Non-Disclosure Agreements

June 14, 2019

Non-Disclosure Agreements

 

The Women and Equalities Committee have been undertaking an inquiry into the use of non-disclosure agreements in discrimination cases.

The Committee reported on 5th June 2019 and there is a link to the full report at the end of this blog post. In the report, MPs condemned the routine cover-up of allegations of unlawful discrimination and harassment in the workplace, and the fact that some employers fail to investigate allegations of unlawful discrimination properly or at all.

The report highlights the difficulties of pursuing a case at employment tribunal and the substantial imbalance of power that can exist between employers and employees which can drive employees to feel that they have little choice but to reach a settlement that prohibits them from speaking out.

The conclusions of the Committee were that:

The evidence clearly shows that there needs to be a package of measures: the misuse of NDAs is one element of a wider system of legislative, regulatory and judicial measures and processes that are failing to protect employees from discrimination and abuse of power. Individuals who have experienced discrimination can feel that they have no option but to reach a settlement, which will routinely include secrecy clauses. We have seen that the use of unethical, vague or excessively restrictive NDAs can create long-lasting fear for those who sign them and can curtail their career.

 We are encouraged to see that some employers, particularly in the public sector, now routinely settle discrimination cases without using NDAs, demonstrating that confidentiality clauses are not intrinsic to settlement agreements. Other public sector employers must now take the lead in ensuring that NDAs are not used to cover up discrimination and harassment, allowing such behaviour to go unchecked. Lawyers and employers must think more carefully about why they are requesting confidentiality and whether it is needed at all, and individuals should never feel forced into signing an NDA.

 There is a clear public interest case for changing the law to provide more protection for employees who face job loss because of discrimination at work. Something more radical than tinkering with the wording of NDAs is required. The Government must ensure that legislative, regulatory and judicial systems do more to prevent harassment and discrimination and to support individuals who find themselves subjected to such behaviours. Our recommendations set out the actions that the Government and regulators should take to bring about a step change in the use of NDAs in discrimination cases.

 

What can we take away?

In the wake of the ‘Me Too Movement’ and with other high-profile sexual harassment allegations coming to light, the use of NDAs has become subject to a significant amount of public criticism. In March 2018 the SRA issued a warning notice on NDAs and a wider paper covering Sexual Harassment & Employment Law in July 2018 was produced by the Employment Lawyers Association.

It is now likely that the Government will legislate in respect of the use of NDAs. In the meantime practitioners must ensure that when settling a claim either by way of a settlement agreement or a COT3, proper consideration is given as to whether an NDA is appropriate in the circumstances, and if it is, that its scope is limited to what is necessary and lawful.

 

The use of non-disclosure agreements in discrimination cases (Ninth Report of Session 2017–19)

 

 

Peter Doughty

Tags:
Employment, Planning, Will Disputes