Buying silence: the cost of keeping quiet

In the wake of the #MeToo campaign and recent scandals involving the likes of Sir Philip Green and Harvey Weinstein, the Women and Equalities Committee (WESC) launched an inquiry into the way in which non-disclosure agreements were being used to silence victims of discrimination and harassment.

Non-disclosure agreements often take the form of confidentiality clauses in settlement agreements and employment contracts. When used for their legitimate purpose, a confidentiality clause allows an employer to ensure that their trade secrets are not disclosed to anybody outside of the business.

However, some employers have tried to ‘buy’ an employee's silence by offering money in exchange for non-disclosure of information surrounding the terms of the agreement and / or the grounds for entering into it. The slight caveat for this is that an employee cannot be prevented from disclosing information of a criminal nature or relating to other unlawful conduct. However, without being properly regulated, there have been some recent high-profile cases whereby some individual's reporting rights have been limited and they have been left feeling unable to speak out about sexual harassment.

Following on from the WESC inquiry, the government has now publicised its response to the proposals to prevent misuse in situations of workplace harassment or discrimination. The government’s response includes some of the following proposals:

• To legislate to ensure that no confidentiality clause can prohibit a person from making a disclosure to the police (as well as regulated health, care and legal professionals) and to legislate to ensure that these limitations are clear to the person signing the agreement;
  
  
• To legislate on drafting requirements for confidentiality clauses; and
  
  
• To introduce new enforcement measures for any confidentiality clause which does not comply with these legal requirements. These will include the ability for a claimant to receive additional compensation if they are successful at an employment tribunal.

The WESC proposed that employers should be required to collect data and create annual reports relating to the number and type of discrimination and harassment complaints and the number of times a confidentiality clause is used. The government, however, rejected this proposal due to concerns that this may deter employers from using them in situations where it would be beneficial. 

What does this mean for you or your business?

Although it will be some time before these proposals become legislation, when the time does come, we will have to alter the way in which we draft confidentiality clauses in settlement agreements and employment contracts and ensure that an employee is fully aware of the limitations of a confidentiality clause before signing on the dotted line.

Recommended Reading

You can find a link to the recommended reading HERE.

 These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.