NDAs - Gagging Orders or Vital Protection Measure for Employers?

The topic of non-disclosure agreements are at the top of the news agenda on a regular basis – and you could be forgiven for thinking they are shady contracts, since they have been associated with some fairly salacious headlines.

However, settlement of disputes between employers and employees will almost always include terms stating that the parties, particularly the employee, are required to keep the circumstances of the dispute confidential. In other words, a gagging clause, often referred to in the press as non-disclosure agreements (NDAs).

When negotiating terms of settlement, there is an expectation that the employee will be required to maintain confidentiality and not make any disparaging statements about either the employer or its officers or employees. These are routinely introduced by the employer who, to a degree, will have the upper hand in the negotiations, since they are the paying party. In order for settlement to be achieved, there will often be a payment of compensation from employer to employee. Therefore, the employee is not usually at liberty to reasonably challenge a confidentiality provision, and the employer is always keen to manage any risk of reputational damage by insisting that if confidentiality cannot be agreed, it is a deal breaker. The employer may also say the allegations are un-investigated or their veracity have not been tested in an Employment Tribunal, so, as such, confidentiality must be maintained.

In my own professional experience, I cannot recall a settlement which has not included such a confidentiality provision and I routinely advise on these for both employers and employees alike. 

However, there are concerns that the use of NDAs are being used “unethically”, to perpetuate a “cover-up culture” of discrimination and harassment in the workplace, and that, as a result, employers are not doing enough to protect their employees from unlawful discrimination in the first place.

The Women and Equalities Committee published a report recently, following an inquiry into NDAs.

In the report, the Committee:

• Seeks a fundamental change to the “cover-up culture” which it fears is used to “silence victims”
• Points to the emotional and psychological damage which victims often suffer as a result of the discrimination and harassment
• Says other victims may be reluctant to complain about incidents of discrimination and harassment because of NDAs
• Says it is in the public interest that employers investigate allegations properly rather than “cover up” through NDAs

One of the main concerns is that NDAs effectively enable employers to ignore incidents and avoid the need to properly investigate complaints leading to a culture in the workplace which is not transparent and less accountable. 

In the light of its inquiry and the concerns raised, the Committee is calling on the Government to legislate the use the NDAs to ensure that these cannot prevent “legitimate discussion” and are “suitably specific about what information can and cannot be shared and with whom”. If legislation is to follow, clearly this will impact the protections that NDAs currently provide employers.

The Committee has also made a number of other recommendations weighted in favour of the employee.

These include:

• Extending the time limits for employees to bring claims to 6 months
• Putting in place a statutory procedure that employees and employers must follow where there are incidents giving rise to complaints
• Putting the employer at risk of paying the employee’s legal costs if ultimately, the employer cannot successfully defend a claim
• Increasing the compensation available to successful employees
• Mandating regulators to share the responsibility and have enforcement powers

In the long term, employers need to do more to safeguard and protect employees from discrimination and harassment in the workplace and take an active interest in what is going on in their workplace to ensure allegations of discrimination and harassment are being dealt with robustly. This, in part, can be achieved by:

• Having clear policies and procedures in place
• Reminding employees of the discrimination and harassment policy and what types of behaviour are not acceptable -  extending to social functions organised by the employer
• Ensure understanding and compliance of policies and procedures through regular training of managers and directors

Some employers may even want to give some consideration to taking on or adopting the spirit or recommendations of the Committee. Further information around the Committee’s findings and recommendations can be found here.

If you have any questions on this topic, or would like to discuss it further, please feel free to contact us 03333 208644 or email law@jcpsolicitors.co.uk