Government addresses use of NDAs in settlement agreements

The Government has moved to allay fears that non-disclosure clauses (“NDAs”) in settlement agreements may be preventing access to justice for employees in the workplace.

The Government’s detailed response was published in response to the House of Commons’ Women and Equalities Committee Report on ‘The Use of Non-Disclosure Agreements in discrimination cases’.

What is an NDA?

NDAs are contractually-binding agreements (or clauses in other agreements, such as settlement agreements) which seek to prevent disclosure of certain information, such as:

  • an employer’s confidential information; and/or
  • the existence of a settlement agreement, the terms of the settlement agreement, and/or the circumstances giving rise to the use of the settlement agreement

The Committee’s Report

The Committee’s Report highlighted concerns that the use of NDAs in the workplace was preventing allegations of discrimination and harassment (and particularly sexual harassment) from being properly investigated and dealt with, and the effect that the use of NDAs has on some employees.

The Committee’s Report recommended that the Government should:

  • ensure that NDAs cannot prevent legitimate discussion of allegations of unlawful discrimination or harassment, and stop their use to cover up allegations of unlawful discrimination, while still protecting the rights of victims to be able to make the choice to move on with their lives;
  • 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; and
  • require named senior managers at board level or similar to oversee anti-discrimination and harassment policies and procedures and the use of NDAs in discrimination and harassment cases.

The Government’s Response

In its Response the Government confirmed that it will introduce new legislation to attempt to ‘crack down’ on the misuse of NDAs in the workplace, particularly when the use of the these NDAs seeks to prevent employees from making protected disclosures. The Government’s Response stopped short, however, of making it a criminal offence to propose the use of a confidentiality clause designed to prevent workers from making protected disclosures.

Our solicitors’ comments

Chris Hadrill, the partner in the employment team at Redmans, commented on the Government’s Response: “This seems to be a reasonably measured response from the Government – although there are some circumstances in which settlement agreements or NDAs are arguably misused, adequate protections already exist to prevent employers from forcing employees not to ‘blow the whistle’. To this extent, the planned further legislation is superfluous.”

If you have any questions about settlement agreements or non-disclosure agreements then please contact our solicitors by calling us on 020 3397 3603 or emailing us.