Non-Disclosure Agreements – where are we now?
In the government response earlier this summer to the consultation on the use of non-disclosure agreements (NDAs) in the workplace, it was confirmed that legislation will be introduced. However, in the current climate, bringing forward legislation “when Parliamentary time allows” makes timeframes very difficult to predict.
Nevertheless, there are some changes that employers can sensibly make now, as the government has made clear what changes will be coming. In our earlier insight we warned of the unintended consequences of over regulating the use of NDAs. As we stated, they are often used for the benefit of both parties, enabling employers and employees to move on when a working relationship has broken down.
What the government are now proposing will enable the majority of employers and employees to continue using NDAs for this purpose. However, legislation will seek to ensure that individuals are clear to what they are agreeing and with whom they can discuss details, without being in breach.
The key legislative changes being proposed include:
- Introducing provisions to ensure that nothing in an employment contract or settlement agreement can prevent an individual from making a disclosure to the police, a regulated health care professional, or a legal professional. The changes will enable those seeking medical support to speak freely, as well as allowing the victim of alleged criminal action to report it. The legislation will only extend this right to professionals who are regulated and bound by duties of confidentiality, so disclosure to therapists and counsellors who are not regulated, will not be permitted and may constitute a breach of an NDA.
- Whilst the government has stopped short of introducing standard form confidentiality clauses, legislation will require that confidentiality clauses in settlement agreements and employment contracts set out clear limits. Whilst we do not yet know how the legislation will be framed, certainty in drafting and the use of plain English will benefit both parties.
- Anyone entering into a confidentiality clause on termination will need independent legal advice on the nature and limitations of the clause. Whilst any solicitor advising on a settlement agreement ought to have provided relevant advice on the scope of a confidentiality obligation, the new requirements will ensure appropriate advice is obtained as a condition of the enforceability of that confidentiality obligation.
- The government has indicated a draconian approach to enforcement: if confidentiality clauses do not meet the new legislative requirements, the settlement agreement will be void in its entirety.
Employers should review their settlement agreements in light of the carve outs being proposed, to ensure employees are permitted to talk to regulated professionals and the police. It is clear that, with or without legislation, settlement agreements which even appear to seek to silence former employees inappropriately will reflect poorly on employers if litigation follows. The remainder of the proposals will need more substance before changes to current practices can be made.