Are non-disclosure agreements or non-derogation clauses appropriate to use in the settlement of sexual harassment claims?
In the wake of the allegations against high profile individuals such as Harvey Weinstein and Sir Philip Green, in addition to the recent Presidents Club dinner scandal, there is a question as to whether non-disclosure agreements (‘NDAs’) and confidentiality clauses are appropriate to use in the settlement of sexual harassment claims. Similarly, non-derogation clauses (which require parties not to disparage each other) could also potentially pose problems within this context.
Legislation to deter inappropriate use of confidentiality clauses
The Government has recognised that clauses requiring secrecy could be problematic. A consultation was therefore launched in early 2019 that focused on preventing misuse of confidentiality clauses in situations involving workplace harassment. On 21 July 2019, the Government committed to passing legislation to deter the inappropriate use of confidentiality clauses. However, there is no known timeframe in relation to these reforms.
Some of the proposed reforms are:
- ensuring confidentiality provisions do not prevent disclosure to certain professionals (e.g. the police, regulated health care professionals, or legal professionals);
- having clear and specific language in confidentiality clauses including explanations as to relevant exclusions (e.g. whistleblowing); and
- requiring mandatory independent legal advice received on settlement agreements to cover the limitations of any confidentiality clause.
Benefits of confidentiality clauses for both parties
This approach signals an understanding that practically speaking it is unlikely that employers and their solicitors will want to settle claims without confidentiality clauses. There are benefits associated with using confidentiality clauses for both parties, which can include that they:
- allow employees to move on;
- ensure sensitive information remains private, which has benefits for the wider workforce;
- allow allegations to be closed if they are unproven.
However, the desire for confidentiality clauses needs to be balanced against the benefits of allowing employees to discuss significant matters with professional advisors (provided those advisors also have duties of confidentiality they are required to observe) and allowing the reporting of crimes.
Solicitors Regulation Authority’s advice of the use of NDAs
The Solicitors Regulation Authority (SRA), has updated its advice on the use of NDAs in which it confirms they should not be used where reporting conduct to law enforcement agencies or other regulators is banned (where that conduct would otherwise be reportable), or use NDAs as a means of improperly threatening litigation which is known to be unenforceable.
Already there are a number of organisations which have decided not to use NDAs in sexual misconduct cases. The BBC, the House of Commons, the NHS, and DWP have all made this decision.
With continuing Brexit discussions, legislative changes are likely to be put on hold for the foreseeable future. Notwithstanding, given the current climate of willingness to make allegations public in the wake of the #metoo movement, employers who are concerned about their public image will also need to consider the repercussions of denying people the ability to speak up.
If you would like to discuss the use of non-disclosure agreements in sexual harassment claims within the workplace please contact Claire Merritt.
(Co-written by Aleksandra Golat Solicitor (admitted in Australia) and Claire Merritt (Partner)