The UK Government yesterday (21st July 2019) announced its plan to reform legislation surrounding non-disclosure agreements (NDAs). This reform will stop NDAs being used to prohibit individuals from coming forward to professionals such as police, doctors, lawyers or social workers regarding sexual harassment, racial discrimination and assault in the office.
Currently, NDAs cannot be used to stop people from ‘whistleblowing’, reporting wrongdoing in the interest of public health. However, misconceptions have prevented employees from ‘whistleblowing’ and so the NDAs being reformed makes it clear that they cannot be used to prevent information of bad practice taking place at work.
This will ideally, put an end to the misuse of NDAs.
Under new legislation, NDAs would be reformed to:
- Ensure that the clause, and its limitations, are written in plain English so individuals can understand exactly what they are signing and their rights in relation to the contract.
- Provide individuals with independent legal advice which would outline the limitations of the NDA and make it clear that, regardless of this contract, information can still be disclosed to police, regulated health and care professions or legal professionals.
- Include new enforcement measures that would make NDAs which do not comply with legal requirements legally void.
These reforms are in response to some employers using NDAs in order to conceal acts of sexual harassment or racism.
According to the Daily Telegraph, in October 2018, Philip Green, the chairman of Topshop, used NDAs on five different occasions “to silence and pay off his alleged victims with “substantial sums” in response to allegations of “sexual harassment and racial abuse”.
Kelly Tolhurst, business minister who announced a consultation on the proposed changes to the NDAs said:
The new legislation will stamp out misuse, tackle unacceptable workplace cultures, protect individuals and create a level playing field for businesses that comply with the law.
Ben Willmott, head of public policy for the CIPD, welcomed the reforms but suggested there was further work to be done. He said:
We welcome the Government’s plans, particularly the reform to make clear the limitations of a confidentiality clause so individuals signing them fully understand their rights.
However, changes to the law alone will not help to prevent harassment and discrimination from occurring in the first place. There needs to be far greater recognition in some organisations that their culture has to change. This change starts with leaders and managers role-modelling the right behaviours and a greater focus on boosting diversity and inclusion.
Remziye Ozcan, employment lawyer at Slater and Gordon, who provided evidence to the committee regarding the proposal, speaks of the financial limitations regarding the reform. She said:
The response highlights the introduction of new legislation to require lawyers to advise on the limitations of an NDA in order for a settlement agreement to be valid, there should also be guidance on how much money an employer should contribute towards the compulsory legal advice, for the employee.
Currently, a contribution is not mandatory so some employers offer no contribution or minimal funding. This would add further protection for the employee and make sure they are not placed in a situation where they cannot cover the cost of any recommended changes and feel they have to agree to the proposed clauses. This would help protect the employee further and make additional steps to balancing out the power between employer and employee, when dealing with NDAs.
Sue Andrews, HR & business consultant at KIS Finance and Chartered Fellow of the CIPD, warns against this reform going too far by banning NDAs. She said:
The intended reforms to NDAs are a welcome introduction. However, if legislation goes further and bans NDAs altogether in cases of discrimination, there will be little incentive for employers to settle matters outside of court, leaving staff trapped in roles where they can’t afford to leave without the cushion of a Settlement Agreement. Whilst they should never be used to protect the guilty, the total removal of NDAs could actually be to the detriment of the victims in some circumstances.