Consultation begins on non-disclosure agreements

In recent times the use of non-disclosure agreements (NDAs) at work has come under the microscope with commentators arguing that the existence of these clauses in staff contracts prevents victims of workplace harassment from taking punitive action against their employers.

Therefore, it is perhaps not surprising that a public consultation has been opened in the hope of gathering opinions from workers, employers and legal advisors who have experience with NDAs. The consultation will run until 29th April and asks a range of questions on the scope of NDAs and the issues that can be created by them.

The government have specifically proposed: clarifying in law that NDAs and confidentiality clauses cannot prevent people from speaking to the police and reporting a crime; requiring a clear written description of rights before staff are able to sign any NDA or confidentiality clause and extending the law so that staff receive independent legal advice before signing any settlement agreements which prevent future disclosures.

Speaking on the matter Rebecca Hilsenrath, Chief Executive at the Equality of Human Rights Commission stated “We really welcome the measures set out today by the government which will help to empower victims and ensure no one is forced to sign a gagging clause against their will”.
Following the end of the consultation, the government will issue their official response on the matter which could lead to certain employers having to review and amend staff contracts. Recent developments including Phillip Green’s alleged use of gagging clauses to cover up acts of misconduct in his organisation, and last year’s President’s Club Scandal, have shown the potential issues that can occur.

Whilst some employers may wish to use NDAs and confidentiality clauses to protect intellectual property from falling into the hands of competitors when staff leave for pastures new, other restrictions placed on employees may no longer be lawful if new laws are introduced.
There have been several instances where workplace harassment and abuse have been perpetuated by the existence of NDAs, with senior managers, and third parties in the case of the President’s Club Dinner, taking advantage of the fact that staff were unable to speak out about their treatment.
Employers should also think about the image of their company they are presenting when asking all new staff to sign a NDA as part of their contract. Whilst this may be more appropriate for those in senior positions, with greater access to confidential information, consider how it may make new starters in more junior positions apprehensive about the culture of the company they are about to walk into.

Whilst employers who incorporate NDAs and confidentiality clauses as standard will have to wait and see the outcome of the ongoing consultation, it may be wise to spend this time considering whether they are truly necessary, especially if they want to show a commitment to improving employee relations and protecting their staff from harm in the workplace.

Suggested Resources