There has been significant media attention surrounding sexual abuse in the workplace in light of the #MeToo campaign, placing Non-Disclosure Agreements (NDAs) firmly in the spotlight. As allegations against high profile individuals have gained momentum, public pressure on the Government has grown to prevent employers silencing employees who try to expose wrongdoing by the employer through the use of NDAs.
What are NDAs?
NDAs are common and effective tools in protecting the commercial interests and trade secrets of businesses. They are legally binding agreements between employers and employees (or workers) whereby the employee generally agrees to waive any rights they have to claims against their employer or withdraw any ongoing claims in exchange for a settlement sum. Many employment contracts contain clauses preventing employees from disclosing confidential company information both during employment and after. NDAs supplement such clauses and, when used correctly, can provide protection for both parties. However, amid concerns surrounding the abuse of NDAs, the Solicitors' Regulatory Authority issued a notice on 12 March 2018 warning that NDAs should not be used to exert inappropriate influence on people not to make protected disclosures surrounding sexual harassment or misconduct.
High Profile Cases
The recent case involving Sir Philip Green in ABC and others v Telegraph Media Group highlighted the unenforceability of such agreements. The Daily Telegraph discovered that Sir Philip Green had paid a female executive £1 million after she raised several allegations and accused him of groping her. She was one of several employees who alleged they had been silenced by an NDA. Sir Philip Green commenced a lengthy legal battle seeking an injunction from the disclosure of the details of the NDAs. Despite successfully securing the injunction last year, the High Court lifted the injunction in February 2019 allowing the newspaper to disclose the details of the allegations made against him and the settlement sums paid to the individuals. The ruling raised the question of the enforceability of NDAs when they are used to prevent alleged criminal acts being reported leading them to go on undetected.
The Government has now brought forward a consultation which seeks to consider other limitations which can be placed on NDAs to prevent misuse and abuse. The consultation closes on 29 April 2019 and can be accessed here.
What is the current position?
Existing legislation prevents NDAs from removing an employee's protection from making a protected disclosure, also known as 'whistleblowing'.
A standalone NDA cannot usually prevent someone making a claim in the employment tribunal however a settlement agreement can be used to waive this right. To be valid, the employee must have received independent legal advice on the terms of the settlement agreement. The legal advisor is required to counter-sign the settlement agreement, to confirm the employee has received such advice.
What employers can do to make sure an NDA is enforceable
NDAs should not seek to prevent or deter a person from:
- Reporting misconduct or a serious breach of a regulatory requirement, or making an equivalent report to any other body responsible for supervising or regulating the matters in question;
- Making a protected disclosure under the Public Interest Disclosure Act 1998;
- Reporting an offence to a law enforcement agency; or
- Co-operating with a criminal investigation or prosecution.
Employers should consider the use of NDAs in settlement agreements carefully and the potential reputational impact if it is found that they have been used to prevent disclosure of sexual misconduct or any other form of misconduct.
If you have any queries or comments in relation to the drafting of settlement agreements and NDAs, please feel free to contact myself or another one of Gateley's national Employment team.