The government has rejected a recommendation from an influential group of MPs to ban the use of non-disclosure agreements (NDAs) in sexual harassment cases.
Earlier this year, a report published following the Treasury committee’s Sexism in the City inquiry recommended bringing forward legislation that would ban the use of NDAs to silence victims of harassment, as well as a strengthening of whistleblowing protections. It also advocated more measures to improve equality for women at work, including expanding the gender pay gap reporting requirements to more organisations and a ban on prospective employers asking for salary history.
However, in its response published this week, the Treasury rejected the majority of MPs’ recommendations.
Sexual harassment and NDAs
Sexual harassment in City firms still ‘shockingly prevalent’
Labour to target sexual harassment of interns and volunteers
It said the government shared the MPs’ concerns that NDAs are being used to intimidate victims of discrimination and harassment into silence, but said it was already taking steps to clarify where they can and cannot be used, including introducing legislation that will specify that they cannot be legally enforced if they prevent the disclosure of criminal conduct.
It said there was a legitimate place for confidentiality clauses that protect commercially sensitive information and there were already legal limits to how NDAs can be used.
In response to the recommendation that whistleblowing legislation should be strengthened to better protect whistleblowers in sexual harassment cases, the Treasury said it had continued to make improvements to the whistleblowing framework and was currently undertaking a review.
Nick Hawkins, employment lawyer at law firm Knights, said it was the “right decision” to reject a ban on NDAs.
“While NDAs understandably have a bad reputation (the Harvey Weinstein matter most notably) and there will inevitably be examples where they have been used improperly, an outright ban would not necessarily assist in promoting a workplace free of discrimination and harassment,” he said.
“Indeed, it is very often the victims in discrimination and harassment cases who are as keen on maintaining confidentiality as much as the employer. By allowing the use of NDAs, it affords individuals the opportunity to enter into a contract with their employer under which they can agree compensation in return for their confidence (very often alongside a waiver of claims as well), and thereby drawing a line under the matter. For individuals, this is very often the preferred outcome.”
Chair of the Treasury committee Dame Harriett Baldwin said: “Backed up by a huge amount of compelling evidence, our committee set out a number of recommendations which would create a fairer, safer environment for talented women trying to get on in the UK’s world-leading financial services sector.
“Steps like banning NDAs in all harassment cases and removing biases which benefit men in salary negotiations are straightforward, logical measures which would have a huge impact on people’s lives. I would continue to urge the government to increase the pace of progress and competitiveness in this important sector.”
Gender pay gap reporting
Steps like banning NDAs in all harassment cases and removing biases which benefit men in salary negotiations are straightforward, logical measures which would have a huge impact on people’s lives.” – Dame Harriett Baldwin, Treasury Committee chair
The Treasury also rejected the recommendation that the gender pay gap reporting threshold should be reduced from 250 to 50 employees, and that employers with wide pay gaps should be required to publish an action plan, as it felt it was “too soon” to make changes to the requirements.
Its response notes: “Reporting on such a small number of employees is inadvisable as individuals may become identifiable in the figures. Furthermore, the figures become exceptionally sensitive to individual staff moves, making them prone to large fluctuations and less reliable as the basis of trend-level data.
“While we have made efforts to reduce the burden of reporting for organisations, it is still an additional task which, for a smaller organisation, can require significant resource. Given that HR and pay and reward functions in these organisations are likely to be limited, we believe their time is best spent embedding interventions which have proven to be effective
at closing the gap.”
Parental leave and salary bands
It also rejected the suggestion that the government and regulators should encourage firms to consider equalising their parental leave offers for men and women, as it felt imposing a “one-size-fits-all” approach would prevent employers from reaching “sensible conclusions”, and declined to take forward the recommendation to mandate the inclusion of salary bands on job adverts.
The Treasury said: “We do not believe that moving directly to legislation is appropriate at this time as it would not give organisations sufficient time to work through historic pay arrangements in a way that is fair for all staff, and increases the risk of a backlash to what should be a positive measure… We know that many employers will be contending with historic pay decisions, may not have agreed pay scales, and could have legitimate reasons why they do not include pay information on job adverts.”
It also declined to expand the scope of the Women in Finance Charter to cover female representation at different levels of seniority, stating this would require firms to submit more data and would potentially make it less attractive to new signatories.
Professor Geeta Nargund, chair of gender parity consultancy The Pipeline, said: “The fact that the Treasury will not be enacting many of the Sexism in the City report’s recommendations – including the banning of NDAs in financial services, and reducing the company size for the gender pay gap reporting threshold – is disappointing. For too long, businesses in the financial services sector have overlooked the unfair and deplorable challenges women continue to experience throughout their careers. More needs to be done to ensure firms root out toxic practices once and for all – and regulatory requirements will pay a core part of this.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
“Ultimately, if firms don’t tackle sexism in the City and beyond, and implement structures to truly support their female talent, they will be the ones that lose out.”
Latest HR job opportunities on Personnel Today
Browse more human resources jobs
