Fri 29 Nov 2019

Non Disclosure Agreements - where are we now?

If 2018 was the year that the part "gagging clauses" had to play in harassment in the workplace was noticed, 2019 has been the year it has been addressed with the publication of consultation on how to stamp out misuse of Non Disclosure Agreements ("NDAs") and guidance setting out good practice

Press coverage of the use of NDAs by Harvey Weinstein and their use in relation to the now infamous Presidents Club charity dinner held at the Dorchester Hotel in London in early 2018 led to the use of NDAs being discussed in Parliament and the then Prime Minister Theresa May undertaking to "look into how these non-disclosure agreements are applied to see if changes are required".

There were fears that those who had been harassed believed they were unable to make use of support, such as counselling, or report criminal activity to the police because they had signed an NDA. In addition, there was concern as to the extent that the use of NDAs hid the scale of the problem and enabled employers to avoid investigating the incidents or dealing with the perpetrators.  This led to calls for NDAs to be made unlawful - the Equality and Human Rights Commission called "time's up" on their use by employers to "sweep sexual harassment under the carpet".

The Solicitors Regulatory Authority was quick to issue a warning and guidance on the use of NDAs for solicitors practicing in England and Wales in March 2018.  While only directly applicable to solicitors qualified in England and Wales its content is relevant to all.  It cautions solicitors against drafting an NDA as a means of preventing or seeking to impede or deter a person from:-

  • Reporting misconduct or serious breach of regulatory requirements to the SRA or another regulator;
  • Making a protected disclosure;
  • Reporting an offence to a law enforcement agency;
  • Co-operating with a criminal investigation or prosecution; or
  • Influencing the substance of such a report, disclosure or co-operation.

It also warns that an NDA must not be used as a means of improperly threatening litigation or other adverse consequences, or otherwise exerting influence over an individual not to make a proper disclosure.  Nor must an NDA stipulate or give the person signing the agreement the impression that a proper disclosure is prohibited. 

In January 2019, the English Law Society issued a practice note which set out the society's view of good practice on the use of confidentiality provisions in either settlement agreements or COT3s in relation to the end of the working relationship. The English Law Society followed up its practice note with guidance aimed at employees entitled "NDAs and confidentiality agreements - what you need to know".

In March 2019, the UK Government launched a consultation on measures to prevent misuse of confidentiality clauses in situations of workplace harassment or discrimination.  The consultation closed at the end of April and the UK Government's response was published in July 2019.  The response also covered a number of the recommendations proposed by the Women and Equalities Committee ("WEC")in their inquiry into the use of NDAs in discrimination cases. 

The response identified a number of measures the UK Government intends to take to tackle misuse of NDAs including:- 

  • Legislating to ensure a confidentiality clause cannot prevent an individual disclosing to the police, regulated health and care professionals or legal professionals;
  • Legislating to ensure the limitations of a confidentiality clause are clear to those signing them;
  • Legislating to improve independent legal advice available to an individual when signing a settlement agreement;
  • Production of guidance on drafting requirements for confidentiality clauses; and
  • Introduction of new enforcement measures for confidentiality clauses that do not comply with legal requirements in written statements of employment particulars and settlement agreements.

Most recently, in October 2019, the Equality and Human Rights Commission published guidance for employers on the use of confidentiality agreements in discrimination cases.  Its aim is to give a clear explanation of the law in relation to confidentiality agreements including describing good practice when using them and explaining when they would be unlawful.  

The UK Government's response to the consultation and the other documentation provide a clear guide as to what to expect when it comes to using NDAs in the future albeit the specific legislation is awaited.  In the meantime, those advising employers should:-

  • consider whether a confidentiality clauses is necessary in any particular circumstance;
  • look at contracts and settlement agreements to identify if amendments are needed;
  • ensure there is no suggestion of bullying or duress when using settlement agreements; and
  • consider recommending training for line managers and HR so they understand the limitations of their use.


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