Comment: In the wake of the #MeToo movement, the mistreatment of employees through non-disclosure agreements has come to the fore. High-profile cases, such as that of the disgraced Hollywood mogul Harvey Weinstein, have shed light on how they can muzzle victims of bullying and harassment in the workplace.
Although touted as tools for protecting sensitive business information, non-disclosure agreements are frequently used to coerce individuals into silence after incidents of misconduct. Victims typically feel they have no choice but to accept these conditions, rendering them nameless and leaving offenders free to continue their predatory behaviour unchecked.
New Zealand was one of the first countries to introduce legislation to protect employees who reported “serious wrongdoing” in their workplace, without having to worry that detrimental action may be taken against them. Yet, despite its early leadership in whistleblowing legislation, the country has fallen behind in best practices and lacks robust oversight mechanisms.
For instance, despite purporting to promote “good faith” employment relationships, the Employment Relations Act 2000 has not adequately addressed the coercive nature of non-disclosure agreements. Section 149, which pertains to settlement agreements, has been taken to imply that confidentiality terms become binding, preventing further legal recourse or public discussion once the agreement is signed.
In response to growing domestic and international pressure, over the last two years New Zealand has reformed its regulatory framework for these agreements. Notably, the Protected Disclosures Act 2000 has been replaced by the Protected Disclosures (Protection of Whistleblowers) Act 2022, which enhances whistleblower protections and expands the definition of “serious wrongdoing” to include bullying and harassment, such as sexual harassment.
The 2022 act also allows for disclosures to be made to an “appropriate authority”, which in this context is WorkSafe. Previously, disclosures had to be made to the employer in the first instance. Additionally, whistleblowers are now protected, even if it is determined their complaint is unfounded or if there are errors in how they reported the issue.
Further, a 2023 amendment to the Employment Relations Act allows sexual harassment victims to file personal grievances within a year, extending the previous 90-day limit. Disclosures related to workplace misconduct can be reported at any time to an appropriate authority.
These reforms aim to create safer workplaces but outcomes vary. A recent survey commissioned by Chief Ombudsman Peter Boshier revealed that though 81 percent of respondents would report serious wrongdoing to their employer, only about half would approach an appropriate authority. A quarter of respondents reported witnessing serious misconduct at work, but fewer than half made a protected disclosure. Concerns about job security were likely one factor.
Despite these concerns, reports of serious wrongdoing to the Ombudsman have increased nearly threefold since the Protected Disclosures (Protection of Whistleblowers) Act took effect on July 1, 2022. Common complaints include financial mismanagement, unsafe practices, sexual harassment, and how the employer handled complaints about the latter. The Chief Ombudsman identified improved whistleblower protections allowing direct reporting to authorities as a factor contributing to the increase.
Globally, there is a trend to limit the misuse of non-disclosure agreements in sexual misconduct cases, with some countries, such as the US, implementing outright bans and others applying restrictions. This shift reflects a growing recognition of the negative impact of these agreements in protecting perpetrators and concealing details of abuse, and promotes greater transparency and accountability in workplace misconduct.
Although New Zealand has not considered an outright ban on non-disclosure agreements in harassment claims, the regulatory reforms of the past two years demonstrate a commitment to improving victim protections and accountability. However, a lack of awareness about those protections likely contributes to employees choosing to settle grievances privately rather than making protected disclosures.
The Chief Ombudsman has stressed the need for effective workplace processes that encourage reporting, protect against retaliation, and ensure confidentiality. True progress, he has said, requires more than just legislative change; it necessitates cultivating a “speak-up” culture that supports reporting misconduct without fear. Secrecy, it is said, is the mother of corruption.
This article was originally published on Newsroom.
Stephen Blumenfeld is a senior lecturer in the School of Management at Te Herenga Waka—Victoria University of Wellington.