On 4 March the Government published its consultation on “measures to prevent [the] misuse [of confidentiality clauses] in situations of workplace harassment or discrimination”.
The consultation is widely regarded as being a direct response to the stories published late last year concerning the use of such clauses by Sir Philip Green’s companies, as highlighted in The Daily Telegraph once he was named in Parliament and the injunction against the paper was subsequently lifted. Just this week, The Sun has published a very concerning video of Sir Philip appearing to behave in a very familiar manner (choosing my words carefully!) with a member of staff who seems to be none too pleased with his attention.
The executive summary confirms the Government’s commitment to upholding and upgrading workers’ rights. Whether you accept that commitment will more than likely depend on your political view. However, the summary makes clear that “harassment or discrimination of any sort cannot be tolerated in the workplace”. It is acknowledged that confidentiality clauses have a “right and proper place” in the context of employment law, both in terms of employment contracts and settlement agreements. Existing limitations are noted, including the bar on preventing protected disclosures (i.e. whistleblowing) and the requirement for independent advice in connection with settlement agreements.
However, there is evidence that despite these protections some employers have used confidentiality clauses to suggest victims of harassment cannot make any disclosures and intimidate them into silence when they have faced harassment or discrimination. For example, a confidentiality clause might be all encompassing, to make a worker believe that they cannot discuss anything that occurs in the workplace with anybody, despite case law establishing that this is not necessarily the case. A confidentiality clause might suggest to the worker that they do not have rights, such as whistleblowing or taking a matter to a tribunal, that in fact cannot be abrogated. Or they could be unreasonably expansive and insist that a worker not discuss the issue under consideration with people such as the police, a doctor, or a therapist.Department for BEIS – Confidentiality Clauses – 4 March 2019
The consultation seeks examples of confidentiality clauses that might have been intended to cloud an employee’s right to make a protected disclosure or overstate the extent to which information could be treated as confidential. In practice, such clauses are still in widespread use and would almost certainly fail if challenged. However, there is every chance that they will go unchallenged as a result of the employee’s resultant misunderstanding of the legal extent of protection. They are also risky from an employer’s perspective because, if parts are found to be invalid, the probability is that the full extent of protection sought will be struck out in its entirety, thereby leaving the employer fully exposed when at least some legal protection would otherwise have been available.
The consultation asks whether all disclosures to the police (and perhaps also other relevant organisations) should be clearly excluded from confidentiality clauses. This seems to me to be a sensible suggestion since it is merely confirming the law as it stands but could serve to clear up any misunderstanding in this regard.
The Government is also concerned about whether relevant clauses in both employment contracts and settlement agreements should make clear what is not prohibited, perhaps with a specific form of words set by the Government. Again, this seems sensible from the point of view of avoiding misunderstandings.
It is also suggested that the independent advice provided to an employee in connection with a settlement agreement might include reference to any confidentiality provisions.
The consultation remains open until 29 April. However, it has met with a lukewarm response, with leading solicitor Mark Stephens suggesting that the scope of the review does not go far enough. He suggests that employers should be required to keep records of all such agreements and that their existence should be disclosed in company annual reports. He has also pointed out that, in the United States, public corporations are effectively banned from using company funds to pay for such settlements. In such circumstances it would fall to the wrongdoers themselves to pick up the tab. For my part, this goes too far and would be likely to present further problems such as a potential conflict between the employer and the wrongdoer which could operate as a bar to settlement.
In my view, I do not think that most employees are aware of the restrictions on the scope of confidentiality clauses. You often hear people say that, in return for the payment, they must not bring any claim whatsoever or say anything at all untoward about the employer. On this basis, some written clarification would be very welcome and could assist both employer and employee.