The use of non-disclosure agreements (NDAs) in the workplace remains in the news and it’s fair to say that it generally gets bad press. As with the start of the #MeToo movement six years ago, the entertainment industry is currently the subject of many of the headlines, but in practice NDAs continue to be used widely in respect of all sorts of workplace complaints, exits and settlements.
The issue of NDAs is again gaining some traction in the political debate. Most recently, in September a debate included cross-party calls for government intervention on NDAs, including from shadow employment rights minister Justin Madders.
Solicitors reminded of their obligations
The use of NDAs in workplace complaints remains a focus for those regulating solicitors. The Solicitors Regulation Authority (SRA) conducted a thematic review into the use of NDAs in workplace complaints and issued its report on 14 August. Although this is primarily directed at solicitors, those handling the process within HR should also be mindful of the issues highlighted by the SRA.
The SRA’s report reflects on the role of solicitors in drafting and advising on NDAs and provides solicitors with learning points to ensure regulatory compliance. Key takeaways are:
- It is good practice that confidentiality clauses are only used when necessary and not as a matter of course when drafting agreements.
- Notwithstanding any pressure to resolve matters quickly, solicitors on both sides have a responsibility to make sure the process is fair for all parties involved.
- In the context of many settlement agreements only providing for limited legal fees by way of the employer contribution, the SRA noted that, while it is for solicitors to ensure they are able to appropriately advise their individual client, ultimately there is usually also a benefit to employers in employees being properly advised in these situations.
The SRA says it will now run a proactive awareness campaign to reinforce best practice in respect of NDAs, which it has previously issued in its warning notice to practitioners.
The Legal Services Board, which is the oversight regulator of legal services in England and Wales, closed its call for evidence on the misuse of NDAs in July. A paper published ahead of its 17 October board meeting indicates its next steps, “including further analysis, publication of a findings report and the development of policy proposals for public consultation in early 2024”. NDAs will still, therefore, be hitting the headlines, and the legal and HR profession need to keep a watchful eye.
The higher education sector
The higher education sector is leading the way in respect of changes in this area. Many higher education institutions have already voluntarily signed up to the Can’t Buy My Silence universities pledge. In doing so they have committed to avoiding the use of NDAs in cases involving sexual harassment, bullying and other misconduct.
Legal limits on the use of NDAs in the higher education sector are also going to apply in the near future. The Higher Education (Freedom of Speech) Act 2023 will prevent English higher education providers, such as universities, from entering into NDAs with staff, students, members or visiting speakers in relation to sexual abuse, sexual harassment, sexual misconduct and other types of bullying or harassment. The date on which this will come into force is yet to be confirmed. This is not a total ban on the use of NDAs, but it does seek to significantly limit their scope.
The question of confidentiality is often at the forefront of the agreed terms of departure. It is sensible for parties to apply their minds to the issue of confidentiality in each individual case, particularly where sensitive issues are involved, rather than simply relying on template terms. It is sometimes overlooked in the debate that, often, the complainant is also very sensitive to this. In other words, they may want the matter to be kept confidential too. The effect of the above changes, the impact they have on all parties (including complainants) and any lessons learned, are likely to inform the NDA debate more generally in the coming months and years.
Kirsty Churm is legal director in the employment team at Kingsley Napley