What are confidentiality clauses?
A confidentiality clause is a provision within a settlement agreement under which parties agree that certain information will be kept confidential as part of the settlement. Confidentiality clauses are also commonly referred to as non-disclosure agreements (NDAs).
Confidentiality clauses used to settle claims of sexual harassment
In a settlement agreement resolving an allegation of workplace sexual harassment, a confidentiality clause may stipulate that parties keep certain matters confidential, such as the quantum of any payment or other details relating to the allegation itself and settlement process.
Confidentiality clauses can be beneficial in providing a complainant with privacy, finality and greater bargaining power when settling their complaint. However, they have also been used to cover up unlawful conduct and to protect the reputations of alleged sexual harassers and their organisations. As such, they can facilitate repeat offending and inhibit oversight by executives and boards, who may be unaware that complaints have settled confidentially. In this way, confidentiality clauses can contribute to under-reporting and reinforce the systemic nature of sexual harassment, hiding both its prevalence and the steps taken to address it.
Advice for Victorian lawyers who draft, negotiate and advise on confidentiality
Lawyers play a key role in drafting, negotiating and advising on confidentiality clauses to resolve workplace sexual harassment complaints. They should keep their professional and ethical obligations front of mind when doing so.
The Australian Human Rights Commission (AHRC) has produced helpful information about the use of confidentiality clauses to resolve workplace sexual harassment complaints. We strongly encourage Victorian lawyers to refer to this information when working on these matters.
See the following expandable sections for more detailed information.
As with any area in which you practise, it is important to understand how professional and ethical obligations apply to the work of drafting, negotiating, or advising clients about the use of confidentiality clauses to settle sexual harassment complaints.
Your basic obligations are set out in the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (Solicitors’ Rules) and the Legal Profession Uniform Conduct (Barristers) Rules 2015 (Barristers Rules) (together, the professional conduct rules). Of these, we consider the following professional conduct rules to be particularly relevant to lawyers who are involved in settling workplace sexual harassment complaints by using a confidentiality clause.
Your paramount duty to the court and the administration of justice
The paramount duty of all lawyers practising in Victoria is the duty they owe to the court and to the administration of justice (R 3 of the Solicitors’ Rules and Cl. 4(a) of the Barristers Rules).
By their nature, confidentiality clauses are included in agreements that come into existence because of a dispute. Their purpose is therefore to avoid the risk of litigation and judicial consideration, at least partially. However, the potential for future court scrutiny of contractual terms remains a possibility (as is the case with any contract). For that reason, if you are involved in drafting, negotiating or advising on such a clause in the context of a workplace sexual harassment complaint, it is wise to keep in mind your paramount duty.
Your duties to avoid any compromise to your integrity or professional independence, and to avoid engaging in conduct which is likely to be prejudicial to, or diminish public confidence in, the administration of justice, or bring the profession into disrepute
Our view is that certain provisions in a confidentiality clause may be so unfair, misleading or intimidatory that they could either raise questions about your integrity or professional independence (R 4.1.4 of the Solicitors’ Rules), or be likely to bring the profession into disrepute (R 5 of the Solicitors’ Rules and R 8 of the Barristers Rules).
We are particularly concerned with provisions that purport to prevent a party from:
- reporting an offence or crime to the police, or co-operating with a criminal investigation or prosecution
- seeking medical or psychological treatment, or
- seeking legal advice about the terms of the agreement.
Lawyers should be aware that any contract ‘having a tendency, however slight, to interfere with the administration of justice’ is contrary to public policy (A v Hayden  HCA 67). In that decision, Chief Justice Gibbs noted that the court will refuse to exercise its discretion to enforce an obligation of confidentiality when the consequence would be to prevent the disclosure of criminality which, in all the circumstances, it would be in the public interest to reveal.
You need to properly consider whether any provisions within a confidentiality clause could be void or unenforceable on the grounds of being contrary to public policy, unconscionable or obtained through undue influence — including the kinds of provisions highlighted above.
Your duty to act in your client’s best interests
Your duty to act in your client’s best interests (R 4.1.1 of the Solicitors’ Rules and R 35 of the Barristers Rules) requires that you fully explore the consequences of confidentiality clauses for your client and their individual circumstances.
When representing complainants, this means understanding—and ensuring your client does not underestimate—exactly what impact the clause will have for your client and what it may prevent them from doing in the future. It is easy to overlook the personal significance of confidentiality clauses for your client when the primary focus is on the nature and extent of any financial settlement.
If you are representing an employer and/or an employee accused of sexually harassing a complainant, a confidentiality clause may appear to be in the best interests of both, by allowing the employer to resolve the matter promptly and the employee to move on without having their reputation tarnished by the allegation.
However, your duty to act in your client’s best interests does not override—and must be balanced against—your professional obligations to act with integrity and professional independence (R 4.1.4 of the Solicitors’ Rules). The content of any confidentiality clauses that favour your client must be considered in light of these obligations.
You should consider whether a confidentiality clause is in fact in your client’s best interests. This requires careful consideration of what their best interests are, in both the long and short term. A confidentiality clause may be useful in the short term in protecting an employer from reputational damage associated with an allegation of sexual harassment by one of their employees. However, the same clause may operate against their long term best interests when:
- there is a risk that the same employee will sexually harass another person, that risk eventuates, and the matter subsequently becomes widely known (potentially exposing the employer to far greater reputational damage than would have been the case without the confidentiality clause), and/or
- the clause prevents the employer from responding to systemic issues and providing a safer workplace (for example, if senior leaders and board members are not made aware of sexual harassment complaints being settled in this way).
Where there are such risks, your client may benefit from advice accordingly, before deciding whether to seek confidentiality and, if so, on what terms.
Other professional conduct rules to consider
In negotiating, drafting and advising clients on confidentiality clauses within sexual harassment settlement agreements, you should also consider your duties to:
- be honest in all dealings (R 4.1.2 Solicitors’ Rules)
- avoid making statements which grossly exceed the legitimate assertion of your client’s rights or entitlement, and which mislead or intimidate another person (R 34.1.1 Solicitors’ Rules and R 49 Barristers Rules). For example, a provision that purports to prevent a person from making a disclosure required by law could grossly exceed legitimate assertion of your client’s rights and mislead the other party.
- avoid acting as a mouthpiece for your clients (R 17.1 Solicitors’ Rules). If a client’s instructions are inconsistent with your professional obligations, you must decide whether you can continue to act on behalf of that client.
These duties are particularly pertinent when dealing with a party who is unrepresented, and therefore in a position of some vulnerability. You should not take unfair advantage of an opposing party’s lack of legal representation to apply undue pressure or oppressive tactics.
The question of whether a lawyer is a fit and proper person to hold a practising certificate is relevant throughout a lawyer’s career. It is relevant to our decisions whether or not to grant a practising certificate and to renew that certificate every year, and to any decision we may make to interfere with a certificate during the practising year (e.g. including in response to a complaint and following an investigation).
At a minimum,
- acting honestly and with integrity, and
- avoiding conduct that is prejudicial to, or diminishes the public confidence in, the administration of justice, or brings the profession into disrepute,
are relevant to fitness and propriety.
If you breach your professional or ethical obligations when negotiating, drafting, advising on, settling or entering into a confidentiality clause, we may take a range of actions. For example, we may:
- make orders, e.g. an order issuing a reprimand or fine
- vary, suspend or cancel your practising certificate
- bring charges against you before the Victorian Civil and Administrative Tribunal for professional misconduct.
We note that the AHRC has published Guidelines on the Use of Confidentiality Clauses in the Resolution of Workplace Sexual Harassment Complaints, (Respect@Work Guidelines) along with a series of Fact Sheets for:
We recommend that employers, lawyers and people who have experienced sexual harassment refer to these resources when becoming involved in negotiating or advising on sexual harassment settlement agreements.
Principles to guide consideration of the use of confidentiality clauses
The Respect@Work Guidelines recommend that various principles inform the use of confidentiality clauses to resolve workplace sexual harassment complaints. We encourage lawyers to familiarise themselves with these principles and follow them:
- Consider the need for a confidentiality clause on a case-by-case basis
- Limit the scope and duration of the confidentiality clause as far as possible
- Confidentiality clauses should not prevent organisations from responding to systemic issues and providing a safer workplace
- All clauses in a settlement agreement should be clear, fair and in plain English, and translated for non-English speakers where necessary
- The person who made the allegation should have access to independent support or advice to ensure they fully understand the meaning and impact of the settlement agreement, including any confidentiality clause
- Negotiations about the terms of a settlement agreement should ensure so far as possible the wellbeing and safety of the person who made the allegation, and be trauma-informed, culturally sensitive and intersectional.
We further strongly recommend that:
- Confidentiality clauses should clearly state what disclosures can and cannot be made, and to whom
- Signatories should be given appropriate time to consider whether to sign the settlement agreement containing a confidentiality clause, including time to seek legal and other advice
- Lawyers are alive to and understand the power imbalances that can be present in a negotiation, and consider how to minimise the potential for unfairness.
We also refer lawyers and employers to the Victorian Equal Opportunity and Human Rights Commission guideline on Preventing and responding to workplace sexual harassment (at section 4.5.5), which also contains detailed guidance about best-practice use of confidentiality clauses in workplace sexual harassment matters.