Authored by Diya Vinekar (Intern), a 2nd-year law student at National Law University, Delhi
Non-disclosure agreements, hereafter simply referred to as “NDAs”, since time immemorial, have been a tool used by conglomerates and corporations to keep confidential information under wraps, to protect what is best known as 'trade secrets' for safeguarding their capitalist ventures. Its application in cases of workplace sexual harassment has, however, raised greater concern-especially regarding the silencing of victims and survivors of workplace harassment. In India, NDAs are technically in place under the Indian Contract Act, 1872, and are therefore utilised relatively frequently. However, their use in silencing victims of sexual harassment involves principles that enshrine the Constitution and relevant human rights law. This article delves into the sense of implications of NDA clauses on the rights of survivors under sexual harassment laws in India, by keeping in mind the framework of the Indian Contract Act, POSH Act, constitutional freedoms, and the broader international perspective.
Indian Position
NDA’s are legal instruments under the Indian Contract Act in India. This covers agreements between persons who have the intention to engage in a legal relationship, having adhered to the essentials of a valid contract. While these agreements more or less advance and support the business interests of entities, their applicability in the context of sexual harassment can be further interrogated. Indian precedence and trends coupled with legislative support on the whole tend to reinforce such an agreement as 'valid' if it satisfies the set principles of a valid contract. Viewing this through the looking glass of contractual value by an NDA, we are struck by how enforceability in harassment cases today starkly puts them against constitutional rights as well as statutory protections under the POSH Act.
NDAs as an Advent of the Indian Contract Act, 1872
Since the legal basis of NDAs is an aspect of contractual undertaking, they are considered valid in the eyes of Indian jurisprudence. This is particularly true when applying to Section 27, which bears two aspects namely, non-compete and non-disclosure agreements in relation to trade secrets. A non-compete agreement is that which denies access to the seller from conducting a similar business in the specified area for a period of time.
Section 23 of The Indian Contract Act requires an agreement of confidentiality not to run against public policy or injuriously affect the rights of the subject. However, when NDAs are enforced on victims of sexual harassment, their relationship with constitutional rights becomes problematic. Courts have declared that contracts shall not be such as may seem either contrary to law, morals, or good conscience, but in reality, NDAs still perpetuate power imbalances in the employer and employee relationship. For instance, in the Gherulal Parakh vs Mahadeodas Maiya And Others on 26 March 1959 case, the court put forth the notion that “Under this section, the object of an agreement, whether it is of partnership or otherwise, is unlawful if it is forbidden by law or the Court regards it as immoral or opposed to public policy and in such cases the agreement itself is void.”
NDAs and the POSH Act, 2013
Here in our Post-Vishaka world, the most important step towards protecting survivors was taken when the POSH Act, 2013, came into being to prevent sexual harassment of women at workplaces and redress complaints and created the internal redressal mechanism known as the Internal Complaints Committee (ICC) for this purpose. The Act mandates the formation of an ICC in each organisation, outlining a clear process for lodging and resolving complaints. If it undermines the protections under it by preventing survivors from disclosing their experience to the ICC or to the courts, then it takes a position antithetical to the very interpretation of the Act. If it undermines the protections under it by preventing survivors from disclosing their experience to the ICC or to the courts, then it takes a position antithetical to the very interpretation of the Act. It's important to note that while NDAs typically prohibit disclosure to people 'outside' the organisation, the Internal Complaints Committee (ICC) is composed of individuals from within the organisation. Therefore, disclosing experiences to the ICC should not, in principle, violate most NDAs. However, the concern arises when NDAs are broadly worded or interpreted in a way that discourages victims from approaching even internal mechanisms like the ICC. This could happen if victims fear that discussing their experiences with the ICC might be seen as a breach of the NDA, especially if the agreement is vaguely worded. Moreover, if an NDA prevents a victim from pursuing legal action or approaching external authorities when internal mechanisms fail, it directly conflicts with the POSH Act's aim of providing comprehensive protection and redressal options to victims of sexual harassment.
Thus, the Act does not explicitly state whether NDAs can be enforced in such cases or not, though clearly, they would have to put all employers on notice of a duty to create 'safe environments and remove hostile practices' in the interest of justice, equity and good conscience. A growing trend of such NDAs in harassment cases would raise questions as to whether they do not defeat the very purpose of the POSH Act, especially the primary intent thereof-to have an open, and responsible workplace setting.
NDAs and Constitutionality of Prohibiting Sexual Harassment Victims from Expressing their Grievances
In this regard, a critical analysis of gender-centric constitutional values in India leads us to a focused analysis of Articles 15 and 16 in the Indian Constitution. Article 15 explicitly prohibits discrimination on grounds of religion, race, caste, sex, or place of birth, creating established legal frameworks to promote equality and avert discriminatory practices. In the context of workplace sexual harassment, the non-disclosure agreements that silence survivors disproportionately place women at a disadvantage, given the statistical likelihood of this happening. In enforcing such NDAs that stand in the way of such survivors from voicing out and articulating their experiences, employers actually push forward gender-based discrimination-violating the bedrock of Article 15.
The suppression of such voices not only uproots and negates individual dignity but also eradicates a workplace culture intolerable to harassment. The implications of this are deep, for it creates an environment where harassment is tolerated but implicitly accepted and explicitly silenced, hence detracting from the principle of gender equality as enshrined in the Constitution.
To further elucidate the problem, Article 16 secures equality of opportunity in matters of public employment and excludes several areas of discrimination including sex. NDAs may indirectly impact the growth and career progression opportunities available for a survivor in cases of sexual harassment. This forces survivors to keep quiet either openly or implicitly through a signed agreement that imposes NDAs, thereby being deterred from reporting incidents of harassment or complaints. Such deterrence limits their ability to compete fairly at work. More so, employers who know of such harassment but use NDAs as a device to conceal such misconduct do so. It prevents women from having equal opportunities and, moreover, puts in danger their rights to have a safe and conducive working environment.
Further to this, the implementation of NDAs can be viewed as violating another set of constitutional provisions. Article 19(1)(a) provides the right to freedom of speech and expression. The imposition of NDAs that prohibit survivors from speaking out is a patent violation of this fundamental right. It would also, in apparent violation, be against Article 21 which forms a part of the right to life and personal liberty, including the right to live with dignity. The stories of survivors suppressed under the NDAs do not merely steal their voices but are also directly at odds with this constitutional promise of dignity.
For one, the doctrine of equality before the law, as defined under Article 14, is undermined since such 'agreements' compromise access to justice. The working of the agreements effectively places victims in a vulnerable state of legal weakness and deprives them of judicial redress. This is complicated by a violation of Article 32, with a right to constitutional remedies, as NDAs can prove quite significant incursions into such rights since they compromise access to legal redress on the part of the survivors.
While the discussion above focuses on how NDAs potentially violate fundamental rights, it is important to address how these rights would be enforced against private entities. Traditionally, fundamental rights are enforceable against the State. However, in cases involving private organisations, the concept of 'horizontal application' of fundamental rights becomes relevant. The Supreme Court of India, in several judgments, has expanded the scope of fundamental rights to include private actors, especially in cases involving public functions or services. This judicial interpretation allows for the potential enforcement of these rights against private entities in cases of sexual harassment, particularly when such entities use NDAs to suppress victims' voices, thereby indirectly violating their constitutional rights.
An International Viewpoint
Some of the major jurisdictions around the world are taking steps forward in amending their legal protections for the fact that NDAs cannot be used to bar survivors from seeking justice.
The United States made significant progress in 2022 by creating a legislative fastener. The ‘Speak Out Act, 2022’ was a landmark legislation that bars the effectiveness of pre-dispute NDAs for sexual harassment or assault. Such an act is indeed very vital in the strategic shift of the legal framework surrounding workplace harassment to empower survivors and enable them to discuss freely without fear of such legal repercussions. The development was yet the much-needed amendment in the legislature after a dreadful public outcry was raised against the harassment victims being muzzled, especially underlined by movements and waves like the #MeToo wave.
Similar to this, Canada appears to be going through rapid change - grassroots advocacy at the provincial level for legislative reform that places an end to the silencing of survivors through the wrongful use of NDAs. The Canadian Legislature is working toward passing legislation that would limit the enforceability of NDAs in harassment cases, letting victims voice their concerns without risking lawsuits or professional retribution.
The Solicitors Regulation Authority has warned against the use of NDAs to silence victims' voices in the United Kingdom. The move reflects a broader societal understanding that such agreements can enhance a culture of silence surrounding harassment and abuse. This recognition increases scrutiny on how NDAs are used across sectors and results in further debates over potential regulatory changes to protect survivors.
Australia has also been proactive about the issue with the Victorians Government proposing reforms for the limitation of the use of NDAs on matters regarding cases of harassment. This clearly outlines that the rights of survivors and voicing out are to be protected.
As the countries are developing their approach, albeit in a less timely manner, they have now established a clear case for other jurisconsults, including India, to set the law regarding NDAs as concerned with sexual harassment issues. India can and should take considerable steps to bring about a legal setting that will support survivors, facilitate openness, and promote accountability in the workplace.
Major Challenges
There are a few challenges that remain to be addressed in the form of dealing with the impact of NDAs on sexual harassment survivors in India. These include ensuring an effective reorientation of power between employers and employees. Issues tend to arise when NDAs are signed under duress or in the absence of proper legal counsel, which puts the employer at the helm. Likewise, no suitable legislation currently exists to regulate the practice of using an NDA in a case of harassment and leaves all avenues open to exploit the survivors. Obscurity exists in the prevalent laws, especially regarding the relationship between the Indian Contract Act and the POSH Act, which creates a meaningless mess in the whole legal scene. With such contracts marred in layers of legalese, it has become nearly impossible for a layman to be fully conscious of conditions being put forth in the advent of an NDA Signing; and often lacks the aid for legal representation for assistance on the same. Survivors may also face social stigma that discourages them from challenging such agreements in court. The invisibility of survivor experiences because of these clauses and the lack of public discourse on the abusiveness of these confidentiality agreements further complicate efforts towards meaningful reform.
Takeaways and the Road Ahead
Legal reforms are what is required at the moment. The point is that non-disclosure contracts must not violate constitutional or statutory protections. There must be a clear legal structure that enumerates the allowed extent of such contracts in harassment cases to prevent their misuse. More importantly, when a survivor signs these contracts, she should be given access to legal counsellors who would ensure that she is fully aware of her rights. The use of legal jargon incorporated into those contracts that confuse the unsuspecting victim must stop. The victims would also have to comply with greater public awareness and judicial intervention, which can also have a strong role in halting the abuse of NDAs. India can further bar pre-dispute NDAs in cases of sexual harassment to ensure that victims do not fear the after-effects of the lawsuit and report such incidences. There is also a need for easy access to legal professionals for the survivors at the time of signing NDAs and an explanation of the entire implications and the restrictions of such agreements.
Conclusion
Originally, NDAs were conceptualised to safeguard private or proprietary information as well as maintain the confidentiality of business operations. While business organisations commonly use NDAs to guard sensitive information, their relevance in workplace harassment is under heavy scrutiny against ethics and law demanding some critical review. The shifting global landscape is an emerging recognition of the necessity to safeguard the rights of victims and guarantee that such agreements are not a vehicle for oppression or silence. International jurisdictions have lately taken major strides forward in reform in terms of the legal framework around NDAs and the context of sexual harassment. It is in urgent need for India to reconsider its existing legal regime over NDAs and sexual harassment.
Indian law does not specifically indicate how to navigate this intersection of NDAs and rights for victims which may present potential areas of exploitation. As the Indian legal system moves forward, there is a need for a delicate balance between the proper and legitimate protection of business interests and the fundamental rights of survivors. This goes beyond revisiting the question of the enforceability of NDAs in harassment cases but institutes clear regulations defining the scope and application of such agreements admissible under law.