New legislation will restrict use of workplace NDAs

22 Jul 2019 By Elizabeth Howlett

Employees will be able to disclose information to police and lawyers, but experts warn reforms do little to tackle toxic cultures

The government has revealed plans to tackle the misuse of non-disclosure agreements (NDAs) and prevent them being deployed to cover up incidents of sexual harassment, racial discrimination and assault.

Under proposed legislation, organisations would not be allowed to use so-called gagging clauses that prevent workers from disclosing information to the police, regulated health and care professionals or legal professionals including lawyers. 

Employers would have to make clear the limitations of a confidentiality clause in an NDA, in plain English, so employees understood their rights. Under the new terms, if an NDA is used in a settlement agreement that does not follow the new legislation, it would be legally void.

Current legislation will also be extended to ensure individuals signing NDAs get independent legal advice on their limitations.

Business minister Kelly Tolhurst, who announced a consultation into the proposed changes – one of a range of new measures unveiled in the final days of Theresa May’s premiership – warned that silencing and intimidating workers under a confidentiality agreement would not be tolerated.

“The new legislation will stamp out misuse, tackle unacceptable workplace cultures, protect individuals and create a level playing field for businesses that comply with the law,” she said. 

The plans were welcomed by Ben Willmott, head of public policy for the CIPD, who said greater clarity around confidentiality clauses was a positive step, though he warned it might not be enough. 

“Changes to the law alone will not help to prevent harassment and discrimination from occurring in the first place. There needs to be far greater recognition in some organisations that their culture has to change,” said Willmott.  

“This change starts with leaders and managers role-modelling the right behaviours and a greater focus on boosting diversity and inclusion.”

Rebecca Hilsenrath, chief executive of the Equality and Human Rights Commission (EHRC), also welcomed the clarity around employment rights promised by the new legislation, but warned that employers needed to protect their staff. 

“The use of NDAs is only part of the problem of workplace harassment and discrimination, and employers must step up to protect their employees from this appalling behaviour before it happens,” said Hilsenrath. 

“We are developing new guidance on NDAs and tackling harassment which will provide further clarity for employers and help them create safe and supportive working environments.” 

The new legislation would not ban the use of NDAs, which can also cover matters such as commercial confidentiality, but it does address concerned sparked in part by the #MeToo movement, which suggested many organisations were using confidentiality clauses to prevent women speaking up about abuse or harassment. Zelda Perkins, who had worked as an assistant to Harvey Weinstein, gave evidence to a parliamentary committee that an NDA she signed had restricted the amount of evidence she could provide about the film producer.

The reforms follow a government consultation in March 2019, which uncovered “a number of cases” where confidentiality clauses were used to prevent victims speaking out.

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