The use of non-disclosure agreements in discrimination cases Contents


Why we undertook this inquiry

1.We launched this inquiry in November 2018 because of ongoing concerns about the use of non-disclosure agreements following our 2018 Report on Sexual harassment in the workplace, in which we highlighted our concerns that “some allegations of sexual harassment are being ‘dealt with’ using settlement payments and agreements that prevent the employee from speaking about the alleged behaviour—even unlawful behaviour—without those allegations ever being investigated and without any sanctions for perpetrators.”1 We wanted to see whether the picture was similar for people who have suffered other forms of unlawful discrimination and harassment and to follow up on the recommendations we made in our Report.

2.The law makes it clear that discrimination and harassment in the workplace is unlawful. This has been set out in the Equality Act 2010 and in preceding legislation. Rights for employees are also set out in the Employment Rights Act 1996, which allows employees to bring constructive unfair dismissal claims against their employer where they consider that they have been subjected to severe harassment or unfavourable treatment that is not covered by the Equality Act 2010. In addition, employers have a duty under both common law and statute to provide a safe place of work for employees.2 This means providing both a physically and psychologically safe working environment.

3.As we have previously highlighted, the burden of enforcement rests on the individual who has experienced discrimination to seek redress and thereby increase employer compliance. This is concerning because, as we know from our previous work on workplace sexual harassment and on pregnancy and maternity discrimination, only a minority of those who experience unlawful discrimination and harassment will go on to make a complaint to their employer.3 Of those who do make a complaint, many will find that their case is handled poorly by their employer. A tiny minority of cases will end up in employment tribunal, largely because potential claimants find the prospect of taking a case to tribunal so daunting and financially risky.4 This is concerning because if people who have experienced discrimination cannot trust their employer to deal with such complaints fairly and effectively, and if those employees do not feel able to take their case to tribunal, there is nowhere else for them to go. If they are facing a rogue employer who harasses and discriminates against their staff—repeatedly in some cases—there is even less chance of their being exposed and lawful resolutions being reached.

4.It is less clear how many unlawful discrimination and harassment cases are being settled with agreements that include gagging clauses that prevent signatories from speaking about the discrimination they experienced. We knew that statistics on the use of NDAs in such cases would not be available because of the secrecy that surrounds their use. Some agreements prevent signatories even from mentioning that the agreement exists. Nevertheless, we wanted to explore in more detail how NDAs are being used in discrimination cases. In doing so, we wanted to hear directly from individuals about their experience of signing an NDA.

Who we heard from

5.We have received written and oral evidence from a range of people and organisations including employers, employees, unions, human resources professionals, charities, employment lawyers, academics, regulators and professional bodies. We are particularly grateful to those individuals who submitted evidence based on their personal experiences of workplace discrimination and harassment, especially those who have signed an NDA. Clearly, the nature of NDAs means that those who have signed them are subject to restrictions that appear to limit their ability to discuss their experience even with Members of Parliament, and we appreciate their willingness to share their stories. Their perspective has been invaluable in helping us to understand the effects of NDAs on those who sign them.

6.During this inquiry we have received more than 90 written submissions, some of which have been published anonymously, and held 11 oral evidence sessions. Part of the written and oral evidence has been kept confidential in order to protect the identity of the submitters and other sensitive information.

7.We thank our specialist advisers Marian Bloodworth, Employment Partner at Kemp Little LLP, and Richard Moorhead, Professor of Law and Professional Ethics, Vice Dean (Research) at University College London Faculty of Laws, Centre for Ethics and Law, for their support and advice.5

What do we mean by non-disclosure agreements? A note on terminology

8.A non-disclosure agreement is a contract that contains clauses that restrict what a signatory can say, or who they can tell, about something. These can be confidentiality or gagging clauses, which prevent or limit what information can be shared, or they can be non-derogatory or non-disparagement clauses, which prevent signatories from saying anything derogatory about particular individuals or organisations.

9.There are three main types of agreement used by employers that might contain such clauses: agreements to protect intellectual property or other commercial or sensitive information; employment contracts, which can include clauses preventing the disclosure of confidential information during and after employment; and agreements to settle employment disputes or to end employment. For example, if an employee alleges that they were harassed or discriminated against, they may agree to settle, or close, the case instead of asking a judge to rule on it at employment tribunal. To close the case they will reach a settlement agreement, which may include confidentiality and non-derogatory clauses.6 The focus of our evidence-taking has been on this third type of NDA.

10.Among lawyers and employers, the term “non-disclosure agreement” may be used only to describe the first type of agreement outlined above, which protects intellectual property or other commercial or sensitive information. However, in wider public debate, the term NDA is increasingly used as a catch-all term to describe any agreement containing confidentiality or non-disparagement clauses, or to describe those clauses themselves. This is how we have used the term during this inquiry and in our previous inquiry and report on Sexual harassment in the workplace. This approach has helped us to focus on the fundamental issues. We are concerned with the way that these mechanisms are being used in discrimination cases rather than on how they are currently categorised.

1 Women and Equalities Committee, Fifth Report of Session 2017–19, Sexual harassment in the workplace, HC725, paras 74–76

2 The Health and Safety at Work etc. Act 1974 is the main act setting out the health and safety duties of a company, its directors, managers and employees.

3 Women and Equalities Committee, First Report of Session 2016. Pregnancy and Maternity Discrimination, HC 90, para 116; Women and Equalities Committee , Sixth Report of Session 2017–19, Sexual harassment of women and girls in public places, HC 701, paras 109 and 123. See also Equality and Human Rights Commission, Turning the tables - Ending sexual harassment at work, March 2018, p. 5 and Civil Service HR, Review of Arrangements for Tackling Bullying, Harassment and Misconduct in the Civil Service, 24 September 2018, p. 6

4 See Chapter 2 for more detailed figures and discussion of barriers to taking a case to tribunal.

5 Marian Bloodworth declared the following interests: Deputy Chair of the Employment Lawyers Association; Co-Chair, Consultation, Legislation Advice Committee for CityHR, a London-based association for HR Professionals. Professor Richard Moorhead declared no interests.

6 Agreements facilitated by Acas are known as COT3 agreements and may also include confidentiality and non-derogatory clauses.

Published: 11 June 2019