confidentiality clausescontracts of employmentemployment lawsettlement agreements

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.