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Non-disclosure agreements – Are they being used correctly?

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Emily Leeming, of Harrison Drury’s Employment team, shares her thoughts about non-disclosure agreements in the face of recent criticism surrounding their use.

Non-Disclosure Agreements (NDAs) have been the subject of widespread criticism on the basis that they have been used by public bodies, universities and businesses to prevent allegations of bullying, discrimination and/or sexual misconduct from entering the public domain.

This blog aims to explain what an NDA is, when and how they are used, and how employers can tackle the issues of discrimination and misconduct.

What is a non-disclosure agreement?

Sometimes, when a dispute arises between an employer and their employee, in order to allow both parties to go their separate ways, they enter into a settlement agreement to preclude any employment claim from being brought by the employee.

NDAs (or confidentiality clauses) are widely used within settlement agreements as a way of keeping the terms, including the level of any termination payments made, and existence of the agreement confidential.

In some cases, NDAs go further and are used to keep the circumstances surrounding termination of employment confidential. This includes where potentially serious concerns are raised about bullying, discrimination and sexual misconduct – regardless of whether the allegations are substantiated.

Common misconceptions

In certain circumstances, even where an NDA has been used, employees can still bring information about wrongdoing to the attention of an employer or other relevant organisation.

This is commonly referred to as ‘whistle-blowing’ and individuals will be protected from detriment if they speak out against malpractice in an organisation where they are “making a disclosure in the public interest”.

Whistle-blowing is a complex matter and it is often legally uncertain whether a person can talk about how they have been treated in light of NDA clauses.

Parties who may wish to ‘blow the whistle’ will often need professional advice to navigate the issue, as employers argue that certain details about behaviour and detriment are not applicable under whistleblowing legislation.

The issues with NDAs

The recent high-profile case against Harvey Weinstein and the treatment of hostesses at the Presidents Club Dinner have brought NDAs into the public eye. Indeed, MPs have called for a ban on the so-called “gagging clauses” as they argue that they are now being used to “cover up unlawful and criminal behaviour”.

A report on NDAs in discrimination cases by the Women and Equalities Committee has produced a number of recommendations for government to consider, including:

  • Requiring “plain English” confidentiality clauses;
  • The Employment Tribunals’ three-month time limit to bring a claim, to be doubled in cases of sexual harassment and discrimination;
  • Introduce laws so that NDAs cannot prevent the sharing of information to support the claims of other victims;
  • Require named senior managers (not HR) at board level or similar to oversee anti-discrimination and harassment policies and record the use of NDAs.

What should employers do?

The important thing to bear in mind is that NDAs can still be used. However, employers need to ensure they are only used in appropriate cases and are clearly worded. Specialist advice from employment law professionals should be sought at this stage.

Employers should check their policies to ensure clear lines are drawn as to what is, and what is not acceptable behaviour and investigate all allegations properly.

It is also beneficial to have anonymous reporting options for employees, such as a telephone hotline or online systems. Getting staff involved in the conversation helps to raise awareness of any issues within the business, including those in relation to equality and diversity.

If you require advice in relation to settlement agreements or confidentiality clauses, our employment law specialists will be happy to provide guidance and advice. For advice on workplace policies and procedures please contact Emily Leeming on 01772 428194.


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