For the first time, it is to be enshrined in law that individuals cannot be prevented from reporting crimes, harassment or discrimination to the police as part of a Government crackdown on the misuse of non-disclosure agreements (NDAs).

Business Minister Kelly Tolhurst has announced that the rules around NDAs and confidentiality clauses will be tightened under new legal proposals intended to put an end to the unethical use of these agreements and encourage good practice from employers and lawyers.

In future, a clear, written description of rights will be required before anything is signed in confidentiality clauses in employment contracts or within a settlement agreement.

The Government also plans to extend the law that means a worker agreeing to a settlement agreement receives independent advice.

To prevent employees from being duped into signing gagging clauses of which they are unaware, this advice will have to cover the limits of any confidentiality clauses in the settlement agreement so that a person is in full possession of all the relevant facts.

Prime Minister Theresa May said: “Sexual harassment is against the law and discrimination of any kind will not be tolerated — in the home, the workplace or in public. Over the past couple of years, we have seen brave individuals breaking silence on such behaviour, but too many are still facing the unethical misuse of NDAs by their employers.”

She cited examples where victims of harassment or discrimination have been silenced using the legal agreements which suggest that a worker cannot blow the whistle despite the fact that no provision can remove a worker’s whistleblowing rights.

In addition, through an NDA or settlement agreement, employers could insist that a worker is unable to discuss an issue with other people or organisations, such as the police, a doctor or a therapist.

This can leave victims afraid to report an incident or speak out about their experiences, leaving others exposed to similar situations, and putting customers and other businesses at risk.

A consultation on the proposals will be open for comments until 29 April 2019.

Welcoming the move, Equality and Human Rights Commission (EHRC) Chief Executive, Rebecca Hilsenrath, said: “The landscape of women’s employment has been littered with the misuse of NDAs in order to hide harassment, protect perpetrators and silence victims.”

Comment by Peninsula Associate Director Kate Palmer

Traditionally, NDAs are contractual agreements that have been used by parties to restrict the disclosure of highly sensitive or commercial business information, such as trade secrets or purchase negotiations. However, the use of NDAs has been under the spotlight in recent times as the practice has become increasingly widespread and controversial.

As workplace practices are becoming more scrutinised, especially in light of the #MeToo movement, numerous stories regarding the misuse of NDAs have arisen.

These include reports that NDAs have been used to prevent victims of sexual harassment from speaking out, with initial stories focusing on the President’s Club scandal where waitresses were required to sign an NDA before commencing their role whereupon they were subjected to sexual harassment by attendees.

While, currently, the use of confidentiality agreements or clauses cannot, under employment legislation, prohibit an employee or worker from blowing the whistle, it is believed that the use of the clauses intimidates or deters those who are subjected to unlawful behaviour from making a disclosure.

It is, therefore, believed that a new clarification included in legislation that a disclosure to the police cannot be prevented will help those who have signed these agreements make disclosures when necessary.

The consultation’s release has already attracted significant social media interest from those who create NDAs so it will be interesting to see how the proposed changes are received by those in the legal industry and the practical effect of any changes the Government chooses to make.

Last reviewed 5 March 2019