11.Confidentiality and non-derogatory clauses have become commonly used in agreements reached between employers and employees when settling or closing employment complaints or employment tribunal cases about discrimination or harassment. Indeed, they are commonplace when settling any type of employment dispute. Employment lawyers and others told us that such NDAs can be beneficial to both employers and employees in workplace discrimination cases. However, we are concerned that many employees and indeed lawyers were not fully aware of the potential downside of signing NDAs. There appeared to be a lack of awareness about the problems that can be caused by NDAs and it is clear that some of those who draft NDAs, including those who are not legally qualified, could be using NDAs in an unlawful way.
12.Some witnesses suggested that a main benefit for employees is being able to move on with their life and career quickly and quietly, without the stress of going to tribunal. Employment lawyer Emma Webster of Your Employment Settlement Service (YESS) told us:
[A] lot of my clients want these confidentiality clauses themselves. They want to be able to move on. They want to be able to draw a line under this situation. They want to be able to continue their careers without being blacklisted and without being cast as a troublemaker and without being the person who has raised the fact that their previous employer has discriminated against them.
We also heard that NDA settlements enable employees to achieve higher payments than might be awarded at tribunal or in a settlement without confidentiality. Some of these benefits come from the settlement of the dispute, rather than the confidentiality agreement, and could be achieved through settlement without an NDA. However, several witnesses suggested that employers would be less willing to settle, or to settle early, without them.
13.The Employment Lawyers Association suggested that a key benefit of settlement agreements for employers was enabling settlement without admission of liability and that confidentiality was an important part of this. Joeli Brearley of Pregnant then Screwed told us that there was no incentive for employers to settle without confidentiality, and that women who have suffered pregnancy or maternity discrimination are driven towards settlement by their situation:
There is no reason for a company to settle before going to tribunal without a non-disclosure agreement. That is their carrot because it means their reputation is protected. Otherwise, why would you not wait until a tribunal and hopefully get off the hook? You may as well settle and know that you are going to protect your reputation. That is why they have to exist. Women have to be able to settle, because they are so vulnerable if they are pregnant or they have just had a baby.
14.Although employees may be encouraged to sign NDAs by the immediate circumstances, the evidence we have seen demonstrates that in the longer term serious problems can arise for the employee. These include difficulty in moving on with their career, intense fear of repercussions if the agreement is breached, barriers to accessing professional or emotional support for the discrimination or harassment they suffered and other personal and emotional repercussions. We look at these in more detail in Chapter 3. Another concern is that the use of NDAs effectively covers up unlawful discrimination and harassment, allowing management behaviour and organisational culture to go unchallenged and unchanged. What is more, this can enable perpetrators to go on to harass or discriminate against others and prevents victims of such behaviour from knowing about or supporting other complaints.
15.At the organisational level, it is very worrying that some employers appear to have a culture of tolerating unlawful discrimination and harassment and covering it up with NDAs when individual complaints threaten to bring it into the open. Employment lawyer Jane Mann of Fox Williams LLP shared her concern about “culture and systemic discrimination”, suggesting that in some organisations one might commonly see behaviour “as a matter of culture that people do not realise at all are discriminatory and they give rise to lots of cases and lots of cases are settled.” Employment lawyer Emma Webster of Your Employment Settlement Services (YESS) highlighted the lack of action against perpetrators in some organisations, telling us:
[W]hat is problematic is that organisations’ HR departments will see, time and time again, the same issues coming before them, and they will not take any good management action against either the individual perpetrator or the organisational culture.
16.She went on to suggest that some organisations failed to tackle improper behaviour “where an individual is financially useful” or “if they are the head of the company”. We have heard about high-profile examples of this such as the Harvey Weinstein case, and we have also received several examples from individuals. One witness described the difficulties of pursuing a sexual misconduct complaint against a senior individual, suggesting that businesses that rely on “rainmakers”—individuals whose personal reputation or connections make them “disproportionately valuable” to the company—”are apt to grant these ‘rainmakers’ a certain degree of latitude when it comes to standards of behaviour.” Another individual told us simply, “I was told the abuser was indispensible and I was not.”
17.The extent to which the use of NDAs perpetuates a culture of secrecy and discrimination is, by the very nature of NDAs, unclear. However, several witnesses suggested that NDAs are only one of a range of issues that need to be tackled. Kiran Daurka of the Discrimination Lawyers Association described them as “an end product”, and highlighted a need for more joined-up thinking by employers about culture and how grievances are handled. Julie Morris of Slater and Gordon said: “[t]he oversight needs to be of the complaints process, the grievance process, what the outcomes are and what the company or organisation is doing about complaints of discrimination and whether a board director has that as part of their health and safety obligations to be involved in an annual review of what is taking place within the organisation.” We discuss the role of boards in Chapter 4.
18.In our 2018 Report, we found evidence of “serious weakness and poor practice in employers’ handling of sexual harassment in the workplace”. The evidence we have received for this inquiry paints a remarkably similar picture of poor employer handling of other types of discrimination and harassment case, with several individuals describing shortcomings in the handling of their discrimination or harassment complaint. Law firm Slater and Gordon stated:
[G]rievances do not often assist individuals as it is rare for an employer to uphold allegations of discrimination or harassment and we often see overwhelming efforts to find against an employee in such circumstances often because it is one person’s word against another. Instead of an employer upholding complaints or even confirming that they have been unable to resolve a conflict of evidence, they more frequently find against an employee.
19.Employment lawyer Kiran Daurka told us that she did not think she had “ever had a client whose grievance was upheld on harassment or discrimination”. We also heard that in some cases employers do not even pay lip service to grievance procedures, with one individual telling us that in their case, “no grievance procedures were observed even though they were requested.” Law firm McAllister Olivarius suggested that NDAs were used by some employers, particularly in the education sector, to avoid conducting an investigation into discrimination or harassment allegations, stating:
Employers often use NDAs to avoid the need to conduct a proper investigation and issue findings in response to a complaint. The NDA may be offered to the accused employee or the complainant, but either way the allegations in the complaint are left untested and a risk unassessed. We have handled cases, particularly at universities, where institutions have agreed with an accused employee that he can leave quietly in exchange for valid charges being dropped and suppressed by an NDA.
20.Ben Wilmott of the Chartered Institute of Personnel and Development accepted that “there are examples of poor practice, and of course we should be absolutely trying to improve practice” but did not accept that poor practice is commonplace. We heard from several employers who set out actions they were taking to ensure that grievance procedures and practices were fit for purpose and how they were addressing discrimination and harassment more widely. For example, Rupert McNeil, Government Chief People Officer, told us about the actions being taken across the civil service:
In the past 12 months, we have continued to upgrade and improve our investigation capability across the civil service between Departments and the bullying, harassment and discrimination guidance, which is very important. That is all dealing remedially with problems but most of our effort is actually on things like encouraging flexible working, looking at the elimination of things like micro-behaviours in the way in which people are interacting with colleagues, and basically raising the bar about how people should create an inclusive workplace.
21.However, working for an employer with good policies and procedures does not necessarily mean that complaints and grievances will be well-handled. One individual told us:
There seems to be an expectation that if an employer has a written grievance procedure, including an appeal process, this will itself ensure fairness, thoroughness and good practice. This was not my experience. My former employer’s written procedure was long and comprehensive and looked very good. The reality was that there was a serious disconnect between the statements made in their grievance policy and the way they behaved. There was / is no way to get this addressed. There doesn’t seem to be a legal obligation on the employer to behave honestly or ethically, and they know this and take advantage of it.
22.A common theme that came across throughout this inquiry was the imbalance of power between the employer and employee at most stages of a discrimination complaint and subsequent settlement or tribunal claim, particularly with larger employers. For example, employers set and oversee company policy and grievance processes and therefore have control over the investigation and handling of any discrimination complaint. As a result, they retain any information that is obtained as part of that process and can choose how much, if any, they share with the complainant. Several witnesses raised concerns about the difficulty that employees can experience in accessing information about the outcome of investigations into their complaints about discrimination or harassment. Farore Law stated:
Currently we have three clients unable to access the outcome of their internal complaints to their employers of harassment and discrimination. All worked or work in the City in financial institutions. These clients are also unable to access any of the evidence or recommendations made. This is because the employers have used external law firms to conduct the investigations, and then covered both the investigation report and the outcome with legal privilege, which, of course, they refuse to waive. We regard this as a potential abuse of privilege, if not an abuse of process. This practice must be outlawed.
Nathalie Abildgaard, a City worker who recently settled a sexual harassment case against her former employer without an NDA stated that she had to submit a data subject access request “to learn the outcome of their investigation into my sexual harassment allegations”.
23.If litigation is being considered as a possible option, employers will tend to have greater familiarity with the employment tribunal system and easier access to legal advice and expertise than employees. Larger employers in particular may have much deeper pockets and therefore a greater ability to fund litigation, employ experienced lawyers and drive negotiations by choosing when to make settlement offers, how much to offer and what to include in the suggested terms. Several individuals described financial, emotional and psychological pressure being put on them by employers and/or their lawyers during litigation, with some noting the importance of good legal advice. One individual told us:
In a lot of scenarios, including mine, pressure is put on you by the other parties. They intimidate and there are lots of very dark things that go on in that period when you are not sure what is going on, and lawyers can help you massively.
We discuss access to legal advice in more detail in chapters 2 and 3.
24.Employers can also influence a former employee’s future employment prospects through the reference that they provide, and this can be used as a bargaining chip. Jayne Phillips of the National Education Union identified the fact that there is no legal obligation to provide a reference as a key factor in the power imbalance between employers and employees when negotiating a settlement agreement, suggesting that confidentiality is seen as a trade-off for a reference. A former teacher who was advised by their union to sign an NDA in order to get a reference told us that it had been their main consideration in deciding whether to sign an NDA:
It comes down to the reference. It was never about the money. It was never about the money. I did not want to sign that NDA. I did not want the settlement agreement. I wanted to resign from my job, knowing that I had the reference I deserved. That was not given as an option.
25.Law firm Clifford Chance described confidentiality clauses as “the most significant ‘bargaining chip’ for the individual given the imbalance in the relationship” between employer and employee, suggesting that they could be used to secure agreement terms such as requiring “remedial steps such as training programmes to be instituted and a satisfactory form of reference to be agreed”. Employment lawyer Jane Mann suggested that while, generally “the employer is in a stronger position because they have the greater resources”, this could change “in the immediate run-up to a tribunal hearing, where matters are going to be made public” when “suddenly the individual can get into quite a powerful position to negotiate something, but that is only if they have been able to take the case all the way to the doorstep of the tribunal.”
26.We are concerned that the imbalance of power between employers and employees is one of the key drivers behind the widespread and commonplace use of NDAs in the settlement of discrimination cases. 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. We have been disappointed, but not surprised, to hear examples of large employers using the significant resources at their disposal to put considerable pressure on employees who pursue allegations of discrimination or harassment at tribunal—for example by making the process more protracted and difficult—instead of taking action to tackle and prevent future discrimination or harassment. There are widespread examples of poor practice in the handling of harassment and discrimination complaints. We are particularly concerned that some employers are using NDAs to avoid investigating unlawful discrimination and harassment complaints and holding perpetrators to account.
27.The Government should begin an awareness-raising programme for employers and employees about how to handle grievances fairly and effectively, including signposting to relevant guidance and support. This should include guidance on the handling of investigations into allegations of unlawful discrimination and harassment following a settlement agreement if this is agreed before any investigation is completed. It should do this within the next six months.
29.Employers gain significant bargaining power from their ability to choose whether to provide a reference. The Government should legislate to require employers to provide, as a minimum, a basic reference for any former employee confirming as a minimum that they worked for that employer and the dates of their employment. It should do this within the next year.
7 [Rosalind Bragg; Joeli Brearley]; [Kiran Daurka]; [Jane Mann]; Clifford Chance LLP (); Gowling WLG (); Thompsons Solicitors Scotland (); McAllister Olivarius ();
9 [Emma Webster]; Employment Lawyers Association (); TUC (); CBI ()
10 [Joeli Brearley, Emma Webster]; [Kiran Daurka]; Maternity Action and YESS (); Clifford Chance LLP (); Gowling WLG (); Employment Lawyers Association ();
11 Employment Lawyers Association ()
13 Thompsons Solicitors Scotland (); Pregnant Then Screwed (); National Education Union (); McAllister Olivarius (); (Baroness Kennedy); Dr Emma Chapman (); Professor Abigaël Candelas de la Ossa and Selena Phillips-Boyle ()
16 A member of the public ()
17 A member of the public ()
18 [Emma Webster]; [Baroness Kennedy, Kiran Daurka]; [Julie Morris, Jane Mann];
21 Women and Equalities Committee, Fifth Report of Session 2017–19, , HC725, paras 74–76
22 A member of the public (); A member of the public (), A member of the public (); A Member of the Public (); A Member of the Public (); A Member of the Public (); A Member of the Public; ()
23 Slater and Gordon ()
25 A member of the public ()
26 McAllister Olivarius ()
29 A member of the public ()
30 Farore Law ()
31 Evidence to Women and Equalities Committee inquiry into Enforcing the Equality Act: the law and the role of the EHRC, Nathalie Abildgaard ()
32 A member of the public (); Evidence given in confidence; Witnesses in private; Evidence to Women and Equalities Committee inquiry into Enforcing the Equality Act: the law and the role of the EHRC, Nathalie Abildgaard ()
Published: 11 June 2019