Challenging A "cover Up" Culture

Issue 50

Charlotte McBride, Associate Solicitor at award-winning employment law boutique Collingwood legal looks at the potential abuse of NDAs in cases of discrimination and harassment.

NDAs, non-disclosure agreements, settlement agreements, confidentiality clauses – whatever form they take and however you want to label them, these contractual clauses that seek to “gag” a party from disclosing certain information having been getting bad press.

Almost as much bad press as the media moguls and celebrities that have been caught up in the #TimesUp and #metoo social media campaigns that have shone a spotlight on sexual harassment at work, but in particular the movie industry.

In the wake of these movements the public’s interest around the use of these types of agreement was piqued. Were these agreements being used to prevent potential victims of discrimination and harassment from speaking out or reporting matters to the authorities?

By all accounts there certainly seems to have been a history of abuse of these type of agreements. We’ve all see the press coverage of celebrities, from pop icon Michael Jackson to footballing star Cristiano Ronaldo, allegedly ‘paying off’ those who have made or are threatening to make allegations (often a sexual nature) against them. I was always told “you learn from your mistakes” but as a society how can we if we don’t know these problems exist in the first place?

In the UK, the Women & Equalities Committee of the House of Commons took up the issue and, in June 2019, produced a report about the use, or I might better phrase it as abuse of non-disclosure agreements in discrimination cases.

The Committee’s report and recommendations seek to redress the imbalance between the parties to these agreements so that victims of discrimination and harassment aren’t prohibited from sharing their experiences and allowing change to happen.

Although not the focus of the Committee’s investigation and report, settlement agreements in the employment context drew attention. Settlement agreements are commonly used by employers to settle potential litigation with employees which might include claims of discrimination or harassment.

So what does the report mean for us as lawyers and our employer clients? Lawyers are reminded that they should not be complicit in the use of gagging clauses to conceal unlawful acts. This is a basic ethics point worthy of reminder. The Committee’s recommendation that settlement agreements ought to make clear what an employee can and cannot disclose is sensible (and lawful).

However, this recommendation is seemingly at odds with the overall purpose of these agreements – a clean break – and could jeopardise the likelihood of litigation being settled in this way. Yes there is a public interest in transparency but there is also a public interest in parties having avenues to settle litigation. There is undoubtedly an imbalance in bargaining power that needs to be addressed in the context of settlement agreements and whilst an employer is seeking closure of a matter through the use of a settlement agreement, it is worth highlighting that this is the same outcome sought by employees. Both parties are on an even playing field in that regard and any recommendations and subsequent measures should protect parties abilities to resolve matters by this means, but with appropriate safeguards in place, particularly where harassment and discrimination allegations are involved.

One final point (in the interests of balance) is to remind everyone involved that non-disclosure agreements would not be able to legally prevent the disclosure of unlawful or criminal activity. This has been the case for many years with the introduction of the Public Interest Disclosure Act which is more commonly referred to as the “whistleblowing” legislation. Many media reports about NDAs appear to give the erroneous impression that such agreements are used to prevent the public disclosure of criminal activity (which could include sexual assault). That is not the case. Any attempt to use an NDA for that purpose would be unlawful and the clause would be held to be void.

The Government is currently consulting on proposed measures that may affect the use of these types of confidentiality clauses in settlement agreements so all that remains to be said is “watch this space…”

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