New legislation to regulate use of workplace NDAs

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Man is filling in Non-Disclosure Agreement NDA.

The government has revealed new plans to tackle the misuse of “gagging orders”, or non-disclosure agreements (NDAs), in the workplace. Such contract or policy documents are being used to cover up incidents of sexual harassment, racial discrimination and assault.

Plans to introduce new legislation were announced this month by the Department for Business, Energy and Industrial Strategy (BEIS). The new legislation will prohibit, for the first time, NDAs being used to prevent staff in the private sector from disclosing information to the police, regulated health and care professionals, or legal professionals, such as doctors, lawyers and social workers.

Employers will also have to make clear the contract limitations of NDAs in plain English, within a settlement agreement and in a written statement for an employee (similar to the way pre-contractual information must be presented under the Consumer Credit Regulations), so that staff signing NDAs fully understand what they are signing and the implications that the agreement will have on their rights.

It remains unclear whether the new legal requirement will extend to contingent workers such as an independent contractors or freelance workers.

Current rules will also be extended to ensure those signing up to NDAs are given independent legal advice on the limitations of NDAs, or so-called confidentiality clauses, and that it is made clear that NDAs cannot prohibit the disclosure of information to police, regulated health and care professionals and legal professionals for whatever reasons, regardless of the terms of the NDA policy documents.

New enforcement measures will ensure the new requirements are met – for example, by voiding any NDA agreements or policy documents that do not comply with the new legal requirement.

The consultation into the proposed changes was one of a range of measures unveiled in the final days of Theresa May’s premiership. Business minister Kelly Tolhurst, who launched the consultation, warned that the silencing or intimidation of workers using confidentiality clauses and other policy documents will not be tolerated:

“The vast majority of businesses comply with the law and use NDAs legitimately – from protecting commercially sensitive information to preventing information being shared with competitors.

“As we have seen in the news recently, there are a handful of employers using NDAs to cover-up criminal acts in the workplace, including sexual harassment, assault and racist discrimination.

“We will not tolerate the use of NDAs to silence and intimidate victims from speaking out. The new legislation will stamp out misuse, tackle unacceptable workplace cultures, protect individuals and create a level playing field for businesses that comply with the law.”

Women and equalities minister, Penny Mordaunt, said: “Sexual harassment is illegal, yet individuals are still reporting abhorrent ordeals in the workplace.

“Today’s announcement will work alongside the consultation I launched earlier this month setting out further protections for workers against this type of vile behaviour.”

The plans were welcomed by Ben Willmott, head of public policy for the Chartered Institute of Personnel and Development (CIPD), who said greater clarity around NDAs was a positive step, although he warned that regulation alone may not be enough to stamp out harassment and discrimination in the workplace.

“Changes to the law alone will not help to prevent harassment and discrimination from occurring in the first place. There needs to be far greater recognition in some organisations that their culture has to change,” said Willmott.

“This change starts with leaders and managers role-modelling the right behaviours and a greater focus on boosting diversity and inclusion.”

Chief executive of the Equality & Human Rights Commission (EHRC), Rebecca Hilsenrath, said:

“Harassment and discrimination should never go unanswered and unchallenged just because victims are prevented from speaking out. This new legislation will help to end ambiguity about employees’ rights and stop the misuse of NDAs to protect corporate and personal reputations and obstruct justice.

“The use of NDAs is only part of the problem of workplace harassment and discrimination, and employers must step up to protect their employees from this appalling behaviour before it happens.  We are developing new guidance on NDAs and tackling harassment which will provide further clarity for employers and help them create safe and supportive working environments.”

The new legislation should help to address some of the concerns sparked by the #MeToo movement, which has revealed many cases of organisations and recruitment agencies using confidentiality clauses to prevent women from making accusations of abuse or sexual harassment. Zelda Perkins, who had worked as an assistant to Harvey Weinstein, gave evidence to the Commons’ Women and Equality Committee in 2018 that an NDA she signed had restricted the amount of evidence she could provide about the film producer.

Currently, confidentiality clauses, or NDAs, cannot prevent an individual from reporting wrongdoing in the public interest, known as making a protected disclosure or ‘whistleblowing’. These could include a criminal offence, danger to health and safety, or failing to comply with a legal obligation. Confidentiality clauses and NDAs can also not prevent an individual from taking a matter to an employment tribunal.

31st July 2019.