Employment lawyers acknowledge place for further regulation of confidentiality agreements but express concern over lack of regulatory clarity

There is a place for further review and regulation of confidentiality agreements (or NDAs), particularly in settlement agreements, to reduce the risk that such agreements prevent proper reporting of sexual misconduct at work, the Employment Lawyers Association (ELA) has said.

However, in its response to the Department for Business, Energy and Industrial Strategy’s (BEIS) consultation on measures to prevent the misuse of confidentiality clauses, the ELA said it was “It is equally important to recognise that agreements including provision for confidentiality are a vitally important dispute resolution tool in a broader commercial and employment context. Accordingly, proper use of confidentiality provisions should not be excessively restricted”.

This meant any restrictions on their use must be proportionate to the need to bring employment disputes to a conclusion “without undue uncertainty as to what might happen in the future”.

Confidentiality should remain available for those who wanted it, for example, if they were worried about the impact of disclosure on future employment prospects or on family members.

The ELA – an a-political group of approximately 6,000 UK employment law specialists that includes in-house lawyers, trade union lawyers and private practice lawyers – said that it was not always possible for the employer to ascertain the truth and there was no practical remedy for defamation available to those with limited means, so disclosure leading to reputational damage “can have a very significant impact on employees’ personal and working lives, and future income”.

It called for clear parameters as to which disclosures must not be restricted following the settlement of claims.

The ELA said it recognised the benefit of oversight for confidentiality clauses but argued that this would be a difficult framework to introduce and maintain.

“The main concern for solicitors advising both sides is the lack of regulatory clarity. This has been further underlined with the SRA’s warning notice of 12 March 2018,” the response said.

“It is vital that all of the moving parts which govern use of confidentiality provisions in settlement agreements are reviewed together to ensure that there is consistency. The current whistleblowing legislation, discrimination provisions, the SRA notice, any new statutory code of practice and the proposals from BEIS must all work in harmony to avoid on-going uncertainty for employees, employers and their advisers in the broader interests of being able to resolve workplace disputes.”

Looking at confidentiality agreements in isolation would not be sufficient to address “the serious underlying issue of sexual harassment”, the ELA said, and a broader review was needed of protections including training and the possibility of granting investigation and enforcement powers to a statutory body such as the Equality and Human Rights Commission.

“We consider that introducing meaningful sanctions is the only way to achieve real change, such as the substantial fines capable of being imposed under the GDPR,” the ELA said.

“An overhaul of cultural norms is required to achieve a genuine reduction in sexual harassment and related inappropriate conduct.”

Mark Smulian

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