The use of non-disclosure agreements by employers is a worldwide phenomenon. However, the #MeToo movement and recent high profile cases, such as the Harvey Weinstein scandal, have caused the use of non-disclosure agreements to come under intense scrutiny following claims that they are being used to “gag” alleged victims of serious sexual assault.
What are non-disclosure agreements?
Employment tribunals are usually open to the public and the media, meaning any allegations made by claimants, along with tribunal rulings, are free to be reported on by the press. However, it is now common practice for settlement agreements to contain provisions requiring both parties to keep the facts relating to the dispute and the settlement terms strictly confidential, otherwise known as an non-disclosure agreement.
Recent report and developments concerning non-disclosure agreements
The Women and Equalities Parliamentary Select Committee recently published a report concerning the use of non-disclosure agreements in discrimination and harassment cases. Following this, employers may find it more difficult moving forward to use these type of agreements in cases involving allegations of harassment in the workplace. The view of the committee is that the use of non-disclosure agreements risks creating a “cover-up culture” where employees are paid off and subjected to confidentiality clauses instead of employers investigating issues.
The report recommends the following actions are taken to prevent then misuse of non-disclosure agreements in employment disputes moving forward:
- An awareness campaign for employers and employees.
- Consideration of a requirement that all discrimination and harassment complaints have to be investigated regardless of whether a settlement is reached.
- A requirement for employers to provide ex-employees with at least a basic reference.
- An extension of the time limits to bring discrimination complaints from the current three months to six months.
- An equalities review of the employment tribunal system.
- A review of compensation payable to claimants.
- To make it a criminal offence for an employer or their advisor to propose a confidentiality clause to prevent legitimate whistleblowing or the reporting of a criminal offence.
- To stop non-disclosure agreements from restricting one employee from providing helpful information to another to support their case.
- Requiring employers to contribute to an employee’s legal fees for advice on settlement terms (currently a custom, not a requirement).
- Minimum requirements for confidentiality clauses.
- Employers to appoint a senior manager to oversee anti-discrimination and harassment policies and the use of non-disclosure agreements in such cases.
- Compulsory reporting on discrimination and harassment complaints and use of non-disclosure agreements.
While not all of these recommendations are likely to be implemented in the short to medium term, there is definitely mounting pressure for a drastic change in approach in the use of confidentiality provisions in settling cases of discrimination and harassment. This will impact good employers, as well those with cultural concerns, which should rightly be addressed.
How Nelsons Can Help
Laura Kearsley is a Partner in our expert Employment Law team.
For further information or to comment on this article, please contact a member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.