The Use of Non-Disclosure Agreements in Discrimination Cases

In the past few years there has been a lot of discussion regarding sexual harassment in the workplace. In addition, stories regarding high profile figures such as Sir Phillip Green using non-disclosure agreements to cover up allegations of sexual harassment have come to light and the “me too” movement began.

Following this highly topical issue, the Women and Equalities Committee of the House of Commons recently published a report on the use of non-disclosure agreements in discrimination cases.

What are NDA’s?

Non-disclosure agreements (NDA’s) / non-disclosure clauses are usually contained in settlement agreements to settle and waive any potential claims that an employee may have against an employer when their contract of employment terminates. Such a clause restricts what an employee can disclose about their employment and/or the terms of the settlement agreement.

Provided NDA’s are not misused, they can prove particularly useful to both employees and employers as both parties are given the opportunity to depart on amicable terms, keeping any disagreements and difficult situations private whilst protecting the reputations of all involved.

However, public perception is that NDA’s are sometimes misused by employers in an attempt to cover up allegations of harassment and discrimination.

What did the Women and Equalities Committee’s report state?

The report states that NDA’s should not be used to silence victims of discrimination and harassment, stating that this cover-up culture has to be challenged. The Committee reported that in some cases, allegations of unlawful discrimination and harassment are not investigated properly – or at all – by employers.

In the report, the Committee set out a number of recommendations for the Government to adopt. Their key recommendations stated that the Government should:

  • Ensure that NDA’s cannot prevent legitimate discussion of allegations of unlawful discrimination or harassment;
  • Require standard, plain English confidentiality, non-derogatory and similar clauses where these are used in settlement agreements, and ensure that such clauses are suitably specific about what information can and cannot be shared and with whom;
  • Strengthen corporate governance requirements to require employers to meet their responsibilities to protect those they employ from discrimination and harassment;
  • Require named senior managers at board level or similar to oversee anti-discrimination and harassment policies and procedures and the use of NDA’s in discrimination and harassment cases;
  • Extend employment tribunal time limits from 3 months to 6 months in cases where sexual harassment, or pregnancy or maternity discrimination is alleged;
  • Improve the remedies that can be awarded by employment tribunals as well as the costs regime to reduce disincentives to taking a case forward;
  • Make it an offence for an employer to propose a confidentiality clause designed or intended to prevent or limit the making of a protected disclosure or disclosure of a criminal offence;
  • Introduce legislation to require employers to provide, as a minimum, a basic reference for any former employee in order to weaken the ability for an employer to use the giving of a reference as a bargaining tool in settlement negotiations; and
  • Require employers to pay for the legal costs of an employee for getting advice on any proposed settlement agreement.

In conclusion, NDA’s and confidentiality clauses in settlement agreements do serve a purpose as they allow parties to settle disputes that involve potentially damaging allegations. However, employers should ensure that they are not simply used as an easy option to silence victims of discrimination and harassment in the workplace.  Whether or not a confidentiality clause is used, employers still need to consider that allegations of discrimination may need acting upon to prevent similar accusations arising in the future.

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