Non-disclosure agreements (NDAs) have become a standard feature of workplace sexual harassment settlements. A University of Sydney study revealed that 75% of legal professionals had never reached a settlement without a strict NDA.
While NDAs can sometimes offer a path to resolution, their traditional use has been heavily scrutinised. Some argue that they protect offenders and silence victims. Others claim they help victims negotiate better settlements and avoid the trauma of public scrutiny.
If you’re going down the path of making a sexual harassment claim, it’s vital to understand what an NDA is. This article explains what they can include and the arguments for and against them. We also look at how the Victorian government has proposed a law that will prohibit the use of NDAs in workplace sexual harassment settlements.
When two parties resolve a sexual harassment complaint outside of court, they enter into a legally binding settlement agreement. An NDA is a common inclusion within such an agreement. It’s otherwise known as a confidentiality clause or agreement.
An NDA is a legally enforceable contract that requires both parties to keep certain information confidential. This can include the details of the incident, including what was alleged to have happened. Also, the fact that a settlement was reached and the terms of it, including any compensation that was agreed to be paid.
No, an NDA is not a legally essential term of settlement. It’s an optional clause that must be negotiated and agreed upon by the parties. However, NDAs are considered standard practice when reaching a settlement. As we’ll explore later in this article, their entrenched status in settlements is considered a problem by some.
An NDA can include several clauses and terms that restrict the future actions of the parties of a settlement agreement. This includes:
This outlines what details about the harassment incident can be disclosed to those not party to the settlement. An employer or perpetrator will generally seek the broadest possible terms. This can include the specifics of the incident, including the date, location, and nature of it. Also, the amount of compensation paid to the victim and any other agreed actions, like the perpetrator resigning or having their job transferred. An NDA can also keep confidential the fact that a settlement was reached.
This stipulates that both parties, but particularly the victim, can’t say or write anything negative or derogatory about the other party. It’s often the most restrictive clause as it can be interpreted to cover conversations with friends or comments on social media.
This is a standard term in almost all settlement agreements, with or without an NDA. It states that, in exchange for the settlement payment, the victim releases the employer from any further legal action related to the harassment claim. This means that the victim can’t bring legal action against the employer again for the same incident.
These are clauses that must be negotiated. They can permit specific people or entities to disclose details of the agreement or incident. For instance, it can give the victim the right to disclose details to a future legal advisor or union, medical professional, government or regulatory bodies, or family members.
Because the NDA is a legal contract, it will specify the consequences if a party breaches its terms. This often includes a clause for liquidated damages, which is a pre-agreed financial penalty, or the ability for the employer to seek a court order to prevent further disclosure.
NDA reform has been championed by many, particularly the Australian Human Rights Commission. Here are the main arguments made against the use of strict NDAs, which the Commission claims have become “standard practice” when negotiating workplace sexual harassment settlements.
One of the main arguments against NDAs is that they prevent victims from speaking about their experience with family, friends or even medical and mental health professionals. It’s claimed that this hinders their ability to heal and achieve closure.
In its 2020 Respect@Work: Sexual Harassment National Inquiry Report, the Australian Human Rights Commission said that this can have “long-term impacts” on the mental health of victims. International studies back this claim up. UK not-for-profit Speak Out Revolution found that 95% of victims who signed a sexual harassment NDA experienced negative mental health as a direct result.
Another argument against NDAs is that by concealing harassment incidents, they allow perpetrators to escape the consequences of their actions. The Australian Human Rights Commission cautioned that NDAs “protect” offenders, allowing them to “move on with their career” and potentially repeat their behaviour.
It’s also argued that they shield the employer’s reputation, preventing them from addressing issues in the workplace. This runs contrary to an employer’s positive duty to actively prevent sexual harassment.
The Australian Human Rights Commission has argued that widespread use of NDAs undermines the broader societal goal of eliminating sexual harassment. In its Respect@Work report, the Commission said that NDAs contribute to a “culture of silence” around systemic issues of workplace harassment.
It argued that widespread use of NDAS runs counter to the Sex Discrimination Act 1984 (Cth). This is because the Act imposes a “positive duty” on employers to take reasonable measures to prevent and eliminate sexual harassment. The Commission argued that keeping harassment details confidential means that there is less awareness of the pervasive nature of incidents. Therefore, it’s argued that less proactive action is taken by employers to stamp them out.
This argument was mirrored by the Sydney University study. Its Social Justice Practitioner-in-Residence, Sharmilla Bargon, said widespread use of NDAs means that “we continue to know very little” about the harassment taking place in Australian workplaces. Therefore, we also don’t know much about the “impact of recent law reform” in curbing the issue.
Carrying on from the previous point, it’s argued that NDAs prevent political leaders and entities from being aware of the rate and types of sexual harassment incidents and settlements.
The Australian Human Rights Commission heard through its inquiry that confidentiality obligations can be “harmful and counter-productive” to the fight against workplace harassment as they prevent the “oversight” of leaders. In addition, when employees see that complaints are systematically silenced, it contributes to under-reporting of harassment. This of course reinforces the systemic nature of the problem.
In its Respect@Work report, the Australian Human Rights Commission said that it didn’t call for a “blanket ban” of NDAs. Rather, it said that their advantages and disadvantages need to be balanced. It noted that they “can have benefits for the person who made the allegation.”
Here are the main arguments in favour of NDAs:
The primary benefit of an NDA lies in giving the victim control over their story and their exposure to the public. Many people settle a sexual harassment claim out of court under confidential terms to avoid the intense public scrutiny and emotional toll of a trial. An NDA ensures the details of the allegation, the settlement and their identity do not become public knowledge.
Public sexual harassment claims, even when substantiated, can lead to professional repercussions for the victims. An NDA legally ensures that their involvement remains confidential. This is seen as a way to “move on with their career” and avoid further personal or professional repercussions.
Stigmatisation can arise from having your name publicly associated with a harassment lawsuit. A strict NDA shields the victim from being identified by future employers as a “troublesome” or “litigious” employee. By keeping the matter private, the claimant ensures their professional future is not jeopardised by the public record of a high-profile, sensitive dispute. This benefit is particularly strong in smaller industries or professional fields where word of litigation could severely limit future employment opportunities.
Another argument in favour of NDAs is that they can provide victims with a valuable piece of leverage in negotiations. Since employers are highly motivated to avoid reputational risk, a victim’s willingness to agree to an NDA can result in a more beneficial settlement. They can negotiate a higher payment than might otherwise be achieved through litigation,
This increased bargaining power was acknowledged by the Australian Human Rights Commission. Its Respect@Work Report noted that confidentiality clauses can mean an employer is essentially paying a premium – often referred to as the “secrecy tax” – to ensure the matter and its sensitive details do not become public knowledge. This leverage provides a faster route to substantial compensation, which is crucial for a victim seeking funds to support their recovery and career transition.
Presently, there aren’t any federal, state or territory laws regulating the use of NDAs in workplace sexual harassment settlements. But in October 2025, the Victorian government introduced a bill designed to regulate the use of NDAs. The Restricting Non-Disclosure Agreements (Sexual Harassment at Work) Bill seeks to prohibit the use of NDAs in workplace sexual harassment settlements unless their inclusion is specifically requested by the worker who experienced the harassment.
The government stated that the purpose of the law is to address “power imbalances” in the NDA negotiation process. It claimed the law will stop NDAs from being used to silence victims and conceal harassment in the workplace. This is a practice which the Victorian Ministerial Taskforce on Workplace Sexual Harassment found was routinely misused to protect employer reputations and hide serial offending.
If passed into law by the Victorian parliament, the bill will apply to all workplace sexual harassment matters within the state. It will introduce the following core restrictions and protections:
A workplace mediator can play an essential role in ensuring both parties in a harassment dispute can reach a fair, respectful resolution without the stress of litigation. They help clarify what confidentiality clauses actually mean, negotiate reasonable terms and safeguard your right to tell your story if you choose to.
If you’ve been sexually harassed or pressured into signing an NDA, it’s vital to seek professional advice before agreeing to anything. That’s where Australian Workplace Discrimination Representatives (AWDR). For over 20 years, we have been at the forefront of workplace sexual harassment representation, achieving significant settlements and driving change.
As Australia’s leading independent workplace representatives, we’ve handled over 10,000 employee claims across every state and territory. Our team can help you understand your rights, assess your legal options and negotiate fair settlements — including reviewing or challenging NDAs that could silence your experience or limit your recovery.
We also offer free, confidential initial consultations, and if you decide to proceed, we can represent you through mediation, Fair Work or Human Rights Commission processes on a no win, no fee basis. Contact us seven days per week on 1800 333 666 for a complimentary, no obligation claim assessment and personal evaluation.
