from the Academy of Motion Picture Arts and Sciences, the Producers Guild of America and his own film production company, Weinstein Company, firing him.

At first glance, it seems inexplicable that Weinstein could continue to allegedly sexually harass and sexually assault for over 30 years without his behaviour becoming public, or charges being laid. However, what has also recently come to light is that Weinstein has reached at least 8 settlement agreements according to The New York Times. Such settlement agreements involved Weinstein paying a sum of money to the victim, who was then prohibited from discussing the matter by a non-disclosure agreement.

Non-disclosure provisions are also common practice in settlement agreements in Australian workplaces. They often involve standard confidentiality terms that prohibit either party from disclosing certain facts such as the identity of certain people and the settlement amount. Often, both parties are satisfied with this outcome. The perpetrator protects their reputation by avoiding having criminal or civil proceedings brought against them whilst the victim avoids having to take legal action and reliving traumatic experiences in a public setting. There is also a fear that career prospects will be damaged if you have a reputation for suing.

Despite the existence of strong laws prohibiting sexual harassment, this is unfortunately also an issue in the workplace in Australia. In 2016, the Australian Human Rights Commission heard 453 complaints under the Sex Discrimination Act 1984 many of which relate to sexual harassment in the workplace. It is estimated that a staggering 25% of women are sexually harassed over the course of their employment. Whilst it is understandable that victims may wish to avoid reliving a traumatic experience, non-disclosure agreements do nothing to protect other people from becoming victims and allows the Harvey Weinstein’s of the world to continue to avoid facing scrutiny. A serious question must be asked whether employers should be able to use non-disclosure agreements to keep sexual harassment claims secret.

On moral grounds, most people would answer this in the negative since an alleged crime has been committed, and that person should have to face these allegations in a court. However, there are also compelling legal arguments that employers should not be able to cover up workplace sexual harassment using a NDA.

It is an implied term in all employment contracts in Australia that employers have an obligation to provide their employers with a safe place to work. Commonly in sexual harassment cases, such as Weinstein’s, the victim agrees to settlement terms and exits the company whilst the perpetrator, usually a senior employee or manager, remains. The employer’s decision to retain the perpetrator likely places other employees at risk of experiencing sexual harassment and thus breaches the right of employees to have a safe workplace. However, because the settlement terms are confidential, and the victim is bound by a NDA, often the employees are none the wiser and have no knowledge that this implied term of their employment contract is being breached.

There is another legal argument that that non-disclosure agreements should be void as a matter of law. It has long been recognised that contracts that are contrary to public policy, such as those that are prejudicial to the administration of justice, are unenforceable. Therefore, it stands to question, are non-disclosure agreements in confidential settlements enforceable? Clearly, there is a significant public interest in preventing persistent sexual predators like Harvey Weinstein from continuing their unsavoury behaviour. There is also clearly a public interest in allowing the administration of justice to take its course.

Despite legal arguments that employers should not be able to use NDAs, unfortunately the practical reality ultimately wins. Victims who have signed NDAs are fearful of speaking out. In addition, the potential legal repercussions for breaching a NDA, depending on the contractual terms, can be quite costly. Of course, there is also the power imbalance between the employer and employee that contributes to the culture of silence and ensures NDAs regarding sexual harassment are rarely challenged.

The current use of NDA allows persistent offenders such as Harvey Weinstein to remain unchecked. Perhaps a change in the law is necessary to protect potential future victims of serial sexual harassers in the workplace.

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November 17

The importance of express terms in Contracts of Employment and Enterprise Agreements

A presentation on 16th October 2014 on both Contracts of Employment and Enterprise agreements.

Employment contracts

In Commonwealth Bank of Australia v Barker [2014] HCA 32, the High Court held that the implied term of trust and confidence does not exist. This decision overruled the two federal court decisions below it, as well as the current English authority, Malik v Bank of Credit and Commerce International SA. The thrust of the High Court’s reasoning as that an implication of a term at law requires the term to be ‘necessary’ for the performance of the contract. It is not enough that it simply be ‘reasonable’.

The significance of this decision is that an employment contract is like any other contract, and is to be interpreted according to the words of the document. This is significant in the that traditionally employees framing actions in contract against their employers have often relied upon implied terms, choosing to leave the express contractual terms to one side. The decision in Barker suggests that this may now be a mistake.

From the employer’s perspective, this relaxed attitude toward express terms frequently leads to some lax practices. Express terms concerning things such as KPIs, incentive schemes, and right to renewal have been construed by courts strictly, and they have shown themselves to be unimpressed by evidence of contrary intentions. Courts are demonstrating no desire to treat contracts of employment differently to other contracts, and relying on the statutory regime behind the contract of employment is a mistake for both employees and employers.

The message is, get your express terms right. Don’t put anything in your contract that you can’t do, and don’t rely on implied terms to prevail.

Enterprise Agreements

EA’s can be a nightmare to some employers. But often they can be fantastic in offering flexibility, especially in getting around some of the problems presented by the modern awards, and some cultural benefits to the workforce in bringing people together.

But they can be a significant issue if they are not done correctly.

There have been some developments recently. Every employer wants to retain the right to change workplace policies if and when they see fit. But there have been some recent decisions in which an employer, in attempting to alter workplace policies, have been hauled before the Fair Work Commission under dispute resolution clause, and have been held up from changing their policies. One case involved a policy relating to mobile phone use policy, where the Dispute resolution clause in the Enterprise Agreement gave the FWC the right to concililate and arbitrate on ‘terms and conditions’ of employment: not just on the employment terms governed by the Enterprise agreement, Modern Award or the National Employment Standards. This is a huge mistake, because effectively it is an invitation to the Fair Work Commission to become involved in operational matters at work.

Another decision related to a No Further Claims clause. Every Enterprise Agreement has a clause like this, as they perform an important function in preventing ongoing claims from either side – however in one instance the clause was held to prevent the employer from changing their motor vehicle policy – as it was held to have relationship to the remuneration of the employees.

The lessons : while EA’s can be a great vehicle for flexibility when you are dealing with a good workforce – it is absolutely essential that the agreements dispute resolution does not allow the FWC to arbitrate, and secondly is based on what is covered by the modern award or Enterprise Agreement, and does not go more broadly into terms of employment. If you do that, you are going to end up with the Union or the Fair Work Commission trying to tell you how to run your business.

Once the agreement is made – The importance of consultation

No one likes having these difficult conversations, especially in the context of an employee not receiving a benefit or entitlement that they expect – but it is extremely important that consultation takes place. Not only is the consultation process legally required, but a calm, reflective consultation can actually take the heat out of a situation, and will often reduce your likelihood of having an industrial problem by approximately 90%. View it not as a difficult conversation to be endured, but rather as an opportunity to connect with them, diffuse the situation and begin the process of resolution.

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