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Government clarifies how it will restrict the use of non-disclosure clauses in the workplace

  • United Kingdom
  • Employment law - HR E-Brief

22-07-2019

The use of non-disclosure or confidentiality clauses in employment contracts has been under scrutiny by the Government for many months, with pressure for legal intervention mounting. This weekend, in a Response to consultation, the Government has clarified new measures to prevent misuse of such clauses in situations of workplace harassment or discrimination. Read the Consultation Response.

Background

Whilst the Government has consistently asserted that confidentiality clauses can serve a useful and legitimate purpose in the employment context, it has also been unable to ignore a number of high profile cases where employers have used them to prevent victims of workplace harassment or discrimination from speaking out. Last year, in response to various recommendations of the Women and Equalities Committee, the Government agreed that confidentiality clauses required better regulation and that it would conduct a consultation over future proposals.

Between 4 March 2019 and 29 April 2019, picking up many of the Women and Equalities Committee recommendations, the Government consulted upon various proposals aimed at clarifying the law; for example, ensuring that confidentiality clauses cannot operate to prevent disclosures to the Police (amongst other bodies) and that the nature and effect of such provisions is sufficiently clear to the individuals who sign them, with a requirement for independent advice in the context of settlement agreements see our earlier briefing. This weekend sees the publication of the outcome of that process and how the proposals will now be taken forward.

What can we expect?

New legislation 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.

This new legal provision will be particularly significant in ensuring individuals are not given the impression that they cannot disclose information to the police about harassment, discrimination or other crimes because of a confidentiality clause; that they understand the implications of such clauses on entering into a settlement agreement and that they receive explanation of such clauses at the beginning of employment as part of a written statement of particulars; and

  • enhance the independent legal advice received by individuals signing confidentiality clauses.

This legislative change will ensure that legal professionals must provide clarity on the details in a settlement agreement in order for it to be valid, helping to inform the independent advice from a relevant independent adviser, received by individuals, before they accept a confidentiality clause. This requirement will be similarly reflected in updated professional guidance from the Solicitors Regulation Authority.

New guidance

(for solicitors and legal professionals responsible for drafting settlement agreements)

This will be in addition to guidance emanating from EHRC, Acas and the Solicitors Regulation Authority on this issue, the focus of the former being to clarify the law relating to confidentiality clauses in cases of discrimination in employment and to set out good practice in relation to their use.

• New enforcement measures

(for confidentiality clauses that do not comply with legal requirements in written statements of employment particulars and settlement agreements)

As indicated above, the limits of any confidentiality clause will need to be included in the written statement of employment particulars that must be given to all employees. Under the new provisions, any confidentiality clause in a written statement that does not meet the new drafting requirements will be able to be challenged through the existing tribunal mechanism for addressing issues with written statements and may lead to additional compensation.

When can we expect these changes?

The Government has said it will legislate to implement the commitments in this Response “when Parliamentary time allows”. Despite the significant challenges upon Parliamentary time, currently and the imminent announcement of a new Prime Minister this week, there would appear to be strong cross party support for the proposed changes. It is certainly possible that new legislation may be passed by the end of the year. However, if as seems likely, the Government opts to await the outcome of the parallel consultation on sexual harassment in the workplace in October, to which the provision on confidentiality clauses is inextricably linked, draft legislation may be delayed until next year.

With various guidance documents from the EHRC, Acas and others being underway already, the additional guidance identified in this Response (ie. regarding the drafting of settlement agreements), is likely to precede, if not accompany, the publication of new legislation in early 2020.

Comment

What this Response now makes abundantly clear is that it is no longer a case of “if” the Government will legislate to curb inappropriate use of confidentiality clauses but “when”. A new Prime Minister could propose an alternative course but this seems unlikely and unsupported. Even prior to these Government interventions coming into effect, therefore, we would recommend that employers who have not already done so start to review entrenched practices and procedures in preparation and ensure that their use of confidentiality clauses is reviewed on a case by case basis and explained fully.

Employers should also bear in mind that the steps the Government has committed to in this consultation do not sit in isolation. These reforms are part of a wider response to sexual harassment in the workplace, in respect of which separate evidence and consultation has been and is being collated, with a Code of Practice being expected later this year. Employers can therefore expect to adapt to a series of legislative and other influences upon their behaviour, practices and procedures in the coming months, focusing upon steps to tackle inappropriate workplace culture.

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