Labour is set to add a ban on UK employers using non-disclosure agreements (NDAs) to hush up harassment claims as part of its overhaul of employment rights and that a Government spokesman said
“We are aware of concerns about the misuse of NDAs to intimidate and silence victims of crime, or other types of misconduct such as harassment, discrimination, and bullying, and are taking a fresh look at these issues to identify the right approach,” https://inews.co.uk/news/politics/labour-ban-gagging-clause-employees-exposing-sexual-harassment-3484975
UK workplaces are characterised by a steep power imbalance between employees and the employer. Although UK employment law is characterised as being founded on agreement - to work and be paid in return – in practice it is not a contract between equals.
That imbalance can be mitigated to a degree by legal protections and contractual agreement but when there is a significant disagreement, the imbalance generally becomes very clear.
One area where this imbalance becomes clear is where an employer offers to end the contract of employment in return for some monetary compensation on condition of the employee signing a Non-Disclosure Agreement (NDA).
NDAs were originally created to protect trade secrets but have increasingly been used to buy the silence of employees raising concerns. They have become the default position for employers to settle cases of sexual harassment, racism, all forms of discrimination, bullying, whistleblowing and human rights violations.
A decade ago, I gave evidence to the Francis Speak Up Review (2015) with Dr Kim Holt, arguing that such agreements were generally a lop sided exercise of employer power seeking to silence an employee from continuing to raise significant issues which might be in the public interest.
Now, it appears the Government is being pressed to take another look at NDAs, in particular NDA where sexual harassment or misconduct has been a factor in the dispute that led to an NDA being required by the employer. We are told
This is excellent news. But does it go far enough?
An NDA can be used to establish a legally binding agreement that protects allegedly sensitive information from exposure. There are limitations to their scope and enforceability of such agreements, notably that they cannot:
Remove an employee’s rights under the Public Interest Disclosure Act 1999
Prevent an individual from reporting cases of discrimination, harassment or sexual harassment
Deter employees from reporting a possible crime to the police
Prevent someone from whistleblowing on illegal activities to public bodies and regulators
Many (not all) Non-Disclosure Agreements are insisted on by employers as a precondition for a financial settlement. These are particularly of concern where a protected disclosure of some kind has been made such as on patient safety, risks to consumers, harm to employees or the public, fraud, environmental risk and discrimination.
At their heart is a confidentiality clause which often includes a “non-derogatory” clause and which frequently has a much wider scope which is likely to seek to keep confidential:
The facts and circumstances of the incident, concerns raised, and the employer’s investigation and findings;
The NDA terms;
The fact that such a Non-Disclosure Agreement even exists.
The impact of this is that, despite assurances to the contrary, those signing an NDA who have tried to raise concerns about patient safety, risks to consumers, harm to employees or the public, fraud, environmental risk and discrimination are effectively silenced. It means we frequently have no idea to what extent an employer has been subject to such allegations. It means learning from concerns raised within the organisation is greatly limited because the employee is effectively “gagged”.
The extent of the confidentiality clause can also cause the employee serious problems if they then seek another job because they cannot disclosure whey they left a great deal of difficulty if they are seeking new employment since they cannot discuss why they left their previous job.
Employees raising a concern are left feeling further isolated, unsupported in her working environment and frequently regret raising the issue at all with a chilling effect on other staff considering raising concerns.
So why do employees sign NDAs?
They primarily do so as that is the condition of the financial settlement and agreement to not provide a damaging reference to the employee. Employees have to consider the alternatives which may be great difficulty on getting another job, enormous health impact of leaving without any financial compensation and with the prospect of having to fight a in the courts to highlight the concerns they raised or gain compensation for the disruption to their lives and career, knowing that Tribunal cases drag on and can be emotionally and financially exhausting
For the employer an NDA does, in theory, limit some steps they might take;
Prevents the employee from raising the issue elsewhere – in the media or in court
Provide the employer with an opportunity to circumvent a claim for constructive dismissal and/or discrimination.
Prevents reputational damage from publicity about concerns about patient safety, risks to consumers, harm to employees or the public, fraud, environmental risk and discrimination
There may well be advantages to the employee at the point of signing that because they are invited to do so when the imbalance of power is at its most obvious. Employees may see benefits from accepting the agreement, including:
Though the compensation from an NDA is potentially being less than what is obtainable in court, it may appear (and may be) better than taking one’s chances in a Court where the employer can use its much greater resources to batter you – and where the chances of winning are slim
Some employees would prefer not to endure the publicity that a case might prompt
Financial benefits from not having to pay potentially huge legal costs if these are not covered by their union or insurance.
In most circumstances, an NDA can be used to establish a legally binding agreement. Despite this, there are limitations to the reach and enforceability of such agreements. Signing one does not:
Remove an employee’s rights established under the Public Interest Disclosure Act 1999
Inhibit employees from reporting a possible crime to the police
Prevent an individual from reporting cases of discrimination, harassment or sexual harassment
Impede someone from whistleblowing illegal activities to public bodies and regulators
But in practice, the proposal to sign an NDA often comes at the end of an exhausting, demoralising and lengthy process where one’s career risks becoming a car crash, the original issues raised are lost in the mist of damaged health.
It is not an agreement between equals. Acas guidance says that NDAs must not be used to stop someone from reporting discrimination, harassment or from blowing the whistle on workplace practices but this is wishful thinking. I have spoken to hundreds of staff forced into NDAs who will call them “gagging clauses”.
Once the NDA has been signed, it is legally binding and enforceable against all parties concerned. Therefore, if a party to the employee NDA breaches its terms, the other party can take legal action against them.
Such agreements are frequently the last step in a process of moral injury with serious ill health and career wrecking consequences and a cause of moral injury
As a condition of receiving these payments, you must agree not to pursue certain statutory claims against your employer in a Tribunal or Court, including unfair dismissal, discrimination, or breach of contract
Fortunately, the tide is slowly turning.
A summary of evidence report by law regulator the Legal Service Board (LSB) has offered fresh insights on non-disclosure agreements (NDAs).
Many of those who wrote to the LSB about their experiences reported “suffering devastating impacts” from signing an NDA according to the LSB. Mental health issues had stemmed from the fear of retribution after potentially breaching the terms of their NDAs.
During a debate about NDAs in the workplace in September 2023 the Conservative MP Maria Miller said:
“They remove people from their jobs with an exit agreement that includes a silencing clause, creating fear that talking about even illegal acts might mean they find themselves on the wrong side of the law, with the additional fear of having to pay back any payment they might have received when they departed from their job.”
“[NDAs] stop them from seeking medical support for the psychological trauma that they have experienced, from taking action through employment tribunals, and in some cases from taking cases of criminal wrongdoing to the police.” https://www.personneltoday.com/hr/questionable-use-of-non-disclosure-agreements/
Miller claimed that women, especially Black women, are disproportionately affected by the use of NDAs, as are people with disabilities. She added that lawyers are often part of the problem, despite the Solicitors Regulation Authority issuing several warning notices about the use of NDAs in recent years
So, when it comes to workplace behaviours that involve toxic behaviours or the suppression of employees who have raised protected disclosures, it seems to me that an NDA is simply not acceptable because:
They allow employers and their staff who behave abusively or seek to victimise those making protecting disclosures to be promoted or move seamlessly to another employer
They undermine or prevent learning from learning from toxic or unlawful discrimination, harassment or from blowing the whistle on workplace practices
They cause moral injury to those obliged to sign them due to imbalance of power.
Wes Streeting says he won’t tolerate racism, sexual harassment or the victimisation of staff who whistle blow. Ending the use of NDAs in such circumstances is an essential step and their use in such circumstances should be stopped across the NHS and social care.
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