Crackdown on misuse of confidentiality contracts

workplace: A minority of firms are abusing NDAs and confidentiality clauses to intimidate victims of behaviour such as sexual harassment
workplace: A minority of firms are abusing NDAs and confidentiality clauses to intimidate victims of behaviour such as sexual harassment

Employers will not be able to use confidentiality agreements to stop workers from reporting crimes, harassment or discrimination to the police under toughened government legal measures to be proposed today.

Business Minister Kelly Tolhurst will announce the rules around non-disclosure agreements (NDAs) and confidentiality clauses are set to be tightened under new legal proposals.

Many businesses legitimately use NDAs and confidentiality clauses in agreements to prevent disclosure of confidential information.

However, in recent months there has been increasing evidence to suggest that NDAs and confidentiality clauses are being abused by a “very small minority” of employers to intimidate whistleblowers, conceal harassment and discrimination incidents – including sexual assault, physical threats and racism.

It is hoped today’s proposals will help put an end to the unethical use of these agreements and encourage good practice from employers and lawyers.

Prime Minister Theresa May said: “Sexual harassment is against the law and discrimination of any kind will not be tolerated – in the home, the workplace or in public.

“Over the past couple of years, we have seen brave individuals breaking silence on such behaviour, but too many are still facing the unethical misuse of non-disclosure agreements by their employers.

“We’re sending a clear message that a change in the law is needed to ensure workers are able to come forward, be aware of their rights and receive the advice they need before signing up to them.”

Business Minister Kelly Tolhurst added: “Many businesses use Non-Disclosure Agreements and other confidentiality agreements for legitimate business reasons, such as to protect confidential information.

“What is completely unacceptable is the misuse of these agreements to silence victims, and there is increasing evidence that this is becoming more widespread.”

The proposals aimed at putting an end to the unethical use of these agreements 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.

It is hoped this will help prevent employees from being duped into signing gagging clauses which they were unaware of.

Evidence of the misuse includes examples where victims of harassment or discrimination have been silenced using the legal agreements, for example, suggesting that a worker cannot whistle-blow despite the fact that no provision can remove a worker’s whistle-blowing rights.

In addition, through an NDA or settlement agreement, employers could insist that a worker is unable to discuss an issue with other people or organisations, such as the police, a doctor or a therapist.

This can leave victims afraid to report an incident or speak out about their experiences, leaving others exposed to similar situations, and putting customers and other businesses at risk.

The proposals set out today to extend the requirement to receive legal advice to cover limits on confidentiality clauses and that signatories must be provided with a clear overview of their rights that will help end this practice.

Minister for Women and Equalities Penny Mordaunt, said: “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.”