Government agrees that confidentiality clauses should not be used to silence victims of discrimination but argues that such clauses still have a legitimate place in the employment context.
The Women and Equalities Committee (“WEC”), a departmental select committee, published its report on the use of non-disclosure agreements in discrimination cases in June 2019. The full report can be accessed here.
The WEC launched its inquiry amid growing concerns from trade unions and other employee groups that serious allegations of sexual harassment and other discriminatory behaviour were being swept under the carpet through the use of settlement payments and confidentiality clauses that prevent employees from speaking out about their alleged experience.
In its report, the WEC proposed various changes to help tackle the misuse of confidentiality clauses. These include:
- Preventing agreements from being made that suppress the legitimate discussion of allegations of discrimination and harassment;
- Requiring employers to investigate discrimination and harassment complaints regardless of whether a settlement has been reached;
- Extending tribunal time limits for certain discrimination claims; and
- Enabling tribunals to award punitive damages and introducing a presumption that the employer will pay the employee’s costs in the event of a successful sexual harassment claim.
The Government has now published its response to the WEC Report. The full response can be accessed here.
The Government has pledged to legislate so that confidentiality clauses cannot be used to prevent employees from making any kind of disclosure to the police, regulated health and care or legal professionals.
It has also pledged other proposals for reform, some of which include:
- Requiring the wording of confidentiality clauses to be clear and specific;
- Ensuring that when entering into settlement agreements, individuals receive advice not only on the nature of the confidentially requirement but also on the limitations of confidentiality clauses; and
- Looking at whether the law on sexual harassment in the workplace is operating effectively, as part of a focus on preventing sexual harassment and discrimination issues in the first instance.
The WEC wants the Government to go much further saying that the employer’s duty to provide employees with a safe system of work includes a duty to protect employees from unlawful discrimination. WECs position is that employers should be required to investigate all allegations fully rather than having the ability to cover them up “by legally sanctioned secrecy”.
Confidentiality clauses in settlement agreements can play a vital role, not only from an employer’s risk perspective, but also for the benefit of employees by allowing them to settle their claims and move on with their lives. Whilst it is important that employers take all claims of harassment and discrimination seriously, if the permitted scope of confidential clauses becomes too limited, this could have the unintended consequence of increasing the number of tribunal claims by making settlement agreements less attractive. Any changes that are brought in as a response to the WEC’s report will therefore need to be weighed up against these sometimes conflicting interests.
We await the introduction of new legislation but until then it is important that when drafting settlement agreements that:
- confidentiality clauses are drafted clearly so that the parties are fully aware of their rights and obligations; and
- drafting does not restrict employees from making a protected disclosure within the meaning of section 43 Employment Rights Act 1996, nor should it seek to prevent employees from reporting a suspected criminal offence to the police.
See also Freeths previous article on the Government consultation paper on NDAs HERE
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