As specialist employment lawyers, it is fair to say we have seen our fair share of truly shocking sexual harassment cases land on our desks.

There is much case law on sexual harassment and sex discrimination and one of the most notable sexual harassment cases which springs to mind is the case of Insitu Cleaning Co Ltd and another v Heads (1995). In this case, the son of the company’s directors and also an employee said to Ms. Heads on entering the room ‘Hiya, big tits’.

The Employment Tribunal upheld Ms Heads complaint of sex discrimination and went on to conclude that the one incident was sufficiently serious to amount to sexual harassment. Not only did this have serious financial implications for the company, but it also suffered major reputational damage.

As with all types of employment tribunal claims, the majority of sexual harassment claims will settle before reaching a final tribunal hearing. As a result, confidentiality clauses and NDAs have come under increased scrutiny due to concerns that they have been used to deter victims of harassment from speaking out. The question is, if this had happen today, would the company legally be able to silence Ms Heads through the use of a Settlement Agreement?

In recent years, sexual harassment has been quite widely reported. It largely started in 2018 with allegations surfacing around Harvey Weinstein.

Following this, many women began to come out to highlight their own experiences of sexual harassment in the workplace. This became a wide spread phenomenon on social media, particularly through the use of #MeToo.

In this new post #MeToo era, it has never been more important to give serious attention to such matters when raised. Sexual harassment must not be considered in a vacuum, but in light of the newly established workplace culture which recognises the blight of sexual discriminatory treatment in the workplace.

What is a Non-Disclosure Agreement?

A NDA is a legally binding agreement whereby the parties signing the agreement agree that sensitive information will not be made available to others. NDAs are traditionally used in commercial transactions to protect trade secrets and commercially sensitive information. In an employment context, employers rarely require employees to enter into NDAs, rather confidentiality clauses are often included in employment contracts and settlement agreements.

What are their limitations?

It is important to note that the following NDAs or confidentiality clauses are not enforceable:

  1.  Those which seek to prevent an individual from making a protected disclosure (ie whistleblowing), as defined by section 43A of the Employment Rights Act 1996 (ERA 1996), are void.
  2. Section 142 of the Equality Act 2010 prohibits a contractual clause if it “constitutes, promotes or provides for” discriminatory treatment under the Act. However, while section 142 has been used to obtain a declaration that a clause in an employment contract is unenforceable, its scope in the context of settlement agreement confidentiality clauses or NDAs is uncertain.
  3. Those which seek to prevent, impede or deter, a person from:

a. reporting misconduct to a relevant regulatory body;

b. reporting an offence to a law enforcement agency; and

c. co-operating with a criminal investigation or prosecution.

Therefore, whilst a settlement agreement may prevent an employee from bringing a claim in the Employment Tribunal and include certain confidentiality provisions, a blanket confidentiality provision or a provision in the agreement which prevents the employee from blowing the whistle, reporting the misconduct to a regulatory body, or reporting the offence or co-operating with an investigation or prosecution is void. It is important to ensure the appropriate carve outs are in place.

So whilst NDAs and confidentiality clauses are perfectly lawful, consideration must be given as to whether there is an impact on individuals signing those settlement agreements and whether they seek to prevent individuals from being able to speak out in circumstances where they are allowed to speak out.

Is a confidentiality clause or NDA required?

Considering the above, while it is standard practice for settlement agreements to include confidentiality provisions, where sexual harassment has been alleged, it is worth considering whether one is actually required.

Some employers have begun to take the stance that open disclosure of sexual harassment issues and how they are dealt with is better for their reputation and employee relations and supports their zero-tolerance message.

For example:

  • The Department for Work and Pensions has not used confidentiality provisions or NDAs in its settlement agreements since 2015.
  • The House of Commons has not used confidentiality provisions or NDAs in its settlement agreements since July 2016.
  •  The BBC chose not to use confidentiality clauses in any agreement to settle an equal pay or pay-related discrimination claim in the three years to January 2019. BBC policy is only to use confidentiality clauses to protect trade secrets, not to protect the terms or existence of a settlement agreement, or the circumstances leading up to it. Any exceptions need to be justified and approved at a senior level.
  •  Dr Emma Chapman refused to settle her claim against University College London (UCL) with an NDA. After the settlement, which did not include an NDA and which also lifted the duty of confidentiality that UCL had earlier imposed on Dr Chapman over its handling of her sexual harassment complaint, UCL decided to ban the use of NDAs in sexual misconduct, harassment or bullying cases across the board.
  •  In April 2019, former Health Secretary Matt Hancock committed to end the use of NDAs in the NHS.
  •  In April 2019, a city worker received a settlement of £270,000 against IFM Investors without being required to enter into a confidentiality agreement prohibiting her from discussing the sexual harassment she had suffered.
  • In July 2021 the Home Office published a policy paper, Tackling violence against women and girls strategy, as part of the government’s plans to support victims and survivors. Within this paper it was confirmed that the Department for Education will be reviewing options to limit the use of NDAs in cases of sexual harassment in higher education.

Whilst there may be a desire to settle sexual discrimination claims, care needs to be taken in the extent any such settlement seeks to prevent the individual from reporting it further.