Non-Disclosure Agreements in Scotland

Non-Disclosure Agreements (NDAs) were originally used to keep commercial business information and trade secrets confidential.

In more recent years, the use of NDAs to try to silence allegations of abuse and harassment has generated significant publicity. There is no sign of that controversy abating.

Earlier this month, the Arbitration service Acas published guidance to firms and workers about NDAs, including how to avoid misuse. The point is made that NDAs cannot prevent an individual from reporting wrongdoing in the public interest, known as making a protected disclosure or ‘whistleblowing’. This could include disclosing a criminal offence, dangers to health and safety, or failure to comply with a legal obligation. NDAs also cannot prevent an individual from taking a matter to an employment tribunal. The advice given by Acas to employees is to consult a trade union or lawyer when considering signing an NDA.

Late last month, two independent audit reports on safeguarding within religious institutions were published in Scotland. These  reports were commissioned by an Independent Review Group, chaired by Baroness Liddell, which is monitoring progress in response to the 2015 McLellan Report on safeguarding in the Catholic Church.  One of those reports records that “Many contributors spoke or wrote about secrecy and a lack of transparency, and this was also reflected in some of the papers and documents in the case files. The auditors saw one example of the use of non-disclosure agreements requiring individuals to deny both the details of a situation and that there was a ‘situation’ in the first place.” The report then notes that the institution now understands why NDAs are no longer to be used but that further efforts could be made to resolve situations already covered by them.

Last summer too, the UK Business Minister announced UK government plans for legislation to prohibit NDAs being used to prevent individuals disclosing information to the police, regulated health and care professionals or legal professionals. Legislation in this regard was not specifically mentioned in the 19 December 2019 Queen’s Speech however following the election of the current UK government. Under the current devolution settlement, employment is one of the matters reserved to the Westminster parliament. Given the use of NDAs in an employment context, any legislation in this area on employment is likely to come from Westminster on a UK-wide basis. However, whilst there are no current Scottish Government proposals to legislate on the use of NDAs in Scotland, since civil law is a devolved matter in Scotland, legislation on NDAs from the Scottish Parliament, outwith the field of employment, cannot be discounted at some point.

Written by Fiona McEwan, Associate and Frank Hughes, Partner

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