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Insights

27 March 2020

Is it OK to propose an NDA?

Background

In anticipation of new government legislation, Acas has published guidance on non-disclosure agreements (NDAs), which looks to provide clarity on how to prevent their misuse and how to adopt good working practices when working with NDAs. This new guidance comes a few months after the Equality and Human Rights Commission published their own guidance on the same and you can read our insight piece from October 2019 here.

We recommend reading Acas’ guidance in full, but this article will set out its key takeaways.

NDAs and their misuse

The guide refers to NDAs as ‘confidentiality clauses’ throughout and considers their use in three contractual contexts whilst giving examples:

  1. settlement agreements;
  2. Acas settlements; and
  3. employment contracts.

NDAs are further distinguished between those that seek to keep particular details of an agreement confidential and those seeking to keep the fact an agreement has been made confidential. The guide states that NDAs which fall into any of the above categories may be inappropriate, depending on the circumstances.

According to Acas, NDAs should not be a matter of routine for businesses and institutions and importantly should not stop anyone from:

  1. reporting discrimination or sexual harassment at work or to the police;
  2. whistleblowing; or
  3. disclosing a future act of discrimination or harassment.

The guide outlines, with examples, how to tackle the misuse of NDAs and also provides situations in which NDAs should be avoided, e.g. where an NDA is used as an intimidation tactic or threat. The matters which give rise to the proposed NDA should instead be dealt with using robust internal procedures to safeguard both employees and employers, with the intention of creating a more open and safer workplace. The overarching principle is that NDAs should not be a matter of routine. Instead, Acas advises that alternative mechanisms and approaches should be considered prior to considering whether an NDA would be appropriate. Examples of such mechanisms include training management and employees as to how to deal with specific issues and implementing robust whistleblowing, disciplinary and grievance policies.

Good practice

The guide also suggests that employers should regularly monitor any policy or procedure which could result in the use of an NDA or confidentiality clause, or even be affected by one. Acas believe that adopting such a practice will encourage organisations to learn how to use NDAs appropriately. The example used in the guide notes that across an organisation, one department may find themselves using NDAs three times as often as another department. If the department heads came together to discuss and share good practice techniques, the use of NDAs has the potential to be reduced.

Acas’ guide helpfully contains numerous good practice principles which cover the lifecycle of and NDA from initial discussions, proposing the NDA, negotiating and the drafting of the NDA. Discussions should always be carried out in a sensitive manner and provide informative solutions. Proposal of an NDA should never become a standard approach and careful consideration must be given to whether an NDA is appropriate for the matter at hand. Employees must also be given sufficient time to make an informed decision surrounding the NDA and good practice would dictate that such employees are to be accompanied by a work colleague or trade union representative during discussions and negotiations – although this is not a legal obligation. NDAs must be written in clear, plain English to avoid any ambiguity on the part of an employee or layman.

Comment

It is important to note that Acas’ guidance is not statutory and so tribunals are not obliged to take it into account if a dispute regarding an NDA arises. That being said, its use as evidence in proceedings may prove useful due to its clarity in setting out the misuse of NDAs and good practice.

There is new government legislation on NDAs in the pipeline. However, in the interim Acas’ guide is a good reference point for organisations wishing to position themselves healthily with clear policies and procedures relating to NDAs and confidentiality clauses. With high profile cases based on the misuse of NDAs in the public eye, particularly following the #MeToo movement, now is the time for employers to take responsibility for the safety and openness of their workplaces and employees.

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