Non-Disclosure Agreements and Confidentiality in Settlement Agreements

Government response to report on Non-Disclosure Agreements

We reported in our newsletter on 17 June 2019 about the recommendations made by the Women and Equalities Committee of the House of Commons on the use of confidentiality clauses or Non-Disclosure Agreements in workplace discrimination and harassment cases.   The Government has now published its response to the consultation which includes a series of proposal for legislative reform.  

What does the government say about the use of Non-Disclosure Agreements?

The government says it recognises that confidentiality clauses have their place in helping parties to resolve a dispute without the need to resort to litigation.  However, it condemns the use of such clauses to cover up workplace of harassment or to intimidate individuals into silence. 

What are the government’s proposals?

The government intends to bring in legislation to:

• Prohibit any clause in an employment contract or settlement agreement which prevents someone from making a disclosure to the police, regulated health and care professionals or legal professionals.

• Ensure that confidentiality clauses in settlement agreements clearly set out their limitations.

• Require employers to clearly set out the effect and limits of a confidentiality clause, as part of the mandatory written statement of particulars.

• Make sure that the independent legal advice which an individual must obtain on entering a settlement agreement includes specific advice on the nature and limitations of any confidentiality clauses.  

• To introduce new enforcement measures for confidentiality clauses that do not comply with the legal minimum requirements.

A missed opportunity?

Although undoubtedly welcome, some consider the government’s proposals are not far reaching enough and that this is a missed opportunity to encourage employers to tackle complaints of harassment head on and bring about a change in their workplace culture. 

Many of the recommendations of the Women and Equalities Committee were focused on raising awareness about the need to handle grievances fairly and effectively and on imposing greater duties on employers to protect workers from workplace harassment and victimisation.    These, however, have not been taken up by the government.  Instead, some may say that the majority of the proposals are aimed at dealing with the aftermath – when the harassment has already occurred, and the damage limitation process has begun.    

There are also critics that say the legislative proposals do not go much further than to reaffirm the protections already afforded to individuals.  The law currently provides that a confidentiality clause cannot prevent a worker from making a protected disclosure under whistleblowing legislation to the appropriate legal or regulatory authority. 

What do the proposals mean for employers?

It is expected that these proposals will become law in a short time frame because there remains a strong political will to improve the protection currently offered to vulnerable individuals.  Quite what the legislation will provide is not yet clear as the proposals do not give detail.     

To be prepared for the changes, employers should:

• Review the confidentiality clauses in staff employment contracts to make sure they are clear and specific about the type of information that is confidential, what can and can’t be disclosed and to whom. 

• Ensure that any complaint of workplace harassment or victimisation is taken seriously and dealt with fairly and confidentially in accordance with the appropriate procedure. 

• Be mindful of the limitations of confidentiality clauses in settlement agreements in being able to prevent a worker from making disclosures about any harassment or victimisation. 

• Only offer a settlement agreement after all options to resolve a discrimination or harassment complaint have been explored and ruled out and where the complainant wishes to proceed with this arrangement. 

Read the Full Response here

This article was written and researched by Miranda Amos, Solicitor at our Salisbury Office.  Miranda advises clients across Hampshire, Wiltshire and Nationwide.

 Miranda is the firms expert on maternity, pregnancy and parental rights. If you have any questions or concerns about the proposed changes or any issues in your business please do get in touch with Miranda directly!

Don’t forget getting advice from a Solicitor does not have to be complicated or costly!