Legal

What has the government committed to on NDAs?

2 Sep 2019 By Richard Fox

Richard Fox outlines its response to the consultation on confidentiality clauses, and looks at whether enough has been done to crack the problem

A big part of the current debate on sexual harassment in the workplace centres around NDAs, or confidentiality clauses. The government began a consultation in March in relation to changes it sought to make to these arrangements, and in July it published its response to the many submissions it received.

As a result, the government has now said it is committed to legislate in a number of specific areas: 

  • to ensure no provision in an employment contract or settlement agreement prevents someone from making a disclosure to the police or to a regulated health, care or legal professional;
  • to require confidentiality clauses in a settlement agreement and in a contract of employment to be clear in setting out its limitations; and
  • to ensure the limits of the confidentiality clause are clearly explained. However, instead of prescribing the specific words to be used, the government has said it will work with the Solicitors Regulation Authority, the Equality and Human Rights Commission and Acas to produce appropriate guidance in this respect. 

Has the government made any missteps?

The government acknowledged the current debate around monitoring and reporting an employer’s use of confidentiality clauses, but declined to make any recommendations in this respect. It preferred to await the outcome of the related consultation issued by the Government Equalities Office on sexual harassment more generally.

In terms of looking to change culture in the workplace, that may come to be seen as a missed opportunity. In its paper, the government referred to various responsibilities that already exist. For example, the employer’s responsibility under the UK Corporate Governance Code, the Wates corporate governance principles for large private companies and the legal duty under section 172 of the Companies Act 2006 for directors to promote the success of the company for the benefit of shareholders (and in so doing to have regard to the interests of the company's employees).

But that surely misses the point. It is already the case that individuals cannot be prevented from reporting matters of this kind to the police or to regulatory bodies, or ‘blowing the whistle’ (in the sense of making a public interest disclosure). Nor should they be prevented from talking to their medical practitioners. But it is the lack of clarity in this area that has led to the government deciding to legislate. Arguably it should do exactly the same in relation to reporting requirements. Whatever may be the existing law as set out in the various codes and Acts they have mentioned, it does not appear to be working or doing enough to change the prevailing culture in the workplace. That is why many believe in the introduction of a mandatory reporting regime for these agreements.

Could the recommendations have gone further?

In our submission, we suggested that the law might provide for a settlement agreement to be marked clearly on its face, front and back, with a warning notice cautioning that contained within its terms are confidentiality clauses. It would be akin to a ‘penalty notice’ that has to be affixed to an order served on someone in circumstances where to breach its terms in contempt of court could lead either to a fine or even imprisonment. That would surely help to ensure that the existence of such clauses was drawn to the attention of the employee.

It is currently not compulsory for an employer to make a contribution towards the employee’s legal costs for seeking independent legal advice. However, in practice they usually do. If that contribution is restricted, savvy employers know the employee is likely to get only basic advice in that respect, commensurate with the amount of the employer’s contribution.

The government has listened to those who suggested that the independent advisor signing off on the settlement agreement should be required specifically to advise the employee on any confidentiality clauses and on the limitations that will apply to them. But one option we suggested, was to set a minimum fee to cover both the traditional advice given on signing up to these agreements, plus an additional sum for the specific advice that will be required in relation to the confidentiality provisions. That may be to better safeguard the interests of the employee, particularly at a time when they may be feeling most vulnerable and confused. 

Undoubtedly, the last prime minister, Theresa May, indicated a desire to make changes in this important area of the law. It is now Boris Johnson’s turn to take charge and we do not yet know if he has a similar desire. The fact that he has left the employment minister, Kelly Tolhurst, in situ may be a good sign in that respect, but we look forward to the new legislative agenda with interest.

Richard Fox is head of the employment law team at Kingsley Napley

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