Workplace law update: key actions for employers on parental leave, NDAs and investigations

The Bill seeks to ensure that employers honour employee’s existing employer-funded paid parental leave entitlements in the event of stillbirth or infant death. Employers are not to refuse to approve an employee’s existing employer-funded paid parental leave because of the stillbirth or death and are not to refuse to pay the period of leave or cancel any part of that leave even if the leave has commenced. 

This change provides consistency and greater certainty to parents who were already entitled to unpaid parental leave and government-funded parental leave pay under the Fair Work Act and the Paid Parental Leave Act 2010 (Cth) in these circumstances. 

The Bill does not have retrospective application, meaning the protection is to apply only to existing and future employment contracts where a stillbirth or death of a child occurs on or after commencement. 

The Bill will not apply to:

• employees who do not already have employer-funded paid parental leave entitlements;
• employees who have expressly agreed with their employers otherwise; or
• employees who request the cancellation of employer-funded leave in these circumstances. 

Employers will not be exempt from the requirement in circumstances where an employee’s terms and conditions of employment provide for employer-funded paid parental leave but are silent or unclear on what occurs in the event of death of a child or stillbirth.

Employers will also not be exempt from the requirement in instances where the employer has unilaterally varied an employee’s terms and conditions of employment to exclude the requirement after the new subsection 333X commences. This extends to workplace policies that form part of an employee’s employment contract.

The new subsection will preserve employers’ and employees’ ability to negotiate in good faith when entering into employment contracts and new enterprise agreements that expressly provide for conditions to apply in the event of infant death or stillbirth, even after commencement of the new amendment. 

Where an employee’s terms and conditions of employment already provide for allocated leave expressly available in the event of infant death or stillbirth, employers will be entitled to refuse or cancel employer-funded paid parental leave. This separately allocated leave must not constitute or reflect standard unpaid parental leave and compassionate leave entitlements which employees are already entitled to as mandatory statutory minimums under the National Employment Standards. 

This new protection is to constitute a workplace right within the meaning of s 341 of the Fair Work Act. Employees will have recourse to the general protection provisions to protect against any adverse action taken against them for accessing their existing employer-funded paid parental leave in the event of stillbirth of death of their child. 

The new subsection 333X(1) is a civil penalty provision under the Fair Work Act. You may incur the following penalties in circumstances of breach of the new protection:

• for individuals: a maximum of 60 penalty units or 600 penalty units for a serious contravention;
• for a body corporate that is a small business (less than 15 employees): a maximum of 300 penalty units or 3000 penalty units for a serious contravention; and
• for a body corporate that is not a small business (15 or more employees): a maximum of 1500 penalty units, or 15,000 penalty units for a serious contravention.

• Employers should not cancel paid parental leave that an employee would otherwise be entitled to had the stillbirth or infant death not occurred, unless expressly agreed upon or requested by the employee

• Review all existing employment contracts, enterprise agreements and workplace policies which provide for employer-funded paid parental leave

• Do not amend policies following the Bill’s commencement to remove entitlements or allow cancellation in these circumstances

• Where an employment contract is silent as to employer-funded paid parental leave in circumstances such as infant death and stillbirth, the protection will apply

• Ensure that if alternative leave is being provided specifically for infant death or stillbirth that this leave is explicitly stated to be in respect of infant death or stillbirth

• While the Bill is not to have retrospective application, the new subsection may apply in some circumstances where an employment contract is in effect immediately before s 333X commences and where the stillbirth or infant death occurs after commencement of the provision

• Communicate these protections and entitlements to employees 

• Failure to comply may result in significant penalties

NDAs are currently regarded as a default mechanism in the resolution of workplace sexual harassment matters. Research indicates that 75% of legal practitioners had never settled a sexual harassment issue without a stringent NDA.^[1] This Bill will disrupt the status quo by restricting the use of NDAs and addressing concerns that NDAs have been used to silence victim-workers, protect repeat offenders and diminish employer accountability. 

Premier Jacinta Allan and Minister for Industrial Relations Jaclyn Symes expressed their concerns over the misuse of NDAs which were originally designed to protect trade secrets but have instead contributed to a culture of victim silencing. Workers subject to NDAs face the additional challenge of being unable to provide explanations for gaps in their employment history. 

The Bill seeks to reform the current power imbalance in NDA negotiation process. The Bill’s purpose is to promote the health, safety and welfare of persons at work. Its key provisions include the following:

• Ban on NDAs unless requested by the victim-worker;
• Right granted to the victim-worker to terminate the NDA after 12 months without repayment of any financial settlement;
• Permitted disclosure if an NDA is negotiated to certain individuals and entities such as Victoria Police, support organisations and legal and medical professionals;
• Prohibition on employer coercion of workers to enter into an NDA (including offering the worker a higher settlement amount if they request an NDA or refusing to provide the worker with a work reference unless they agree to an NDA); and
• Mandatory information statements and cooling-off periods of at least 21 days prior to signing.

If passed, Victoria will become the first Australian jurisdiction to legislate restrictions on the use of NDAs in this context. It will apply to all Victorian workplaces, including government departments. It will capture NDAs as well as any other contract or agreement that relates to the disclosure of material information about workplace sexual harassment if such sexual harassment is connected to Victoria. However, the legislation will not have retrospective effect, meaning that existing NDAs will remain unaffected. 

Victoria’s reform aligns with approaches taken in other international jurisdictions such as Ireland, Canada and some US states which have already enacted similar legislation of this kind. There have been domestic organisations who have already implemented this change, with Telstra having removed NDAs relating to sexual harassment from their workplace policies in 2023.^[2]

The Bill follows recommendations from the Victorian Ministerial Taskforce on Workplace Harassment, which advocated for legislative reform to restrict the use of NDAs in workplace sexual harassment matters in Victoria. The Government first announced its commitment to make these reforms in 2022 and conducted public consultation throughout 2024 as to the forms the recommendations should take. 

Following suit, the renowned Working Women’s Centre NSW has recently reopened to join a national network of centres. The centre has been closed for around two decades but has reopened to launch a program targeting NDAs. In the same week that Victoria introduced the Bill, the centre announced its intention to push for regulations which permit survivors of sexual harassment to disclose their experiences without legal ramifications. The centre delivers free, specialist legal advice and support to women who have suffered forms of work-related abuse and discrimination including sexual harassment or sexual violence at work as well as loss of employment as a result of parental leave. 

Employers in Victoria should review their workplace policies and settlement practices in anticipation of the Bill’s passage. 

The FWC found that the employer had multiple purposes when engaging a law firm to brief a barrister to commence the external investigation. While the FWC accepted that one of the purposes was to obtain legal advice, the other purpose was to determine whether the employee had breached the employer’s Code of Conduct and if so, to discipline the employee in accordance with the procedures in the employer’s grievance and misconduct policy. 

In reaching its decision, Deputy President Farouque noted that, without any evidence from the employer demonstrating the dominant purpose, he could not accept that the investigation was primarily for obtaining legal advice. In forming the decision, Deputy President Farouque found:

• the employer had determined that it was obliged to assess whether the employee had breached the employer’s code of conduct and, if so, which disciplinary steps were required to be taken;

• the employer’s workplace misconduct policy encompassed an external investigation as a means of addressing allegations of misconduct; 

• the employer’s correspondence disclosed the purpose of the external investigation as being an employment disciplinary purpose, with statements that indicated that a more thorough external investigation was necessary to assess whether a breach of the code of conduct had occurred; 

• the employer’s use of words such as ‘continue the investigation’ and ‘finalise the investigation’ indicated that there was a continued operation of the employment operation purpose in authorising the external investigation; and

• the letter which notified the employee of the allegations, and which required the employee to respond included statements which provided that, should the allegations be substantiated, disciplinary action may be taken. The employer’s code of conduct and disciplinary policy were attached to this letter. 

The FWC found that even if the investigation was subject to legal professional privilege, privilege over the report was waived. 

The outcome letter provided to the employee included (amongst other things) the evidentiary basis of the substantiated or partially substantiated allegations, including reference to specific witness statements.

The FWC observed at [88] (emphasis added):

‘The disclosure of the particular evidentiary source of [the barrister’s] findings in respect of the substantiated and partially substantiated allegations expose [the barrister’s] reasoning beyond that which was necessary for [the employer] to explain to [the employee] the basis upon which he was placed on a [performance improvement plan]…Consequently, I consider that if the [investigation report] was privileged, there has been a waiver of the privilege by the extent of the disclosure made to [the employee], as the extent of that disclosure to [the employee] is inconsistent with the maintenance of confidentiality.’

Deputy President Farouque distinguished this decision from Peter Tainsh and Markus Wellner v Co-Operative Bulk Handling Ltd [2021] FWC 3381 (Tainsh decision) where privilege had not been waived. Deputy President Farouque considered that in the Tainsh decision the purpose of disclosing investigation finings was to provide the employee an opportunity to respond to substantiated allegations. 

As part of Deputy President Farouque reasoning, he referred to observation made in Damien Stephen v Seahill Enterprises Pty Ltd & Denise Fitzgibbons [2021] FWCFB 2623, where the Full Bench stated:

‘A procedurally fair workplace investigation initiated by an employer the outcome of which is intended to be made known to relevant employees in the workplace and which is to lead, where necessary, to corrective or disciplinary action is not one which ordinarily has a purpose confidential to the employer.’

• Legal professional privilege only applies to an investigation if the dominant purpose is to obtain legal advice.
• Employers should clearly record the purpose of an investigation.
• Any communication sent to participants of an investigation should be carefully drafted to avoid the risk of waiving privilege and any information disclosed should be limited to only what is necessary.
• Employers should be aware of the risk that disclosing the evidentiary basis for findings may waive privilege over an external investigation. Should this occur reports will need to be produced to regulators under compliance notices (including Safety regulators and the Australian Human Rights Commission) and in any proceeding commenced by the complainant or respondent to the investigation.