New laws on misuse of NDAs in the workplace

"We will not tolerate the use of NDAs to silence and intimidate victims from speaking out" – business minister Kelly Tolhurst.
Dinendra Haria/LNP/Shutterstock

The government has announced legislation to address the misuse of non-disclosure agreements (NDAs) in the workplace – including clauses designed to cover up sexual harassment, racial discrimination and assault.

Business minister Kelly Tolhurst announced plans yesterday for new legislation that will prohibit confidentiality clauses being used to prevent individuals from disclosing information to the police, regulated health workers or professionals, such as a doctor, lawyer, or social worker.

Sexual harassment is illegal, yet individuals are still reporting abhorrent ordeals in the workplace. Today’s announcement will work alongside the consultation I launched earlier this month setting out further protections for workers against this type of vile behaviour” – Penny Mordaunt, women and equalities minister

“We will not tolerate the use of NDAs to silence and intimidate victims to prevent them speaking out”, said Tolhurst.

NDAs can be used by employers for a number of legitimate reasons but in some cases they are being abused and people who sign them are not made aware of their rights. They serve a legitimate purpose in the workplace in protecting trade secrets or other confidential information such as intellectual property or information about a company’s clients.

NDAs have come under spotlight in recent years after numerous high-profile incidents emerged where employers “gagged” their staff or former staff, stopping them revealing incidents of bullying and sexual harassment.

The updated legislation follows March’s response to a consultation and will:

  • ensure employers make clear the limitations of a confidentiality clause, in plain English, within a settlement agreement and in a written statement for an employee, so individuals signing them fully understand what they are signing and their rights;
  • extend current legislation so that individuals signing NDAs will get independent legal advice on the limitations of a confidentiality clause – including making clear that information can still be disclosed to police, regulated health and care professionals, or legal professionals regardless of an NDA;
  • introduce new enforcement measures to deal with confidentiality clauses that do not comply with legal requirements – for example, an NDA in a settlement agreement that does not follow new legislative requirements will be legally void.

Tolhurst said: “As we have seen in the news recently, there are a handful of employers using NDAs to cover up criminal acts in the workplace, including sexual harassment, assault and racist discrimination.

“We will not tolerate the use of NDAs to silence and intimidate victims from speaking out. 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.”

Women and equalities minister Penny Mordaunt said: “Sexual harassment is illegal, yet individuals are still reporting abhorrent ordeals in the workplace. Today’s announcement will work alongside the consultation I launched earlier this month setting out further protections for workers against this type of vile behaviour.”

Rebecca Hilsenrath, chief executive of the Equality & Human Rights Commission, said: “This new legislation will help to end ambiguity about employees’ rights and stop the misuse of NDAs to protect corporate and personal reputations and obstruct justice.

“The use of NDAs is only part of the problem of workplace harassment and discrimination, and employers must step up to protect their employees from this appalling behaviour before it happens.”

The EHRC is developing new guidance on NDAs and tackling harassment which will provide further clarity for employers.

Currently, confidentiality clauses, or NDAs, cannot prevent an individual making a protected disclosure or “whistleblowing” – reporting wrongdoing in the public interest. This includes criminal offences, health and safety breaches, or failing to comply with a legal obligation. NDAs can also not prevent an individual from taking a matter to an employment tribunal.

The government’s response to the Women and Equalities Committee’s 2018 report on sexual harassment in the workplace set out plans to further tackle the issue of sexual harassment.

Earlier this month the government recently launched a consultation on sexual harassment in the workplace to ensure that laws are operating effectively.

Acas chief executive Susan Clews said: “The misuse of NDAs is unacceptable. We support this proposed legislation that will help clarify the law around the use of NDAs and prevent them from being misused to intimidate or silence victims of illegal and abusive behaviour at work.”

Acas is also developing new guidance on the appropriate use of NDAs that will incorporate the changes in the law, helping provide employers and employees with greater clarity on their use.

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