MPs call for a ban on gagging clauses

11 June 2019

The Government must address the failure of the employment tribunal system to ensure all employees who have experienced discrimination have a meaningful route of redress, a leading Parliamentary Committee has argued in a new report.

In particular, the Women and Equalities Committee said, the routine cover-up of allegations of unlawful discrimination and harassment in the workplace must be stopped and Ministers must look very carefully at the use of non-disclosure agreements (NDAs).

Maria Miller, who chairs the Committee, said: “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.

“After signing an NDA”, she went on, “many individuals find it difficult to work in the same sector again.

“Some suffer emotional and psychological damage as a result of their experiences, which can affect their ability to work and move on.”

There is also the financial penalty of losing a job and bringing a case against an employer.

“The use of non-disclosure agreements in discrimination cases” is available at https://publications.parliament.uk/pa/cm201719/cmselect/cmwomeq/1720/1720.pdf.

It highlights the difficulties of pursuing a case at employment tribunal and the substantial imbalance of power that can exist between employers and employees which can drive the latter to feel that they have little choice but to reach a settlement that prohibits them from speaking out.

“Organisations have a duty of care to provide a safe place of work for their staff and that includes protection from unlawful discrimination,” Ms Miller said. “Some organisations now routinely settle employment disputes without the use of NDAs. We have put forward a range of measures to ensure more follow suit.”

Tackling the problem

The Committee recommends that the Government should:

  • ensure that NDAs cannot prevent legitimate discussion of allegations of unlawful discrimination or harassment, and stop their use to cover up allegations of unlawful discrimination, while still protecting the rights of victims to be able to make the choice to move on with their lives

  • require standard, plain English confidentiality, non-derogatory and similar clauses where these are used in settlement agreements, and ensure that such clauses are suitably specific about what information can and cannot be shared and with whom

  • strengthen corporate governance requirements to require employers to meet their responsibilities to protect those they employ from discrimination and harassment

  • require named senior managers at board level or similar to oversee anti-discrimination and harassment policies and procedures and the use of NDAs in discrimination and harassment cases.

Comment by Peninsula Associate Director Kate Palmer

Traditionally, NDAs have been a document used in a commercial manner to protect an organisation’s business interests or trade secrets.

Recently, however, it appears that there is a worrying trend to use these agreements to silence company employees. For employees, there is often an imbalance of power where they may feel that they have to sign an NDA to remain in their employment, or to avoid being subjected to a further detriment.

Following a period of being subjected to sexual harassment, for example, they may already feel that they do not have a choice, except to sign the agreement. They may also lack understanding of exactly what they are signing and how the, often, highly-legalised wording applies to them.

Legally, NDAs cannot restrict employees, or ex-employees, from making a protected disclosure or “blowing the whistle”.

In order to avoid breaching the confidentiality agreement, the disclosure will have to meet the requirements of the legislation and be disclosed to specific parties, such as to lawyers when receiving legal advice.

Acts of sexual harassment which are in breach of the Equality Act 2010 can be disclosed in this manner, including past acts or those which are currently ongoing. The difficulty for many individuals who have signed these agreements, however, is that they often do not understand that they have not contracted out of the right to blow the whistle.

They may fear the company suing them or any future reprisals for breaching the agreement, such as being dismissed if are still employed.

In the current environment, it is clear that employers should be focused on taking proactive action to prevent sexual harassment occurring within their workplace, rather than reactively attempting to silence those who have suffered this at work.

Not only will this create a positive and respectful working environment where employees are motivated and productive, it reduces the possibility of facing a tribunal claim on this matter or having negative press coverage where they have attempted to silence their workers.

The Government is currently reviewing whether the laws regarding confidentiality clauses in NDAs need amending, including requiring clauses to specifically outline the limitations on disclosure and to require independent legal advice to be sought before an agreement is entered into.