How can employers do the right thing when it comes to NDAs?

Shilpen Savani explains why businesses need to consider not only what’s legal when using the agreements, but also what’s fair

Credit: Peter Dazeley/Getty Images

Non-disclosure agreements (NDAs) evolved to protect confidential information and trade secrets. Yet in recent years it has become increasingly clear that secrecy clauses in employment contracts and legal settlement agreements are being misused by employers of all sizes and across all industries. 

Following the release of Zoe Scaman’s damning article ‘Mad Men, Furious Women’ last year, NDAs have finally been forced back on to the agenda. It has become clearer still that the abuse of legal clauses is fuelling a greater problem: the silencing of victims of sexual harassment, discrimination, bullying and abuse. 

The ‘Make NDAs Fair’ campaign aims to raise awareness of the misuse of settlement agreements and encourages businesses to include a fair NDA clause visibly within their internal policies. 

Technically, employers are under no legal obligation (yet) to include such a policy, and of course there are circumstances where confidentiality clauses and settlement agreements are not only legitimate, but essential.

So, with no tangible changes in law on the horizon yet, how can employers do their part in eradicating abuse of these clauses and work towards an industry ‘best practice’ standard? Start with a fair NDA clause including the following elements: 

  1. Absolute freedom to report workplace abuse and sexual harassment

Simply put, everyone has a right to an open workplace where they feel they can speak up about any concerns. There should be zero tolerance of obstructions to reporting issues and bullying, and a process should be in place to make this as straightforward and non-distressing as possible. This culture of trust and openness needs to underpin every organisation, from board level to interns.  

  1. Paying compensation to settle a workplace abuse and sexual harassment claim has nothing to do with silence

Compensation for bullying, discrimination or harassment is unrelated to buying wholesale silence. The question of settling a claim is separate to blanket secrecy obligations. Employers can seek closure of a dispute, but they do not have a right to ‘buy silence’ from their employees.   

  1. Protection of reputation should apply to the employer only. No blanket protection for individuals

Essentially, if using a non-disparagement (aimed at protecting reputation) clause in the settlement agreement related to harassment, bullying or discrimination, the scope should be limited to the employer or, at the most, relevant individuals at the consent of the worker. 

  1. Workers should be independently advised before accepting an NDA

Every employee should have the right to independent legal advice, at the employer’s expense, before signing any legal documents including secrecy clauses and NDAs. The resulting agreement should always be available to the employee on request. 

The call to action

So, while non-disclosure agreements and secrecy clauses are entirely legitimate when used appropriately, there are ready safeguards employers can put in place to ensure these are not only legal, but fair. NDAs should be used to protect trade secrets and business confidentiality by all means – but they should never be used to obstruct an employee from making a disclosure to authorities or to pretend that the events never happened. They are a means to protect business interests, not a tool for buying a victim’s silence. 

This is where we are asking leaders and decision-makers to take immediate action. Tell your professional advisers you are concerned about these issues, and instruct them to make sure that all secrecy obligations are fair. Put simply, this will not happen unless, and until, your lawyers understand this is precisely what you want and start singing from the same sheet.

Shilpen Savani is a partner at gunnercooke and part of a group of experts calling on employers to Make NDAs Fair