Why silence on sexual harassment will hurt company bottom lines

Julia Szlakowski never signed a non-disclosure agreement so when her alleged sexual harasser got a massive promotion with uncapped bonuses, she didn’t need to keep quiet.

So far, companies have used non-disclosure agreements (NDAs) to keep everything silent. That trick may be coming to an end now the government has agreed to the development of new guidelines around NDAs in its response to Sex Discrimination Commissioner Kate Jenkins’ [email protected] report.

Julia Szlakowski and AMP Capital’s Boe Pahari.Credit: Supplied

The response was the usual Coalition confusion – just a few elements of the report’s 55 recommendations accepted without argument, others in parts, others just noted. At least NDAs got a look in, which is a glimmer of hope in an otherwise lacklustre and laggardly response. New guidelines might just be the undoing of all those workplace sexual harassers out there, particularly now big institutional investors are backing cultural change.

In Szlakowski’s case, AMP paid her out over claims AMP Capital senior executive Boe Pahari repeatedly sexually harassed her over several months in 2017. It was only when Pahari was promoted last year that news of the harassment claims emerged. Pahari was a rainmaker but that didn’t save him. As Szlakowski’s lawyer, Maurice Blackburn’s Josh Bornstein, pointed out: “When her case attracted public attention, she was able to speak publicly about what happened”.

Managing director of Allan Gray, one of AMP’s biggest shareholders, Simon Mawhinney, said at the time: “Companies must have a social licence to operate above all else or ultimately it will be your company’s downfall.”

Pahari was demoted within weeks of the leak, joined by board members David Murray and John Fraser, both of whom had supported Pahari’s promotion.

Szlakowski says now: “By discussing my case, I hope sexual harassment in the workplace is no longer disguised as a personal matter but viewed for what it really is: a professional crisis catalysed by toxic culture for which the company is ultimately responsible.”

”Non-disclosure agreements are designed to muzzle survivors of sexual harassment, protect perpetrators and help mask the toxic company culture, which enabled the harmful behavior in the first place,” she says. “NDAs are used by most companies and aid in contributing to a culture of silence. Breaking this silence is an intimidating and precarious undertaking. It makes good sense why sexual harassment (and assault) cases are severely underreported.”

Minter Ellison partner and NDA expert Amanda Watt welcomes reform and says an urgent revamp is necessary. NDAs have, she says, been used to protect and even embolden senior employees at the expense of complainants and the community. Corporate Australia must now adopt non-disclosure agreements where the harassment is made visible, Watt says.

Allan Gray’s Simon Mawhinney.Credit:Louie Douvis

“Without greater transparency over how organisations deal with sexual harassment, the behaviour can continue unabated. A new form of NDAs builds in transparency with the complainant’s consent and retains their agency to tell their story at the time of their choosing, should they wish to do so,” says Watt.

Szlakowski hopes there will come a time when NDAs no longer exist: “Eliminating NDAs will allow survivors the room to speak their truth and normalise an otherwise uncomfortable conversation that has been long overdue.”

Watt says it is unlikely NDAs will ever disappear. Some survivors want their privacy. “The decision should always be with the survivor.”

Associate professor in law at the University of Technology Sydney Karen O’Connell says some survivors are desperate for privacy and confidentiality because of the way in which stereotypes about sexual harassment and those who report it can continue to harm them.

“The process doesn’t usually benefit the woman. All kinds of negative stereotypes are engaged where it is the victim who is sexualised. This puts women at risk because of potential harms to reputation.”

O’Connell says that workplace culture can be reshaped to exclude sexual harassment by employers taking positive duties more seriously.

But financial pressures can be brought to bear. One of Australia’s biggest institutional investors, the super fund HESTA, is set to put pressure on companies using NDAs to protect serial sexual harassers. Now the Australian Council of Superannuation Investors is also backing the campaign to make boards accountable.

For too long, it’s been all about the money for institutional investors. Now it is also about a social licence. In what is a major shift, super fund HESTA has adopted principles which demand companies ensure employees can safely bring forward claims of sexual harassment. It also seeks agreement from company directors to share publicly the due diligence used to respond to sexual harassment complaints filed by all employees. That includes the use of NDAs, legally enforceable confidentiality agreements between organisations and complainants.

HESTA’s head of impact Mary Delahunty says corporate Australia must recognise that sexual harassment at work is a financial risk.

“The use of NDAs serves to protect the perpetrator and silence the victim which only perpetuates the harassment and hides from investors the true level of risk.”

HESTA backs reforms such as requiring companies to report settlements to an independent body to make it easier for investors to identify companies with persisting issues.

“Non-financial risk simply doesn’t exist. There are risks that are hard to see, hard to quantify and hard to understand but they nonetheless present a risk to the long-term value of the company,” says Delahunty.

ACSI CEO Louise Davidson says the case at AMP was shocking and likely to be generalisable across industry. ACSI has a survey in the field to see where the gaps are in accountability and whether boards get the information they need to make substantive change.

“It’s time for boards to make sure they have their houses in order. There is no point [in boards] having gender equality policies in place if boards don’t nail sexual harassment in their workplaces.”

Channel Seven whistleblower Amy Taeuber can’t reveal whether she signed an NDA but says it’s clear the agreements are being used to silence women, which is leading to a cover-up of incidents of sexual harassment.

She was a cadet journalist in Adelaide when she complained about a senior colleague who has made personal remarks about her appearance and her sexuality. Her employment was later terminated for a “breach of contract”.

“NDAs protect the perpetrators and not the victims, which is really scary and it needs to change.”

Frame grab showing, Amy Taeuber, a 27-year-old former Seven Network cadet journalist in Adelaide.?

She is calling for workplaces around Australia to waive NDAs to stop the cycle of harassment and allow those speaking out to create change.

“How are perpetrators of sexual harassment and bullying supposed to be stopped when in most cases NDA’s protect them? It’s absurd. Sadly, HR departments are there to protect the company and not the workers.”

Jenna Price is a visiting fellow at the Australian National University.

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