Government called to re-set parameters for NDAs

As a result of the recent inquiry into sexual harassment in the House of Commons, which urged the Government to review the use of non-disclosure agreements (NDAs) in sexual harassment claims, the Women and Equalities Committee was tasked with carrying out an inquiry to look at the widespread use of NDAs in cases where any form of harassment or other discrimination is alleged.

On 11 June, 2019 the Women and Equalities Committee published its report on the use of NDA’s in discrimination and harassment cases.

The report states in the clearest terms that allegations of unlawful discrimination and harassment are regularly covered up by employers by using NDAs but more worryingly goes on to advise that often these allegations are not investigated properly or at all by employers.

The key recommendations made by the Committee in its report are that the Government should:

  • ensure that NDAs cannot prevent legitimate discussion of allegations of unlawful discrimination or harassment, and 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;
  • require standard, plain English confidentiality, non-derogatory and similar clauses where these are used in settlement agreements, and ensure that such clauses are suitably specific about what information can and cannot be shared and with whom;
  • strengthen corporate governance requirements to require employers to meet their responsibilities to protect those they employ from discrimination and harassment;
  • require named senior managers at board level or similar to oversee anti-discrimination and harassment policies and procedures and the use of NDAs in discrimination and harassment cases;
  • ensure tribunals work on the assumption that an employer will be ordered to pick up the legal costs of the successful employee, a process they call “one way costs shifting.”

The Committee has also been vocal in calling on the Government to:

  • place a mandatory duty on employers to protect workers from harassment and victimisation in the workplace; and
  • urgently improve the remedies that can be awarded by employment tribunals as well as the costs regime to reduce disincentives to taking a case forward. Tribunals should be able to award punitive damages, and awards for the non-financial impact of discrimination should be increased significantly.

In its conclusion the Committee challenges us all to think carefully before requesting confidentiality provisions in a settlement agreement, to ask whether such provisions are necessary at all and to be clear that an individual should never feel forced into signing an NDA.

However, the Committee was encouraged to see that some employers, particularly those in the public sector are now moving away from use of NDAs when they settle discrimination cases. The Committee is hopeful that public sector employers will lead the way on abandoning the use of NDAs.

The Committee called out the cover-up culture that currently exists among employers and their lawyers who use NDAs to conceal allegations of unlawful behaviour and they have challenged the Government to take immediate action which will, they say, go some way to redress the imbalance of power between employees and employers.

The other significant effect of NDA’s is that victims are reluctant to report their experiences as they are concerned that their allegations will not be taken seriously, investigated properly and they run the risk of losing their job.

Victims told the Committee that having to sign a NDA affected their ability to work in their sector and to seek employment elsewhere. As a result of this they suffered financial loss because they had to leave their job or move to a different lower paid position.

Many of the readers of the Blog will be aware that NDAs are often discussed in the context of abuse claims and in this regard it is worth noting that in the course of its inquiry the Committee was greatly struck by the detrimental effects that NDAs have on the people who are asked to sign them, in particular the emotional and psychological damage NDAs can cause.

moohan_sharonv2 Sharon Moohan, Partner, BLM

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