In the wake of a series of sexual harassment scandals that have thrown the use of non-disclosure agreements into sharp focus, Will Clift discusses their use in the workplace.
It is now common knowledge that various high profile figures (and employers) – such as Harvey Weinstein and Philip Green – have been attempting to use non-disclosure agreements (NDAs) to silence alleged victims of sexual harassment and assault. Indeed the House of Commons Women and Equalities Committee has launched an inquiry into the wider use of Non-Disclosure Agreements in cases where any form of harassment or other discrimination is alleged.
In the employment context, the inclusion of wide ranging confidentiality provisions within settlement agreements has become common practice. Such clauses will ordinarily seek to prevent the employee from disclosing the terms and existence of the settlement agreement, as well as the circumstances that resulted in the parties coming to terms. In cases where an employee has made allegations of sexual harassment before signing the agreement, such clauses would ordinarily prevent the employee from disclosing details of those complaints to third parties.
The role of confidentiality clauses in protecting the reputation of employers is obvious, and such provisions will often be of as much value to the organisation as the settlement of the employee’s claims. However, the use of such clauses to prevent the disclosure of serious allegations of sexual harassment and assault has led to criticism that they allow powerful employers to avoid scrutiny.
The complexity of this issue is compounded by the fact that confidentiality provisions also confer several benefits on employees. Firstly, the value of such provisions to an employer makes reaching a settlement much more likely, meaning the employee can obtain adequate compensation without the need to take their case to an employment tribunal, which can be an emotionally challenging and expensive process.
Secondly, the promise of confidentiality serves as a powerful bargaining tool for employees, who can often negotiate a generous settlement in return for their silence. Thirdly, a well represented employee will often be able to secure a reciprocal agreement that the employer will not disclose details of the dispute to any third parties, which can prove crucial in protecting the employee’s reputation and career moving forwards.
It is also important to note that, under UK law, settlement agreements are void unless the employee in question has taken advice from a solicitor or other suitably qualified professional on the terms and effect of the agreement, meaning, in most instances, the individual will fully understand the implications of the relevant confidentiality obligation before signing the agreement.
The benefits outlined above do, of course, need to be weighed against several public interest considerations. One concern is that the use of confidentiality provisions to hush up incidents of sexual harassment or other serious forms of misconduct facilitates the continuation of such practices. Whilst interested parties are right to be concerned, it is hard to see Parliament legislating for an outright ban on the use of these provisions (even in cases of sexual harassment) when, in the vast majority of cases, they are freely and knowingly entered into (with the benefit of advice), and serve both parties’ interests.
A further concern is that the way in which most confidentiality provisions are drafted would ordinarily mean that the individual in question would be prevented (at least under the terms of the agreement) from reporting the allegations to the police. It has been suggested that legislation should be introduced which would make it unlawful to seek to prevent individuals from reporting allegations of sexual misconduct to the police. Such a limitation is more feasible than an outright ban, and, given the current climate, it is certainly possible that such a law could be enacted.
In the meantime, employers should be aware that, under UK law, an individual cannot be prevented through a settlement agreement from making a “protected disclosure” under the relevant whistleblowing legislation (which broadly means reporting a breach of a legal obligation carried out by the employer to the employer or to a number of other prescribed regulatory organisations).
In addition, where an individual is obliged by law to disclose information (for example, because they are required to give evidence in court), that disclosure will not be in breach of any confidentiality provision.
Employers should always ensure that they clearly spell these limitations out within any settlement agreement, so as to ensure that the individual in question understands the scope of the relevant restriction, and to avoid the possibility that the confidentiality provision in question becomes void.