The use of non-disclosure agreements in discrimination cases Contents

4Content and effect of NDAs

68.Although several employment lawyers told us that NDAs can be as beneficial for employees as they are for employers, we were keen to hear directly from individuals about their experience of signing an NDA and its effect on them.91 We received written and oral evidence from a number of individuals who had signed an NDA and we know that others did not come forward for fear of breaching their NDA. The majority of those who were able to give evidence about their experience of signing an NDA expressed grave concerns about how NDAs were used by employers. Many told us that they had not wanted to sign one but had felt they had no other option. We were struck by the fear, anger and raw emotion that witnesses expressed and still felt about their experience years—even decades—after signing an NDA. Only one individual we heard from said that settling with an NDA had brought a broadly positive outcome for them. We accept that evidence of personal experience can only ever be anecdotal and we have no way of establishing how representative the views and experiences we heard were. Nonetheless, we found these personal testimonies very powerful in highlighting some of the difficulties that can arise for, and continue to affect, individuals who sign an NDA. We discuss these in more detail below.

Agreeing restrictions and carve-outs

69.In our 2018 Report on Sexual harassment in the workplace, we highlighted some of the most stringent and shocking examples of NDA clauses that we had come across—such as those in the Zelda Perkins case. She described how her agreement with Harvey Weinstein/Miramax barred her from discussing any aspect of her time at Miramax with family, friends, medical practitioners, the Inland Revenue, accountants, financial advisers or legal representatives unless they first signed an NDA.92 During that inquiry, Max Winthrop of the Law Society told us that NDAs usually contain lists of those with whom the signatory can discuss the issues covered in the NDA, stating:

That is a standard provision. Your spouse or civil partner will be able to be told about the contents of the agreement. Then, it goes on to provisions with regard to regulatory authorities, a court of competent jurisdiction, tax authorities and suchlike. To find an agreement without those provisions would be rather unusual. If you are acting for an employee and none of that leeway is granted to the employee, there will be questions.93

70.In the same evidence session, employment lawyer Gareth Brahams agreed that NDAs usually contain such exceptions, but also noted that “you certainly come across confidentiality provisions that do not make that saving.”94 More recently, during this inquiry, employment lawyer Jane Mann told us that Zelda Perkins’ agreement had contained “a very unusual set of clauses” and said that she had been “concerned” and “quite surprised to read and hear about” some of the clauses in it, which she had not seen before.95

Restrictions on seeking professional advice and support

71.It is difficult to establish how widely NDA clauses that restrict signatories from seeking professional advice are used. Several witnesses suggested that NDAs should not prevent signatories from accessing professional advice and assistance from legal advisers, union representatives, counsellors or therapists.96 The Centre for Women’s Justice suggested that “‘blanket’ non-disclosure clauses which unreasonably prevent an individual from discussing allegations with third parties (like medical practitioners, her family, or fellow victims) are unfair contract terms and should be treated as unenforceable.”97 Sue Coe, Senior Policy Officer for Equality and Strategy at the Trades Union Congress, said that the TUC “would like to see explicit statements in settlement agreements around employees not being limited from seeking therapeutic support or legal advice.”98

72.We can see no justification for any clause in a settlement agreement to limit an individual’s right to access professional advice or support relating to the workplace harassment or discrimination they have experienced. Likewise, we see no reason why any agreement settling a dispute in which harassment or discrimination is alleged should restrict access to professional services such as legal or financial advice. Not only should such clauses be unenforceable, but agreements should expressly state that nothing within them can prevent the signatory from seeking such professional advice. Likewise, signatories should always have the option of nominating close family or friends with whom they can discuss restricted issues.

Agreeing what can be said to prospective employers

73.One issue that has arisen for some individuals who have signed an NDA when leaving their employment has been knowing what their NDA permits them to say to prospective employers—for example in job interviews—about why they left their previous role.99 One witness stated that before they signed the agreement a solicitor advised them by telephone, outlining “what I was not allowed to say and do by simply reading out the terms of the agreement”, but giving “no advice whatsoever about what I could say.” They explained that at the time it “did not occur to me to ask questions about what I could say, as I was not thinking of future job interviews or future performance management reviews”. They went on to describe how this lack of clarity about what they could say had made it “incredibly difficult” to move forward in their career:

I therefore found it difficult at future job interviews. Clearly, when your CV states that you were in a senior role and then a month later you are working as a supply teacher, people are going to ask questions. As the agreement stated that I could not disclose anything negative about my previous employer, I found it extremely difficult to answer their questions and found myself unable to be myself and answer their questions sincerely and honestly. To be frank, it is no exaggeration to say that I was terrified of breaking the terms of that agreement and I found myself taking responsibility for the ending of my employment, which eroded my confidence and feelings of self-worth.100

74.Employment lawyers have suggested that negotiations on the terms of NDAs will often include discussion of what can be said in references and to prospective employers.101 The ELA stated that “employees are frequently concerned about securing a new job and may seek agreement on the terms of references for prospective employers.”102 However, even witnesses who were represented during negotiations have described feeling extremely limited by their NDA about what they could say in future job interviews, with some suggesting that this had cost them several potential jobs.103 One witness, who had not felt able to apply for another job yet, said they were not sure how they would handle questions about why they had left their former role but that they would find it “extremely difficult” not to be able to be truthful about it.104

75.One individual described the approach that they had taken to dealing with questions about the events that led up to their NDA and why they had left that employment:

The biggest thing is that in the aftermath you need to come to terms about how you talk about it. You pretty much have to write a script for yourself of what to say. Once you know what to say and are comfortable with it, you refer back to that. The hardest part is defining what your story is in a way that is clearly not telling white lies or whatever, but covers what needs to be said without infringing on your confidentiality agreement.105

Unfortunately, not all of those who sign NDAs are able to move forward in this way.

76.Employment lawyers highlighted the contested nature of discrimination disputes and argued that there were good reasons to agree to confidentiality around the behaviour or actions leading up to the dispute.106 Jane Mann told us that “when parties are settling a dispute, which may involve all sorts of allegations being made in both directions, the parties may wish to bring an end to that and to give both sides the reputational protection in not talking about it in the future.”107 Emma Webster also suggested that there were benefits for the individual of being able to move on with some reputational protection.108

77.We are deeply concerned that some individuals who sign NDAs are being left uncertain about what they are permitted to say about the alleged unlawful discrimination, harassment or other employment issue that led to the settlement. This lack of clarity can have a devastating effect on people’s career, self-esteem and personal life. Confidentiality, non-disparagement and similar clauses in settlement agreements need to be suitably clear and specific about information that can and cannot be shared. Most employees will already be covered by their employment contract in terms of commercial confidentiality and this need not be duplicated in an NDA on departure although employees may need to be reminded of this and other relevant obligations in law. It is understandable why an employer might wish to keep confidential the size of the financial settlements. It should, however, be for individuals to decide whether to tell a third party or a new employer why they left a previous employment if the case involved allegations of unlawful discrimination. NDAs should not be used to silence victims of discrimination and harassment, and employers and their legal advisers should not be complicit in using NDAs to cover up allegations of unlawful behaviour.

78.The Government should legislate to ensure that NDAs cannot be used to prevent legitimate discussion of allegations of unlawful discrimination or harassment, and in the public interest consider how to 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. Legitimate purposes include discussing potential claims with other alleged victims, or supporting such victims through the trauma of raising a complaint of discrimination and harassment.

Protected disclosure and whistleblowing

79.Whistleblowing legislation means that someone who raises concerns—in the public interest—about breaches of the law or dangers to health and safety, or about the cover-up of such behaviour, is entitled to protection from victimisation or dismissal.109 We are concerned that NDAs are being used unethically and sometimes unlawfully to deter whistleblowers from being able to speak out in the public interest. As we set out in our 2018 Report, any NDA clause designed to prevent a worker from whistleblowing—also known as making a protected disclosure—would be void under section 43J of the Employment Rights Act 1996. However, an individual who signs an NDA containing such a clause might not realise that it is unenforceable. Even if they suspected that it was not enforceable, they would probably need legal advice to work out whether they were entitled to protection under complex whistleblowing law, as set out in the Public Interest Disclosure Act 1998 (PIDA).110

80.In particular, there is a lack of clarity about when it would be in the public interest to blow the whistle. The whistleblowing charity Protect has suggested that although the anti-gagging provisions in section 43J are “potentially a powerful tool against the use of inappropriate gagging clauses in the employment context” they are not working as they should because they have “not been tested in practice”. Protect outlined the difficulty for an individual who has suffered discrimination at work of establishing whether they would qualify for whistleblowing protection, and therefore whether an NDA could legitimately prevent them from raising their concerns:

A protected disclosure is one which tends to show that one of the categories of concern are engaged (crime, breach of a legal obligation, miscarriage of justice, health and safety, damage to the environment or cover up of any of these) and meets the test that it is in the public interest. It is the last point which particularly distinguishes an individual complaint of sexual harassment or other discrimination from a whistleblower complaint. While case law sets out some guidance about when the public interest is engaged it is difficult to identify when a disclosure of a single breach/ discrimination against an individual would be seen to be in the public interest [ … ]111

81.Several legal experts, employers, unions and others have also drawn attention to this lack of clarity.112 Ben Wilmott said that the CIPD had received feedback from its members and employment lawyers that there “seems to be some confusion over what type or what level of severity or how systemic an issue would have to be in order to fall under public interest disclosure.”113 Employment lawyer Jane Mann talked about a grey or “fuzzy zone” of behaviours that “can impact on people very badly at work”, but are “not clearly covered by the whistleblowing legislation and [ … ] are not clearly criminal offences that can be reported.”114 Professor of Law and Ethics, Richard Moorhead, told us that he had read whistleblowing law and guidance and still did not understand it, adding that “the courts do not get to deal with” the cases that might bring the necessary clarity.115

82.Given the complexity of the law, it is unsurprising that Protect has identified a lack of awareness among employees about whistleblowing protections.116 It has also suggested that “many NDAs involving whistleblowers have unclear or opaque wording”, making it difficult for individuals to fully understand the effect of such agreements.117 Certainly, several of the individuals we heard from had little understanding of how their potential rights under whistleblowing law might be affected by their NDA. One witness described feeling “very bound and gagged” by their NDA and said that they really wanted to break it but that they had no idea how it affected their ability to make a protected disclosure under whistleblowing legislation.118 Another told us that when they signed their NDA they “did not know what whistleblowing was” and that it had only “come onto my radar since then”.119

83.In our 2018 Report we recommended several actions that the Government could take to help tackle the problems we have outlined for potential whistleblowers. These included requiring the use of standard, plain English confidentiality clauses, which must explain clearly what disclosures are protected under whistleblowing laws and cannot be prohibited or restricted. We also recommended changes to the law to ensure that disclosures of unlawful sexual harassment to the police and all regulators, including the Equality and Human Rights Commission (EHRC), and to any court or tribunal would be covered under whistleblowing law.120

84.In its response to the Report, the Government acknowledged the concerns we raised about the unethical use of NDAs and agreed that “NDAs require better regulation and a clearer explanation of the rights that a worker cannot abrogate by signing one [ … ] [p]articularly that workers have the right to make a public interest disclosure”. It announced that it would “consult on the best way to achieve this, including the Committee’s recommendation of a standard approved confidentiality clause.” It also agreed to add the EHRC to the list of prescribed persons to whom employees can make a disclosure. However, it said it was “not persuaded that there is a need to prescribe every court or tribunal” and that it needed “to think through the wider implications” of adding the police and would consider further whether to add other regulators.121

85.In March 2019, the Government launched a consultation on measures it proposed to take to prevent misuse of confidentiality clauses in situations of workplace harassment or discrimination. The proposals include legislating “that no confidentiality clause can prevent a person making any disclosure to the police”, and making it clearer “to workers that they still maintain some disclosure rights even when they sign a confidentiality clause”.122 The consultation does not cover the proposed changes to whistleblowing law that the Government has committed to make. We discuss the Government’s proposals on the wording of clauses in more detail below.

86.Following the Government’s response to our report, Protect has welcomed the undertaking to “strengthen the regulatory environment for those who wish to report sexual harassment” but has also raised concerns about “the piecemeal approach of this amendment”. It reiterated the difficulty of testing whether an individual is covered by PIDA in sexual harassment or discrimination claims and describes the public interest test as “an additional hurdle for victims”. It suggests that to avoid unintended consequences the Government should properly review how the Equality Act and PIDA operate alongside each other. It also suggested that section 43J of the Employment Rights Act should be “amended with more robust language”.123 Other witnesses also advocated clarifying whistleblowing legislation.124

87.We welcome the Government’s undertaking to add the EHRC to the list of prescribed persons for the purposes of employment protections for whistleblowers. We look forward to hearing whether it plans to add any other regulators or relevant authorities to the list, as we previously recommended. However, we also acknowledge the concerns raised by Protect about taking a piecemeal approach to amending whistleblowing legislation. Our concerns about the complexity of whistleblowing law and the lack of clarity about when the public interest test would be met in workplace discrimination cases have been amplified by the evidence we have heard in this inquiry. If employment lawyers, HR practitioners, whistleblowing experts and others are all telling us that they are not clear about the circumstances in which the public interest test is likely to be met—and if those laws are consequently not being tested—then greater clarity is needed. We consider that the legislation needs to be simplified and clarified.

88.The Government should review the operation of measures under the Public Interest Disclosure Act 1998 and the Employment Rights Act 1996. In particular, they should clarify the extent to which these measures can provide protection to those who wish to raise concerns with regulators and other relevant bodies or people about workplace discrimination or harassment. The review should consider: how best to simplify and clarify existing legislation; how whistleblowing law interacts with other relevant legislation such as the Equality Act; and whether the public interest test is workable.

Restrictions on assisting with police, court and other proceedings

89.We are particularly concerned about the use of NDAs to prevent signatories from providing evidence or otherwise assisting with police inquiries, court proceedings, regulatory investigations and hearings and other employees’ grievances or complaints. In our 2018 Report, we highlighted provisions in Zelda Perkins’ NDA relating to her ability to contribute to police investigations and court cases, which she summarised as being asked to use her “best endeavours to not disclose anything in a criminal case”.125 Professor Richard Moorhead has suggested that such clauses may amount to an attempt to pervert the course of justice, which is a criminal offence.126 He explained that if someone does something “that is likely to prevent or discourage somebody from engaging with the police” or to “inhibit or shape” the way that they engage with the criminal process, and if their intention was to have that effect, they would be committing this offence.127

90.We are also concerned about the use of warranty clauses, which require the signatory to warrant, for example, that they know of no reason why they would make a complaint to the police or another enforcement body. Protect has raised concerns that warranty clauses may be used “to circumvent the anti-gagging provisions in PIDA”.128 Professor Moorhead noted that some warranty clauses state that monies will automatically be repayable “if the individual exercises or attempts to exercise any of the statutory rights referred to in the agreement for Public Interest Disclosures” and explained that the use of such clauses could also constitute an attempt to pervert the course of justice in certain circumstances.129 Farore Law has called for clarity from the Crown Prosecution Service on the kind of conduct around the drafting and negotiation of an NDA that would amount to perversion of the course of justice and has suggested that the Solicitors Regulation Authority (SRA) should “specifically outlaw” poor practice.130

91.There is clearly potential for NDA agreements to be negotiated, drafted, and/or enforced in ways which may amount to perverting the course of justice. It would be helpful for the Crown Prosecution Service to recognise this. Further guidance from the CPS on the type of cases in which it might be appropriate to prosecute would also be helpful.

92.We were so concerned about unethical practice by lawyers and employers in drafting NDAs, that we recommended in our 2018 Report that the Government should “make it an offence for an employer or their professional adviser to propose a confidentiality clause designed or intended to prevent or limit the making of a protected disclosure or disclosure of a criminal offence.”131 The Government stated in its response that this “could be difficult to enforce” but said that it would “consider and consult on enforcement approaches”.132 In its recently published consultation, it stated:

[T]he existence of a confidentiality clause is not necessarily conclusive proof of underlying misconduct or criminal misconduct. It would be difficult for employers to know what content is and is not acceptable in any given situation that might arise in the future, and it would be extremely difficult to monitor the wording of confidentiality clauses to the extent that a criminal sanction could be effectively enforced.133

The consultation does not ask for contributors’ views on this proposal, but instead proposes that a confidentiality clause in a settlement agreement that does not meet new wording requirements—which are yet to be agreed—is “made void in its entirety” and asks whether contributors agree with that approach.134

93.We are disappointed that our recommendation that the Government “should make it an offence for an employer or their professional adviser to propose a confidentiality clause designed or intended to prevent or limit the making of a protected disclosure or disclosure of a criminal offence” is not being taken forward. The Government’s argument that this “could be difficult to enforce” is weak. Failure to tackle poor and unethical practice in this area leaves workers insufficiently protected and facilitates the covering up of discriminatory and, in some cases criminal, behaviour. The Government must show that it is taking this issue seriously. We therefore reiterate our recommendation that the Government should make it an offence for an employer or their professional adviser to propose a confidentiality clause designed or intended to prevent or limit the making of a protected disclosure or disclosure of a criminal offence.

Assisting with discrimination and harassment complaints by other employees

94.Several witnesses raised concerns about the use of NDAs in discrimination cases making it difficult for other victims of discrimination to gain supporting evidence from colleagues.135 One individual suggested that employers use NDAs “to control and silence victims of abuse”, especially in sex discrimination and harassment complaints, with the employee often being unaware that there have been other complaints.136 Law firm McAllister Olivarius made a similar point, stating:

The wide use of NDAs also makes it more difficult for future victims of a repeat workplace offender to bring a claim and prove it. Complainants usually have little documentary evidence to prove workplace harassment and so rely on the testimony of others, to establish patterns of behaviour. This can be difficult to obtain at the best of times, since employees are reluctant to speak against their employer, but it is virtually impossible to obtain where the witness, a previous victim, has signed an NDA.137

95.The NEU has raised concerns about NDAs being used to prevent its members from giving information or evidence relating to “sexual harassment allegations during future investigations where they are party to a further dispute or where they are called as a witness to another dispute”. It suggested that “there is no clear case law on whether a confidentiality clause in a settlement agreement or COT3 can prevent an employee from giving witness evidence” in quasi-judicial regulatory proceedings. It proposed that the law should be amended to ensure that NDAs cannot prevent teachers from giving evidence in such proceedings, adding that this was “particularly important in relation to repeat offenders who may continue to work in a school or college while a succession of targets of harassment leave under settlement agreements.”138 Farore Law said it was clear that “NDAs can and have been used to essentially shield repeat offenders by placing strict conditions on victims and therefore isolating them. (For instance, if clients are prevented from discussing matters amongst themselves, the risk of a collective response is minimised.)”139

96.While many of the witnesses we heard from had concerns about the chilling effect of NDAs, some argued that there was a need for employers to protect reputation.140 We note these arguments but we are concerned that NDAs should not be used to prevent victims of discrimination from sharing information to support other victims’ cases. We note that there are protections under the Equality Act—for example relating to pay secrecy and victimisation—that could be extended to prevent the use of NDAs in this way. Pay secrecy clauses are unenforceable where employees make pay disclosures for the purposes of establishing whether their pay or that of another person is affected by having a protected characteristic.141 This principle could be extended to make unenforceable any provision in an NDA seeking to restrict disclosures made for the purposes of establishing whether other employees have experienced discrimination or harassment. The measures on victimisation, under section 27, provide protection against retaliation for those who bring proceedings, give evidence or provide information, or take any other steps in connection with the Equality Act 2010. These could be further strengthened by making unenforceable any provision in an NDA that would remove the protections set out in section 27.

97.We are gravely concerned that NDAs are being used to silence victims of discrimination and can make it more difficult for other victims to obtain supporting evidence for similar complaints. The Government should legislate to ensure that NDAs cannot prevent signatories from sharing information that may be helpful to a potential discrimination or harassment complaint or claim by another employee. Such legislation could build on existing protections in the Equality Act 2010 regarding pay secrecy clauses and victimisation. And we restate that employers and their legal advisers should not be complicit in using NDAs to cover up allegations of unlawful behaviour and that it is in the public interest that the Government considers how to stop the use of NDAs to cover up allegations of unlawful discrimination whilst protecting the rights of victims to be able to move on with their lives.

Clawback clauses and fears of repercussion

98.A considerable fear and deterrent for some of the individuals we heard from was that of being pursued for the entire settlement amount they had received if their former employer thought that they had broken their NDA.142 One individual, who otherwise felt that their NDA had been broadly beneficial to them, described it as “a weight that hangs over you for the rest of your life.” They also expressed the unfairness they felt at the prospect that they could be pursued for damages by their perpetrator if their NDA was breached, stating:

If I was found to have breached my confidentiality agreement, even in this room, I would have to give back every penny, and also damages and everything that comes from that, which I find difficult, because ultimately I am the victim here. If it did come out somewhere, the person who was the perpetrator should just live with the fact that they have done what they have done. It should not be on me to hold their secret. If it does get out into the public, I am the one who has to repay every penny. To be honest, that is unreasonable because, if you take into account tax and things like that, I would be paying back more money than I received in the first place, not to mention the fact that you use that settlement to move forward with your life.143

Another individual highlighted the potentially “onerous” and “one-sided” nature of clawback clauses, in which “remedies for a breach by an employee are defined in detail, while the remedies for a breach by the employer are not”, leaving the employee “in a much more difficult position should they wish to pursue a breach by the employer.”144

99.Legal experts have also raised concerns about the use of draconian clawback clauses.145 Kiran Daurka described as “potentially unenforceable” clawback clauses that would require the individual to pay back the full amount plus the employer’s costs if they sued the individual for breach of the agreement. However, she noted that the deterrent effect of such clauses still held because of the difficulties of testing their enforceability in court, stating:

It is a massive deterrent to individuals. It has a real impact, that particular clause, more than anything, even though potentially it is not enforceable. You can say to your client, “I am not sure if it is enforceable. It has not really been tested and you do not want to be the one testing it”. You have tried to have it removed, but it is standard. It is not going to come out of there. I think the clawback is a real silencer.146

100.Individuals also told us that knowing that a clause may be unenforceable does not necessarily take them any further forward. One witness observed that “reassurances that NDAs are unenforceable [ … ] give very little comfort in the real world.”147 Another highlighted the barriers to fighting such a case in the courts, particularly against a well-resourced employer, stating:

I wouldn’t want to go to a court of law about this [ … ] I think the bigger problem is that I would not necessarily have the legal means to represent myself in that scenario, and the other person has unlimited means, or at least relatively unlimited means.

They suggested that clawback provisions for breaching a non-disclosure agreement should be limited so that individuals should not be faced with potentially having to pay back more than they received, stating:

[R]ather than repaying every penny of everything just because someone finds out about the existence of your agreement, what about if it was just limiting the actual damage suffered to the perpetrator? If there is no damage, then it doesn’t really matter.148

101.As we have outlined above, the Government’s recently published consultation suggests that its main approach to enforcing the use of confidentiality agreements would be that any confidentiality clause in a settlement agreement that does not meet new wording requirements would be “made void in its entirety”. It suggests that “this would mean that an employee who breaches the confidentiality provisions of a settlement agreement could not be sued for doing so if the confidentiality provision was not drafted appropriately” and that this “should encourage employers to ensure they draft confidentiality clauses correctly [ … ] If they do not, they will be taking the risk that the reason behind the dispute is made public with no recourse for the employer”.149

102.We are deeply disappointed by the Government’s suggestion that simply making NDA clauses unenforceable if they do not meet wording requirements will be sufficient encouragement to ensure that employers draft clauses correctly. We have highlighted the evidence that unenforceable clauses are widely used to deter disclosure of discrimination and harassment. Currently there is little risk to employers and legal practitioners in using such clauses, and considerable risk to the individual in challenging them. Other enforcement measures will be required to bring about a change in practice. We discuss enforcement in more detail in the next chapter. We restate our previous recommendation that the use of provisions in confidentiality agreements that can reasonably be regarded as potentially unenforceable should be clearly understood to be a professional disciplinary offence for lawyers advising on such agreements.

Access to legal advice

103.We have already highlighted the importance of good legal advice in bringing a discrimination claim to tribunal. This is no less important when a settlement agreement is being drafted, considered and signed. Individuals who have legal representation will have a greater opportunity to negotiate the terms of the agreement than those who do not. However, for a settlement agreement to be binding, the employee must receive a minimum level of independent legal advice on its terms and effects.150 Some employers therefore make a contribution of around £200-£500 towards the employee’s legal costs, but this is not a requirement. Often, this advice will cover only the minimum required to achieve this legal sign-off of the agreement and will not include advice on whether the agreement is a good deal for the employee.151 The Employment Lawyers Association told us that a £500 employer contribution “will rarely be sufficient to cover the type of complex advice that is typically required where there has been sexual harassment or other types of discrimination.”152 The Government noted in its recent consultation that this advice “might not always cover the extent to which a worker is still able to discuss their experience with anyone or the specific legal disclosure rights they maintain.”153 If an employee is unhappy with the terms of the agreement, they are faced with the choice of signing an agreement they are unhappy with, picking up the cost of negotiating more favourable terms, or walking away with no settlement, and potentially being left with the bill for the legal advice that they had already received as the employer contribution may not be paid if the agreement is not signed.154

104.The Government has proposed in its consultation to extend the requirement for legal advice “to specify that, for a settlement agreement to be valid, the independent advice a worker receives must cover the nature and limitations of any confidentiality clause in the settlement agreement, and the disclosures that a worker is still able to make.”155 However, this does not extend to providing advice on whether the agreement appears to be reasonable and fair in the circumstances, or on the enforceability of the NDA.

105.Employees without legal representation may be severely disadvantaged in the lead-up to an NDA being signed, as they have very little opportunity to negotiate the terms of the proposed settlement. Minimum requirements for legal advice on settlement agreements are insufficient to ensure that individuals are properly advised on confidentiality and similar clauses. We are concerned that this leaves them vulnerable and particularly at risk of feeling unable to challenge NDA terms that they are uneasy about. It is in the public interest to address this imbalance of power and ensure that individuals are not left feeling that they have no choice but to accept unfair NDAs.

106.We welcome the Government’s proposal to require that the independent advice a worker receives on a settlement agreement must cover the nature and limitations of any confidentiality clause in the agreement, and the disclosures that a worker is still able to make. This advice should also cover any concerns about the reasonableness and enforceability of the terms. However, the cost of this additional requirement for legal advice cannot be allowed to fall on the employee.

107.The Government should require employers to make a financial contribution sufficient to cover the costs of the worker’s legal advice on any settlement agreement proposed by the employer. This advice should cover, as a minimum, the content and effect of any confidentiality, non-derogatory or similar clauses, and any concerns about the reasonableness or enforceability of those clauses. Where the worker wishes to negotiate the terms of those clauses, further contributions should also be payable by the employer to cover the costs of legal advice and representation for those negotiations. These contributions should be payable regardless of whether the employee signs the agreement.

Conclusion and recommendations on the drafting of NDAs

108.The evidence we have highlighted show some of the ways in which clauses can be drafted to silence victims of harassment and discrimination. We have previously recommended the use of standard, plain English confidentiality clauses in settlement agreements, and during this inquiry employment lawyers, employers and others have broadly agreed that this would be a sensible approach. Employment lawyer Emma Webster told us that the use of standard settlement agreements and clauses “tweaked to fit the individual circumstances” would “ reduce legal fees massively” by reducing the amount of time needed to go through agreements.156 Ben Wilmott told us that the response that the CIPD had got after consulting members and employment lawyers was that “some greater standardisation around the wording of confidentiality clauses would be helpful.”157 However, Jane Mann was opposed to a standard template “because there are so many circumstances in which employment may be coming to an end and agreements are being negotiated and you need to allow the parties to reach their own agreement.”158

109.In its recently launched consultation, the Government said it was “concerned that requiring a single form of words in all written employment contracts and settlement agreements could become quickly out of date as other protections develop over time” and that it was “highly unusual for legislation to require such specific wording to be included.”159

110.There is a clear need for action to ensure that confidentiality, non-derogatory and other clauses cannot be drafted in such a way that they lack clarity about what the effect of the clauses are and, importantly, about the types of disclosure that they cannot prevent. Clauses must be suitably specific, without being overly stringent, and their limits should be clearly set out. We are not convinced by the Government’s arguments against the need for standard clauses. We have found wide support for this idea and believe it has the potential to bring an immediate step change in lawyer and employer practice in this area.

111.We welcome the Government’s consultation on the use of confidentiality clauses. However, we note that other types of clause can also have a gagging or chilling effect. We recommend that the Government should legislate, within the next two years, to ensure that any clause in a settlement agreement that has the effect of controlling what information an individual can share with other people, organisations or bodies should:

112.We further recommend that the Government should legislate, within the next two years, to require the use of standard, plain English, confidentiality, non-derogatory and similar clauses where these are used in settlement agreements, with additional guidance on suitable forms of wording to ensure that they are clear and specific. Standard clauses on the damages that can be reclaimed for the breach of confidentiality, non-derogatory and similar clauses should also be included. Non-standard clauses of this type should be legally unenforceable unless the relevant party can show a clear need for alternative clauses. This reasoning should be provided with the draft agreement to enable those giving legal advice on the effect of such clauses to advise on their propriety. The direction of travel of the Government should be towards assessing in the public interest how to stop the use of NDAs where there are allegations of unlawful discrimination whilst still protecting the rights of victims to move on with their lives.

91 Q135 [Julie Morris, Kiran Daurka]; Clifford Chance LLP (NDA0010); Gowling WLG (NDA0012); Brahams Dutt Badrick French LLP (NDA0016);

92 Women and Equalities Committee, Fifth Report of Session 2017–19, Sexual harassment in the workplace, HC725, paras 113–122; Oral evidence taken on 28 March 2018, 2018, Q52

93 Oral evidence taken on 28 March 2018, Qq172–173

94 Oral evidence taken on 28 March 2018, Q174

96 TUC (NDA0024); CIPD (NDA0025); National Education Union (NDA0049); McAllister Olivarius (NDA0056); Centre for Women’s Justice (NDA0065); Q334 [Ben Wilmott]

97 Centre for Women’s Justice (NDA0065)

99 Thompsons Solicitors Scotland (NDA0015); A member of the public (NDA0014); Witnesses in private

100 A member of the public (NDA0014)

101 Gowling WLG (NDA0012); Employment Lawyers Association (NDA0017)

102 Employment Lawyers Association (NDA0017)

103 Witnesses in private

106 Q22 [Emma Webster]; Clifford Chance LLP (NDA0010); Gowling WLG (NDA0012); Slater and Gordon (NDA0053)

109 Under the Public Interest Disclosure Act 1998 (PIDA)

110 Women and Equalities Committee, Fifth Report of Session 2017–19, Sexual harassment in the workplace, HC725, para 118

111 Protect (NDA0038)

112 Q17 and Q58 [Emma Webster]; Q106 [Kiran Daurka]; Qq160–161 [Jane Mann]; Qq356–358 [Sue Coe, Debbie Alder, Ben Wilmott, Jayne Phillips]; Q409 [Tracy Vegro, Professor Moorhead]

116 Protect (NDA0038)

117 Protect (NDA0038)

118 Qq 627, 645 and 667

120 Women and Equalities Committee, Fifth Report of Session 2017–19, Sexual harassment in the workplace, HC725, paras 131–132

121 Women and Equalities Committee, Seventh Special Report of Session 2017–19, Sexual harassment in the workplace: Government Response to the Committee’s Fifth Report of Session 2017–19, HC1801

123 Protect (NDA0038)

124 Q358 [Jayne Phillips, Sue Coe]; Q409 [Professor Moorhead]

125 Oral evidence taken on 28 March 2018, Q53

126 Q372; Women and Equalities Committee, Fifth Report of Session 2017–19, Sexual harassment in the workplace, HC725, para 124

128 Protect (NDA0038)

129 Professor Richard Moorhead (NDA0069)

130 Farore Law (NDA0020)

131 Women and Equalities Committee, Fifth Report of Session 2017–19, Sexual harassment in the workplace, HC725, para 133

132 Women and Equalities Committee, Seventh Special Report of Session 2017–19, Sexual harassment in the workplace: Government Response to the Committee’s Fifth Report of Session 2017–19, HC1801

134 As above

135 A member of the public (NDA0006); Farore Law (NDA0020); National Education Union (NDA0049); McAllister Olivarius (NDA0056); BBC Women (NDA0057); A member of the public (NDA0086)

136 A member of the public (NDA0006)

137 McAllister Olivarius (NDA0056)

138 National Education Union (NDA0049)

139 Farore Law (NDA0020)

140 Qq93, 100 and 143 [Jane Mann]; The Law Society of England and Wales (NDA0008)

141 Section 77, Equality Act 2010

142 Witnesses in private; Evidence given in confidence

144 A member of the public (NDA0046)

145 Q137 [Kiran Daurka], Oral evidence: Sexual Harassment in the Workplace, Wednesday 28 March 2018, Q186 [Suzanne McKie]; Professor Richard Moorhead (NDA0069)

147 A member of the public (NDA0046)

150 Section 203(3) of the Employment Rights Act 1996 requires that a worker receive advice from an independent adviser (such as a lawyer or a trade union official) as to the terms and effect of the agreement for the agreement to be valid.

151 Q42[Emma Webster]; Q151 [Julie Morris]; Gowling WLG (NDA0012)

152 Employment Lawyers Association (NDA0017)

154 Slater and Gordon (NDA0053)

Published: 11 June 2019