Businesses must stop ‘covering up’ harassment with NDAs, say MPs

11 Jun 2019 By Maggie Baska

Parliamentary committee calls for strengthened governance requirements, and condemns failings in tribunal system

The government needs to overhaul the rules around non-disclosure agreements (NDAs) to end the “cover-up culture” around discrimination and harassment in the workplace, a group of MPs has said.

In a report published today, the women and equalities committee (WEC) condemned the “routine cover-up” of allegations of discrimination and harassment in UK organisations and called on the government to ensure NDAs could not be used to suppress allegations or prevent legitimate discussion around harassment.

Maria Miller (pictured), chair of the WEC, said the evidence the committee had heard suggested the use of NDAs in settling allegations of wrongdoing was “at best murky and at worst a convenient vehicle for covering up unlawful activity with legally sanctioned secrecy”.

Miller added: “It is particularly worrying that secrecy about allegations of unlawful discrimination is being traded for things that employers should be providing as a matter of course, such as references and remedial action to tackle discrimination.

“Organisations have a duty of care to provide a safe place of work for their staff, and that includes protection from unlawful discrimination.”

The report is the result of a seven-month inquiry into the use of NDAs in cases of sexual harassment, and is running alongside a longstanding investigation into sexual harassment in the workplace. It suggested many individuals found it difficult to work in the same sector after signing an NDA and some reported living with “emotional and psychological damage” as a result of their experiences, which affected their ability to work. 

The WEC called for strengethened corporate governance requirements to ensure employers met their responsibilities to protect employees from discrimination and harassment.

It also recommended that employers be made to appoint a named senior manager to oversee anti-discrimination and harassment policies and procedures and any use of NDAs in such cases.

The report also called for government to address the “failure” of the employment tribunal system to provide a meaningful route of redress for those who have experienced discrimination or harassment at work, highlighting the difficulties employees face when pursuing a case. It said the “substantial imbalance of power” between employers and employees can result in individuals feeling they must reach a settlement. 

While the use of NDAs is not illegal, and many businesses may deploy them for legitimate commercial reasons, concern has grown over the past few years that so-called ‘gagging orders’ silence victims and allow discriminatory and potentially illegal behaviour to go unpunished. Multiple cases have been tied to the #MeToo movement, including testimony from Harvey Weinstein's former assistant Zelda Perkins and the ongoing NDA scandal surrounding Arcadia Group chair Sir Philip Green, who allegedly deployed NDAs against at least five staff members who accused him of sexual and racial harassment. 

The recent WEC report commended organisations that now routinely settle employment disputes without the use of NDAs, but cautioned urgent action must take place to bring about a step change in the widespread use of NDAs in discrimination cases. Employment lawyers have suggested most tribunal cases are now settled with an NDA.

Rebecca Hilsenrath, chief executive of the Equality and Human Rights Commission (EHRC), said the report sent a “clear message” that employers and the government needed to end the “routine cover-up of allegations”.

Hilsenrath said it was vital that pressure was maintained on employers to stop NDAs being misused to hide harassment and discrimination, protect perpetrators and silence victims, but added: “To fundamentally transform workplace cultures, employers must be legally required to take steps to prevent harassment occurring in the first place.

“We are developing new guidance to help businesses tackle sexual harassment and create a working environment that allows everyone to achieve their full potential.”

However, Melanie Stancliffe, employment partner at Irwin Mitchell, questioned the suggestion in the report that rules to ensure employees receive full legal advice before signing a settlement including an NDA were not robust enough.

“Most lawyers will advise their clients about what they could expect to receive if their claim went to tribunal – ultimately, deciding whether or not to accept the offer is [a decision] the client has to make, not their lawyer.”

The Department for Business, Energy and Industrial Strategy (BEIS) welcomed the report, saying it was unacceptable that NDAs have been used to hide workplace harassment or intimidate victims into silence. 

A spokesperson said: “We share the committee’s concerns, which is why we recently consulted on proposals to tighten the laws around NDAs and confidentiality clauses for workers and put an end to the unethical use of these agreements. We will be publishing our response to the consultation and the committee’s report in due course.”

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