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EHRC takes a firm approach: new guidance on NDAs in discrimination cases

  • United Kingdom
  • Employment law

18-10-2019

The Equality and Human Rights Commission (EHRC) has published guidance on the use of confidentiality agreements in discrimination cases. The guidance contains a helpful explanation of the law applying to such agreements and also seeks to push back on those employers using confidentiality routinely when settling discrimination disputes. It is important that HR professionals and in-house lawyers familiarise themselves with the guidance which was produced at the request of the Government.

Background

The use of non-disclosure or confidentiality clauses in employment contracts, particularly following the #MeToo revelations, has been under scrutiny by the Government for many months, with pressure for legal intervention mounting. In July, a Consultation confirmed that legislation will be introduced which will:

  • provide that a confidentiality clause cannot prevent disclosures to the police, regulated health and care professionals and legal professionals; and
  • require that limitations imposed by confidentiality clauses are clearly set out in employment contracts and settlement agreements.

In addition, Acas and the EHRC were tasked with producing new guidance, the latter being published this week (link here). For further information on the background to the Consultation and its proposals, read our briefing.

The EHRC guidance

Scope

The guidance covers confidentiality agreements (also known as confidentiality clauses, non-disclosure agreements (NDAs) or gagging clauses) under which it is agreed that certain types of information will not be discussed or passed on. Reflecting the EHRC’s remit, the guidance relates to discrimination, harassment and victimisation claims and covers a broad range of workers, including agency workers and job applicants in England, Scotland and Wales.

Aims and status

The EHRC recognises that confidentiality agreements in the context of discrimination can have legitimate uses, such as where a worker wants to keep complaints private. However, it is concerned that agreements may be used inappropriately, resulting in a chilling effect within organisations where workers feel unable to speak up.

As such, the guidance aims to help employers to understand when confidentiality agreements can be used legitimately and when these agreements will not be enforceable. The guidance is not a statutory code, meaning that an employment tribunal is not obliged to take it into account (but it may still be used as evidence in legal proceedings where it is relevant).

Key content for employers

The guidance:

  • explains when a confidentiality agreement will be unenforceable, such as where a worker is under duress to sign it or the agreement seeks to prevent lawful whistleblowing, reporting a criminal offence, cooperating with a criminal investigation or making other disclosures required by law/a regulatory duty, or it includes a penalty clause
  • requires employers, as a matter of good practice, to ensure that workers understand the limitations of a confidentiality agreement through clear drafting and explanations, giving workers time to reflect and take advice as appropriate, providing a signed copy for their records and ensuring that internal policies/training/induction process clarify how discrimination can be reported and that reports will be taken seriously
  • states that employers should keep a central record of confidentiality agreements, which is GDPR compliant, to identify systemic issues and to prevent the misuse of such agreements. The board of directors (or equivalent) should have oversight of the register and each agreement should require director or equivalent sign-off
  • provides advice on using confidentiality in settling discrimination disputes (in settlement agreements and Acas COT3 agreements). For example:
    • not having a blanket policy of always including confidentiality clauses. It goes further by stating that “most cases” will not require a confidentiality agreement to stop a worker discussing an act of discrimination and may only be appropriate where, for example, it is at the worker’s request, to protect a witness, to protect a worker who has been falsely accused or to avoid an investigation or tribunal proceedings being prejudiced
    • only including confidentiality agreements where justified, having weighed up the reason, benefit to the employer, impact on the worker and the organisation’s culture and the benefit of leaving it out
    • avoiding standard wording, instead tailoring the agreement to the particular circumstances and going no further than necessary and appropriate. Employers should take advice as necessary on their use of confidentiality and wording
    • informing the worker why it is including a confidentiality clause
    • listing in the agreement, as a matter of good practice, those people or organisations the worker may discuss the issues covered by the agreement with, which go beyond those required by law, such as a trade union and immediate family
    • paying for the worker’s reasonable costs to receive independent advice on the terms of the settlement agreement, including where the worker reasonably decides not to sign the agreement, and giving the worker at least 10 days to take and consider that advice
    • not treating settlement as the end of the matter if acts or allegations of discrimination are not investigated or action taken to prevent a reoccurrence. In this respect, the EHRC points out that employers may be vicariously liable for current and future discriminatory acts between workers if it failed to take reasonable steps to address the immediate act which is the subject of the settlement agreement

In addition, the guidance reminds public sector organisations to consider whether the use of confidentiality agreement complies with their public sector equality duty.

Comment

Employers will welcome clear guidance in the wake of the recent controversies over the use of confidentiality agreements. For some, the guidance anticipates a cultural change so that confidentiality clauses in discrimination cases come under director oversight (or those of equivalent seniority), are justified on a case-by-case basis, are clearly understood by all parties and, where they highlight systemic issues, these are addressed.

This is not the final word on NDAs. Further guidance is expected to be published by Acas and, as outlined above, we await legislation in this area.

For more information contact

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