As the #MeToo movement continues at pace, the Women and Equalities Committee of the UK Parliament (the Committee) has launched a new inquiry into the wider use of nondisclosure agreements (NDAs) in harassment and discrimination cases following its recent inquiry into sexual harassment in the workplace.
In a recent Court of Appeal decision, the court granted an injunction against a UK newspaper, preventing it from disclosing allegations of “discreditable conduct” by a senior executive of a group of companies against five of its employees. In this case, the relevant complaints were settled by way of settlement agreements including NDAs. The individuals received independent legal advice and significant payments in exchange for signing up to the settlement agreements. Although the NDAs required the individuals to keep the alleged misconduct confidential, it did not prevent them from making any legitimate disclosures (i.e., blowing the whistle), including reporting any criminal offences. This is in accordance with Section 43J of the Employment Rights Act 1996, under which any provision seeking to preclude an individual from making a “protected disclosure” will be void. The individual has now been named in Parliament, and the case has given rise to wider questions over the use of NDAs to settle disputes relating to allegations of sexual misconduct in the workplace. This comes against a backdrop of a number of examples of alleged misuse of NDAs, which have been claimed to silence victims inappropriately.
The Committee conducted a six-month inquiry into sexual harassment in the workplace, which they described in their report as “widespread and commonplace”. In July 2018, the Committee published a report which recommended that sexual harassment is put at the top of the UK government’s agenda, and suggested that the use of NDAs should be controlled to ensure that they are not used unethically in cases where sexual harassment is alleged. Specifically, the Committee recommended the following:
The UK’s Solicitors Regulation Authority (the SRA) has also addressed the use of NDAs in their Warning Notice on the use of NDAs, issued on 12 March 2018. Specifically, the SRA has advised that NDAs should not be used
The new Women & Equalities Committee inquiry will focus on the wider use of NDAs in cases involving other forms of harassment or discrimination, and specifically on the following key issues:
Settlement agreements are a useful tool for both employers and employees to bring disputes to a definite end, quickly and confidentially, with the benefit of independent legal advice. In light of the recent recommendations, employers should take care when drafting NDAs to ensure that they are not used to cover up illegal behaviour, or to prevent the reporting of conduct to the relevant authorities. Although the recent Court of Appeal decision related to NDAs in settlement agreements, employers should be mindful that the recommendations apply to any NDA, including an NDA within an employment agreement. Employers should consider the recommendations at the beginning of an employment relationship, especially given that incoming employees will not typically be required to receive independent legal advice.
The call for evidence closed on 28 November 2018, and we anticipate recommendations to be published in the coming months. We will report on the findings of the Committee’s inquiry in due course.
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