NDAs (confidentiality clauses) are in the news. Some commentators allege illegal behaviour can be masked when employers pay employees or workers off and bind them to silence with an NDA.
What is an NDA? They are often found in settlement agreements but they can also be required before starting a project - to stop business secrets and sensitive information becoming public.
Settlement agreements (formerly known as compromise agreements) are a tried and tested solution to employment disputes. They save time and money, and an appearance in the employment tribunal. The employer agrees to pay the employee a lump sum and often to provide an agreed reference. The settlement agreement is private and the reputations of both employer and employee are undamaged. Under the Employment Rights Act the employee receives independent legal advice before signing the agreement. But settlement agreements often contain NDAs.
The House of Commons Women and Equalities Committee reported in June on the use of NDAs in discrimination cases. It heard that employees and workers are often paid more under the terms of an agreement than they would receive in the tribunal.
But the committee found it unacceptable that allegations of unlawful discrimination and harassment are routinely covered up by employers with NDAs, and that some allegations of unlawful discrimination are not investigated property. Criminal investigations are avoided and in some cases employees and workers can’t give evidence in Court. Victims often suffer emotional and psychological damage and don’t receive support.
The committee believes that Government should place a duty on employers to protect employees and workers, and should:
Ensure NDAs don’t prevent discussion of allegations of unlawful discrimination or harassment
Require plain English confidentiality clauses
Strengthen requirements that employers protect employees and workers from discrimination and harassment
Require employers at board level or similar to oversee anti-discrimination and harassment policies and the use of NDAs in these cases.
The Law Society has produced a downloadable leaflet, “Non-Disclosure agreements - what you need to know as a worker”. This urges employees and workers to take legal advice before signing an NDA because there a certain rights employees and workers can’t be asked to opt out of; eg whistleblowing in the public interest and the ability to talk to the police or a regulator. The NDA should be clear, time limited, and work for both parties, not just the employer. Employees and workers are advised to make sure they always get a copy of the agreement.