Banner triangles

The changing face of non-disclosure agreements

Business Minister Kelly Tolhurst has announced that the rules surrounding non-disclosure agreements (NDAs) and confidentiality clauses will become more restrictive. We look at the proposed changes and how these could impact employers.

How are such agreements used at the moment?

Currently, a large number of employers use NDAs and confidentiality agreements to protect the company in question from any confidential information being unwantedly disclosed to third parties. However, following numerous examples published in the media over the past few months, and following pressure from the #MeToo movement, it has become increasingly apparent that the use of NDAs and confidentiality agreements can be abused by employers to enforce power and control over departing employees who have been the victims of unwanted conduct, particularly sexual harassment, during the course of their employment.

What is changing?

The proposed change in law is an attempt to limit the use of NDAs and confidentiality agreements in instances where they are used unethically, often to conceal immoral acts such as sexual harassment and/or assault, physical threats, intimidation tactics and racist behaviour. As a result, the most substantial change is that an individual will no longer to be able to be prohibited from reporting illegal acts, including harassment or discrimination to the police.
In summary, the government has stated that the new proposals will include:

  • clarifying in law that confidentiality clauses cannot prevent people from speaking to the police and reporting a crime (or prevent the disclosure of information in any criminal proceedings);
  • requiring a clear, written description of rights before anything is signed in confidentiality clauses in employment contracts or within a settlement agreement; and
  • extending the law that means a worker agreeing to a settlement agreement receives independent advice; the advice must cover the limits of any confidentiality clauses in the settlement agreement so a person is in full possession of all the relevant facts; this will help to prevent employees from being duped into signing gagging clauses which they were unaware of.

Penny Mordaunt, Minister for Women and Equalities, has commented on the plans, saying that:“Sexual harassment at work is illegal, yet this disgusting behaviour is something that many women still experience today. I want to make clear to anyone who thinks they can bully and harass people at work, the UK government, good employers and the public will not accept this. We will act to make sure that workplace rights are protected for everyone. This is important for us all because unless every one of our citizens can reach their full potential at work, our nation never will.”

What should employers do now?

The consultation period for the planned change of law will run until 29 April 2019 so we should expect to hear further developments on this area of employment law in late Spring/early Summer.

Once we have further clarity on the proposals, employers will need to review their use of confidentiality clauses and non-disclosure agreements both within contracts of employment and settlement agreements to ensure that they comply with the new rules.

For more information on the law surrounding sexual harassment, please have a read of our articles: Ensuring your workplace is equipped to deal with sexual harassment allegations? and ACAS guidance on sexual harassment.

The minister made the announcement on 4 March.

Disclaimer

This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.

Insights

Read the latest articles and commentary from Shoosmiths or you can explore our full insights library.