confidentiality clauses contracts of employment employment law settlement agreements

Competing interests lead to more confusion concerning NDAs

On 21 July (oddly given that it was a Sunday) the Government announced what it described as “measures to prevent misuse of confidentiality clauses in situations of workplace harassment or discrimination. Frankly the press releases are light on detail. However, the four main changes are as follows:

  • Employers will have to make clear the limitations of a confidentiality clause, in plain English, within the settlement agreement and in the form of a written statement for the employee. In other words there will have to be a notice to the employee within the agreement which clearly explains what the clause does not cover.
  • Current legislation will be extended so that it will be a requirement for all individuals signing an NDA (whether or not contained within a settlement agreement) to obtain what is described as enhanced independent legal advice, presumably at the employer’s expense. This is potentially interesting because it raises the possibility that employees may need to obtain such advice at the commencement of or during employment, perhaps even before the commencement of employment. Much will depend on the definition of what constitutes a regulated NDA and that information, perhaps unsurprisingly, has not been published.
  • All NDAs must make clear that the restrictions will not prevent the employee from disclosing the otherwise protected information to the police, regulated care and health professionals, social workers and, interestingly, legal professionals. As matters stand, most settlement agreements include a confidentiality clause which provides that not only the terms but even the existence of the agreement must be kept confidential, save for immediate family members and relevant professional advisers (i.e. those advising the employee concerning the agreement).
  • Enforcement measures will introduced to deal with settlement agreements and written statements of employment particulars that do not comply with the regulations, including that non-compliant NDAs will be legally void.

Chief Executive of the Equality and Human Rights Commission said:

Harassment and discrimination should never go unanswered and unchallenged just because victims are prevented from speaking out. This new legislation will help to end ambiguity about employees’ rights and stop the misuse of NDAs to protect corporate and personal reputations and obstruct justice.

The use of NDAs is only part of the problem of workplace harassment and discrimination and employers must step up to protect their employees from this appalling behaviour before it happens. We are developing new guidance on NDAs and tackling harassment which will provide further clarity for employers and help them create safe and supportive environments.

It is surprising that the list of those to whom information in the NDA can be disclosed does not include immediate family members, since that is routinely permitted in most existing settlement agreements. It has also been suggested that permitted disclosure should be extended to regulators such as the Financial Conduct Authority and the Information Commissioner.

In the meantime, The Law Society has issued guidance for the public concerning NDAs. Oddly, this suggests that employees should ask for a copy of the agreement, which implies that they might not be provided in all cases. This is inconsistent with a warning notice issued by the Solicitors Regulation Authority which states that it would be improper for a solicitor to not to provide the employee with a permanent copy of the agreement.

The guidance also states that NDAs should be clear about who an employee can talk to “including family members and medical professionals” and that it would “not be normal” to prohibit disclosure to professionals for legal, tax advisory, medical or therapeutic reasons. It suggests that an agreement may not be legally binding if an employee is not given sufficient time to consider the agreement and/or to obtain legal advice. However, the Society’s guidance for solicitors merely states that it is “good practice” to give anyone signing an NDA time to consider it and potentially to obtain legal advice.

Crispin Passmore, former SRA policy adviser has described The Law Society’s guidance as “an example of public mis-education”.

It seems that reform cannot come soon enough although, of course, it remains to be seen whether Parliamentary time will be found in order to legislate on the matter.

Court of Appeal Employment Appeal Tribunal employment law employment status immigration wages disputes

Can an employee who does not have the right to work in the United Kingdom bring a successful employment law claim?

The ‘illegality principle’ prevents a court from aiding a claimant who has based their claim on an immoral or illegal act, meaning that a tribunal or court will generally not enforce an illegal contract.

An employer of an individual working under an illegal contract can raise a defence against any employment claims the individual may bring against them. This is what is known as the ‘illegality defence’, the basis of which is that the contract is illegal and therefore void, so the claim should not succeed.

A common example of an individual working under an ‘illegal contract’ would be an employee who is working in the UK despite not having the right to – i.e. working illegally, in breach of immigration laws.

In recent years, tribunals and civil courts have been reluctant to allow an employer to use the illegality defence to block vulnerable migrant workers’ employment tribunal claims.

An interesting Court of Appeal decision has further illustrated this. The case of Okedina v Chikale, has shown that an employer cannot always automatically rely on a breach of immigration rules to argue that an employment contract is unenforceable. The matter concerned contractual claims (including unfair dismissal) brought by a Malawian national whose leave to remain (and right to work) in the UK had expired two years before the time she was summarily dismissed.

The Claimant, Ms Chikale, was originally employed by Mrs Okedina in Malawi in 2010 where she was taken on to care for Mrs Okedina’s parents.

Mrs Okedina decided to bring Ms Chikale to the UK in July 2013 to continue to work for her as a live-in carer. Ms Chikale was initially granted a visa to work in the UK, however this expired in November of the same year.

Mrs Okedina assured Ms Chikale that she had successfully applied to extend the visa, however it transpired that within the application she had fraudulently named Ms Chikale as a family member, amongst other inaccuracies, and the application was subsequently refused. As a result, Ms Chikale was working illegally in the UK from November 2013 onwards.

Ms Chikale was never made aware that the application had been unsuccessful, so she remained in the UK, working for Mrs Okedina. She held a genuine belief that she had the right to continue working here in the UK.  

Throughout her period of employment, Ms Chikale received only minimal remuneration, despite being promised a healthy salary and other benefits (including the provision of education) before leaving for the UK from Malawi in 2013.  In 2015 when she requested an increased wage from Mrs Okedina, she was summarily dismissed.  She then proceeded to bring a claim against Mrs Okedina for unfair and wrongful dismissal, unlawful deduction from wages, and unpaid holiday pay.

Ms Chikale’s claims were upheld at the Employment Appeal Tribunal which considered whether or not the contractual claims should have succeeded given that the contract was illegal from November 2013 (when the Visa extension was denied) onwards. 

This case is distinct from most case law in this area as generally, an employee is well aware of their immigration status, and thus has some culpability should they continue to work illegally. In this case however, it was the employer, Mrs Okedina, who was concealing Ms Chikale’s true immigration status.

The Court of Appeal decision took account of this and ultimately found in Ms Chikale’s favour. The court considered whether the Immigration Asylum and Nationality Act 2006 (ss. 15 and 21) meant that an employee who had no right to work in the UK (even if they believed they did have this right) should be barred from bringing contractual claims by way of the principle of statutory illegality.

The court held that to imply the above would be going a step too far. It was held that the true intention behind the above legislation was to ensure penalties were imposed on people who knowingly employed illegal workers, rather than to penalise the workers themselves. The court decided against allowing the illegality defence in this case, as it would mean that an innocent employee would be deprived of all contractual remedies against their employer.   

Ms Chikale, who was mistakenly under the belief that she had the right to work in the UK, had not knowingly participated in any illegality and as such the court held that there was no reason to deny her a remedy – the Court of Appeal therefore rejected Mrs Okedina’s appeal and upheld Ms Chikale’s contractual claims.