Boards must ditch traditional non-disclosure agreements in favour of more effective tools that create a safe, open and transparent company culture.
Recent events in Australia have shown the failure to prevent and adequately respond to sexual harassment on a systemic basis creates complex and extensive risks to organisations. These risks extend beyond reputation and breaches of workplace health and safety and anti-harassment obligations, to significant distress to those impacted by sexual harassment (complainants), extensive losses of productivity and profitability, scrutiny of leadership succession, and loss of shareholder confidence.
The risk lens through which boards respond to sexual harassment needs a refocus. The priority must expand from minimising reputational damage and legal liability to creating a culture and systems that ensure a physically and psychologically safe workplace for all. Shareholders, investors, employees, regulators and the community now expect this change in approach.
When sexual harassment occurs at the executive level in an organisation, and managing the crisis reaches board level, the “go-to” tool for managing reputational damage is often a non-disclosure agreement (NDA). In an NDA an organisation may provide a financial sum to the complainant in settlement of the sexual harassment matter in exchange for the complainant’s agreement not to discuss the matter publicly or take legal action against the organisation.
However, these traditional NDAs are not an effective way of solving a deeper governance issue for boards, which is workplace health and safety. Adoption of NDAs in this traditional form also prevents transparency of patterns of behaviour, thereby reducing the ability of the organisation to prevent sexual harassment on a systemic basis. Serial perpetrators can move on to new complainants and/or new workplaces — without fear their history will become known.
The Male Champions of Change report Disrupting the System: Preventing and responding to sexual harassment in the workplace, noted that: “In the past, many organisations have prioritised legal responses and ‘shutting down the issue’, driven by reputation management. This can have the perverse outcome of protecting and/or emboldening higher- status employees at the expense of complainants, their co-workers and the broader interests of the organisation and the community in naming and tackling sexual harassment. Commercial settlements and non-disclosure agreements often reinforce this view and ensure issues are kept out of the public domain and opportunities to learn from cases are diminished.”
Fight or flight
There are growing calls for NDAs to be used only when requested by a person who has experienced sexual harassment, reflecting the reality that, over time, a complainant may change their perspective on the harassment.
Signing an NDA may present to a complainant as a means to protect their privacy and finalise what has been a period of great anxiety and to move on with their life, but retaining agency over the ability to tell their story in the future, should they so choose, can also be important to their ultimate wellbeing.
The Champions of Change Coalition is urging their member organisations to be more transparent about sexual harassment, commencing with an openness that this problem exists in their workplaces. The coalition is also advocating that once any investigation is complete, organisations will not restrict the complainant’s right to speak even if they have signed an NDA. In addition, where there is substantiated conduct by a senior leader, and legitimate public and stakeholder interest in the matter, their member organisations may reveal the perpetrator’s identity.
In this context, NDAs are transformed in nature from covert, potentially damaging organisational responses to sexual harassment, to vehicles that aid in a complainant’s healing and confirm to the organisation’s stakeholders, shareholders and the wider community in which it operates, that its most senior leadership does not tolerate sexual harassment in its workplaces.
A new form of NDA
- Would only include confidentiality clauses if the complainant agreed
- Would be clear on the limits of that confidentiality, including as to the right of a complainant to engage with regulators on the matter
- Would protect the complainant’s identity and privacy
- Could make the amount of any settlement payment to the complainant confidential
- Would not preclude the complainant from speaking about the complaint at any time in the future so they retain agency over how their story is told
- Would expressly carve out the right of the organisation to disclose, both internally and externally (in a de-identified way), that a complaint had been made and how it had been dealt with, and to capture that matter in its aggregated data
- Would carve out the right to disclose the perpetrator’s identity where there is a legitimate public or stakeholder interest, and an investigation has found that the allegations had been substantiated.
These carve-outs are essential for ensuring adequate transparency to enable the systemic prevention of sexual harassment and to ensure the organisation fulfils its duty of care to all its people.
Amanda Watt is a partner at MinterEllison and contributed to Disrupting the System: Preventing and responding to sexual harassment in the workplace. A version of this article appeared in ANZ bluenotes. A CHANCE FOR REFORM
The report and the federal government’s response, with whole of community buy-in, paves the way for globally ground- breaking reform on workplace sexual harassment.
Kate Jenkins GAICD, Sex Discrimination Commissioner RESPECT@WORK On 8 April, the federal government announced its response to the 55 recommendations made in Respect@Work, the Human Rights Commission’s 2020 Report on the National Inquiry into Sexual Harassment in Australian Workplaces.
Among measures, the Roadmap for Respect: Preventing and Addressing Sexual Harassment in Australian Workplaces includes an implementation taskforce to deliver legislative and regulatory reform; simplifying and strengthening the legal framework, existing rights and obligations for employees and employers. And greater coordination between agencies and services to ensure workers and employers have access to consistent information. It also committed to preventative action through education and training programs, and improving data collection and research on prevention strategies.
“The fact that the government has accepted in whole, in part,in principle or noted, all 55 recommendations, is a credit to the thousands for Australians who participated in the national inquiry, and those who haveused their voices to call for change,” said Sex Discrimination Commissioner Kate Jenkins GAICD.
Prime Minister Scott Morrison also undertook to end a loophole exempting federal MPs and judges from having sexual discrimination complaints lodged against them. The government has flagged introduction of the legislation by June.
Learn more at the 'Roadmap for Respect'.
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