Non-disclosure or confidentiality provisions are often used by employers. However, there has been concern recently, particularly in the light of the #metoo campaign and various high profile cases that such provisions are being used to prevent victims of workplace harassment and discrimination from speaking out. If a waitress complains about continual sexual harassment by a manager, for example, she may agree to accept a pay-out and sign a compromise agreement, in return for agreeing not to bring an Employment Tribunal claim for sex discrimination against the company.
The Government has launched a consultation paper to investigate how best to protect individuals from the misuse of NDAs in this way. The consultation closes on 29th April 2019 and the Government is expected to issue draft legislation after that.
Confidentiality provisions can be used to:
- protect trade secrets as part of employment contracts e.g. ingredients, brewing processes or customer lists;
- on termination of employment as part of a settlement enabling both parties to make a clean break and move on.
Current limits on confidentiality clauses
Confidentiality clauses cannot be used to gag an employee where they would:
- prevent a protected disclosure i.e. to stop whistleblowing
- prevent an employee bringing a claim to a Tribunal (unless included in a COT3 or settlement agreement)
Use of NDAs
There are often situations on termination of employment that an employer and/or employee does not wish to disclose – e.g. performance management issues, or the fact that a termination payment has been made, for fear of encouraging other employees to bring unfounded claims against the employer looking for a settlement payment. Confidentiality clauses can play an important role in these cases.
However, some employers have used confidentiality clauses to suggest that victims of harassment or discrimination cannot make disclosures about their treatment to anyone and the prohibitions are sometimes so wide as to restrict disclosures to the police and doctors. In such cases NDAs have been used to cover up less than perfect working practices.
Proposals for limitations to NDAs
The Government is consulting on how best to limit the scope of confidentiality agreements to ensure that they are not misused. The Government proposes:
- to prohibit confidentiality clauses which seek to prevent a person making a disclosure to the police or reporting a crime;
- to require all confidentiality clauses to set out their limitations and make it clear which disclosure rights an employee still retains after signing an NDA;
- to require that anyone signing an NDA has the benefit of legal advice not just on the settlement arrangement but also specifically on the confidentiality provisions;
- that where a settlement agreement does not meet the new requirements the whole agreement will be void.
Amending confidentiality provisions in this way should help to make sure that instances of harassment and discrimination can’t just be covered up by employers. They will instead need to manage issues internally using appropriate company policies and procedures. As a result it is hoped that fairer working environments will be created for all.
The consultation paper can be found HERE