The Government has announced that it is consulting on certain measures to prevent the misuse of confidentiality clauses. This is in response to some recent high profile cases which have given rise to concerns that confidentiality clauses in employment contracts and settlement agreements are being used to intimidate or silence victims of harassment or discrimination at work.
This Government Consultation follows the Women and Equalities Select Parliamentary Committee’s inquiry on sexual harassment in the workplace and its current inquiry into the misuse of confidentiality clauses. Some, but not all, of the Committee’s recommendations have been accepted by the Government.
The early clamour for “Non-Disclosure Agreements” to be banned in employment cases has been replaced by a more nuanced understanding of the many legitimate reasons for having confidentiality clauses; this includes the fact that many victims of harassment and discrimination do not want publicity, preferring private settlements in which they receive compensation for the treatment they received.
The writer gave oral evidence to the Committee on the use of confidentiality clauses at its hearing on 23 January and is chairing a working party charged with responding to the Consultation on behalf of the City of London Law Society.
The publicity given to cases where workers have felt unable to disclose issues of serious concern has obscured the fact that the existing law already allows victims of harassment and discrimination to speak out in breach of confidentiality clauses in certain circumstances. These rights are limited to (broadly speaking) reporting a crime to the police, co-operating with an investigation being carried out by the police or a regulatory authority, giving evidence in court, blowing the whistle under section 43J of the Employment Rights Act 1996 and disclosures of wrongdoing in the public interest.
Many current and former workers are completely unaware of these rights and even if they are aware are unsure of the exact scope of them. The Consultation process is focussed on addressing these specific issues under four main headings:
Disclosures to the police and other bodies
Legislation is proposed to make it clear that no provision in an employment contract or settlement agreement can prevent someone making any kind of disclosure to the police. Workers would then be sure that whatever the issue they can safely make the disclosure regardless of whether it meets any whistleblowing test and irrespective of the terms of any confidentiality clause applying to them.
Once a disclosure has been made it would of course be for the police to decide whether to open an investigation into the matter disclosed.
Views are sought as to whether this legislative change should be made and also whether disclosures to other organisations should also be excluded from confidentiality clauses.
It should also be noted that Government has already accepted the Committee’s recommendation to add the Equality and Human Rights Commission to the list of “prescribed persons” to whom the whistleblowing disclosures may be made.
Ensuring the limits of confidentiality clauses are clear to workers
Views are sought on whether confidentiality clauses in both employment contracts and settlement agreements should be required to clearly highlight the disclosures that confidentiality clauses do not prohibit.
If so, should the Government set a specific form of words?
An earlier recommendation by the Select Committee that the wording of confidentiality clauses be standardised has not been taken up so that parties will continue to be free to negotiate wording appropriate for the circumstances.
Written Statement of Particulars of Employment
So far as employment contracts are concerned the proposal is that wording highlighting permitted disclosures be included in the Written Statement of Particulars of Employment that employers are required to give workers. The existing enforcement mechanism would apply in the case of a breach namely an uplift of 2 to 4 week’s pay (subject to a statutory cap currently £508) where the worker succeeds in the tribunal in another claim such as unfair dismissal or discrimination.
Respondents are asked whether they agree with this proposal.
Independent advice on a settlement agreement
Waivers in settlement agreements are only valid if an independent adviser has advised the worker on “the terms and effect of the agreement”. The Consultation seeks views on whether this requirement should be extended to advice on the “nature and limitations of any confidentiality agreement and the disclosures that the worker is still able to make”.
It is proposed that if such advice is not given the confidentiality clause should be void in its entirety (or possibly the entire agreement) and views are sought on the positive and negative consequences of this.
Although superficially an attractive idea this could present difficulties to employers, workers and advisers.
It could pave the way for a worker who has signed a settlement agreement to claim that they are not bound by the confidentiality obligation because the adviser did not give accurate advice on the precise scope of the confidentiality obligation and the permitted exclusions as they apply to the worker’s circumstances. This could in turn lead to employers demanding that independent advisers give them direct assurances that comprehensive advice has been given in order to obtain a valid clause.
The end result could be uncertainty as to whether a clause is enforceable, greater legal costs in obtaining comprehensive advice and lawyers assuming unwelcome liabilities to employers.
Contributing to the Consultation
If readers have any views or opinions on any of the above issues that they would like the working party to consider in formulating its response to the Consultation paper please email Jane Mann directly at email@example.com.
Contributions would be very welcome, but please send them in soon as the consultation closes on 29 April 2019. Thank you in advance for your help.
If you have any questions in relation to this topic, please contact a member of the employment law team at Fox Williams or speak with your usual Fox Williams contact.