New proposals have been unveiled by the government which aim to prevent employers from using non-disclosure agreements (NDAs) to conceal complaints of bullying and sexual harassment in the workplace.
Non-disclosure agreements, or ‘gagging orders’ as they are commonly known, have hit the headlines in recent weeks after an investigation by the BBC discovered that 96 UK universities had spent about £87m on pay-offs with NDAs since 2017. News followed shortly after that Health Secretary, Matt Hancock, had promised to banish gagging orders from the NHS stating that he was “determined to end” the injustice of making health service staff choose between speaking out to protect patients or keeping their jobs”.
Non-disclosure agreements are typically used by employers to stop staff ‘going public’ with information that could have a significant reputational or financial implication for the company. When used correctly, NDAs can provide value and protection to both employees and employers. For example, quite often NDAs allow an employer to prevent any ‘leaks’ of trade secrets when a member of staff leaves the business. However, recent media coverage, including high-profile cases, such as that of Topshop boss, Sir Phillip Green, have raised allegations that NDAs are being misused to silence employees and protect serial perpetrators of misconduct.
Non-disclosure agreements are commonly used when an employee’s contract is being terminated. To this end, many settlement agreements include a clause that may require employees to repay settlement funds if the NDA is later breached. Often, many employees who have signed such agreements do not fully understand the terms contained therein and the limits as to what they can disclose and what they cannot. This is obviously problematic should an employee have serious concerns about misconduct and seek to disclose this after they have signed an agreement.
Now, Business Minister, Kelly Tolhurst, proposes changes to the operation of NDAs in an attempt to increase fairness in the workplace. The government is seeking to change the way in way NDAs are used to prevent employees from feeling “gagged” and unable to report misconduct such as workplace harassment to the police, and also highlighted concerns with how NDAs are enforced and intends to consult on whether formal guidance should be issued as to how employers should provide advice to employees on such confidentiality clauses.
However, employers should not be afraid to use NDAs were appropriate. There are many situations, particularly when terminating a contract, that both employers and employees may not want to disclose. For example, employers will be reluctant to disclose that a payment has been made in return for early termination of an employment contract in a bid to discourage unfounded claims being brought by other staff members in the hope of financial gains
It is also important to note that the use of NDAs does not just arise when handling settlements, it also concerns confidentiality clauses in employment contracts. Many employees are expected to sign and return their contract in the first few minutes of commencing employment. This often does not give employees enough time to properly evaluate what they are signing which may lead to problems at a later stage.
It is also important that businesses can point to an appropriate workplace policies which ensures that any complaints can be dealt with appropriately and efficiently. This may involve an independent investigation and where appropriate and necessary, suspension of those accused of such behaviour. Employers should also be proactive by encouraging a culture of reporting within the workplace. Combining the government’s plans to stamp out unethical practices regarding NDAs, in addition to a holistic approach to ensuring staff feel comfortable reporting misconduct, will help protect employees and prevent misconduct from reoccurring.
Amy Barr is a solicitor at Worthingtons Solicitors in Belfast, specialising in employment law and regularly provides ongoing advice and assistance to employers on a range of employment law matters. For advice on workplace issues or the drafting of non-disclosure agreements, please contact Amy on 028 90434015 or [email protected]
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