Government Rejects Ban on NDAs in Sexual Harassment Cases Among Other Recommendations

After the ‘sexism in the city’ inquiry by a group of MPs revealed the prevalence of misused NDAs in sexual harassment cases, they advocated for a ban to safeguard against future injustice. However, the Government has rejected this advice in favour of their forthcoming measures.

Continue reading to delve into the MPs’ recommendations and understand why the Government opted not to listen. We analyse the ongoing concerns regarding NDAs and offer insight from one of our employment law specialists.

If you have any questions about NDAs in sexual harassment cases or believe your rights have been breached, contact us now. Redmans Solicitors are employment law specialists and could advise on your possible next steps following a quick consultation.

Get in touch with us today by:

Treasury Committee Calls for Ban on NDAs in Sexual Harassment Cases

In the summer of 2023, the Treasury Committee launched an inquiry titled “Sexism in the City”. Its purpose was to establish and address the barriers women face in the financial services sector.

As the inquiry concluded, MPs unveiled troubling revelations earlier this year. They exposed how NDAs were being abused to hide sexual harassment and misconduct, silencing victims and allowing perpetrators to escape consequences.

Furthermore, the Committee discovered significant shortcomings in whistleblower protection. Employers were found to prioritise their reputation over employee welfare, with 70% of whistleblowers reportedly facing victimisation, dismissal, or feeling compelled to resign.

Consequently, recommendations were made to reform the highlighted shortfalls within the financial services sector. Primarily, this included a ban on NDAs in sexual harassment cases. 

The Committee’s Head, Harriett Baldwin, explained how firms must become accountable in addressing the issue. She stated, “There have been several high-profile cases which show the existential risk to firms who don’t tackle sexual misconduct”. She added, “We also know that more diverse organisations perform better, so inaction is not only immoral but bad for growth and business”.

Yet banning NDAs in sexual harassment cases wasn’t the committee’s sole recommendation. They also suggested preventing employers from requesting salary history and advocated for mandatory inclusion of salary brackets in job adverts. Moreover, they proposed lowering the threshold for companies required to undertake pay gap reporting from those with 250 to 50 employees.

Government Rejects Proposals

What may come as a surprise to many is that the Government has rejected the Treasury Committee’s proposals. This is despite the recommendations being directly influenced by the misuse of NDAs in sexual harassment cases. Given the seriousness of the revelations, this could lead to some confusion. However, the Government has provided a detailed explanation of its stance.

First, they explained how a complete ban would be a misjudgment since NDAs still hold value in specific circumstances. For example, they protect commercially sensitive information from becoming public knowledge.

Despite this, they acknowledged the need for better protection to ensure that victims of serious misconduct aren’t silenced. Therefore, the Government asserted that they have already taken measures to clarify the parameters of NDA usage. This includes introducing legislation that sets out the unenforceability of confidentiality agreements to conceal criminal behaviour.

What’s more, the Government confirmed its ongoing review of the whistleblowing framework to explore potential avenues for enhancement. Unfortunately, Ms Baldwin doesn’t believe the Government is moving quickly enough or taking the most effective measures. She stated, “I would continue to urge the government to increase the pace of progress”, adding, “Steps like banning NDAs in all harassment cases… would have a huge impact on people’s lives”.

A Professional’s Insights

Considering these events, we turned to Alex Hodson, senior associate and employment law specialist at Redmans. We sought her perspective to grasp the insights of a professional in the sector and understand the rationale behind the Government’s decision.

Alex began by highlighting the common usage of NDAs in sexual harassment cases. She also discussed recent reforms that have improved protection to prevent victims from being unable to report criminal behaviour. She said, “The Solicitors Regulation Authority issued a warning notice to law professionals on how to use NDAs in settlement agreements”.

As such, legal professionals must ensure settlement agreements clearly outline the exceptions to any confidentiality clauses included. Alex provided an example of this, explaining how employees must know they can still make a protected disclosure. She stated that this might include “the reporting of a criminal offence… or reporting a regulatory breach to the appropriate body”.

To better understand why the Government didn’t want to issue a blanket ban, Alex discussed some of the practical benefits of NDAs. She outlined that, typically, NDAs focus on “the confidentiality of the terms and existence of the agreement”. Thus, they could prevent an employee from disclosing events, averting a surge of new claims and safeguarding confidential business information.

However, Alex emphasised that the advantages she highlighted extended beyond businesses. She elaborated on how NDAs provide “assurances to the employee that there will be a ‘clean break’ for them leaving their employment and that the employer will not make adverse comments to prospective employers”.

Therefore, while Alex acknowledged the perceived unfortunate nature of the Government’s decision, she recognised the pragmatic advantages of NDAs. Despite the deficiencies spotlighted by the Treasury Committee, she reiterated that legal constraints ensure victims can report crimes. As such, while NDAs in sexual harassment cases aren’t flawless, they appear to warrant further refinement rather than outright bans.

Get Help From Redmans

Having said that, there may be circumstances where you believe your rights have been breached. Maybe you’ve been offered a settlement agreement containing an NDA or already accepted one. Regardless of the situation, if you want professional help, contact Redmans Solicitors today.

We are employment law specialists and can answer any questions you may have. If you have an eligible case, we could navigate you through the legal process effectively and provide guidance on your possible steps. Begin your journey with us now by: