Confidentiality clauses: Protecting employers and employees

Following a number of high-profile cases of sexual harassment in the workplace where confidentiality clauses (or non-disclosure agreements) had been used in the employment context to hide workplace harassment or to intimidate victims into silence, the Government has wanted to tackle the unethical misuse of, or lack of clarity around, such clauses.

After a 6 month consultation period, the Government recently published its response in which it agreed that confidentiality clauses can have a legitimate place in employment arrangements. They can be used at different stages of an employment relationship: as part of an employment contract, for example to protect commercially sensitive information; and within a settlement agreement, to allow both sides of an employment dispute to move on with a clean break. However, it also acknowledged that it is clearly unacceptable that confidentiality clauses be abused to cover up cases of harassment and discrimination, as this allows for unacceptable workplace cultures to exist.

The Government’s response introduces a number of measures to attempt to reform the situation. The measures include:

  • legislating so that no provision in a confidentiality clause can prevent an individual from making disclosures to the police, regulated health and care professionals and legal professionals.
  • legislating so that limitations in confidentiality clauses are clearly set out in employment contracts and settlement agreements.
  • producing guidance on drafting requirements for confidentiality clauses, in particular, to ensure that clear wording is used and that it is specific about what information can be shared.
  • legislating to improve independent legal advice available to individuals signing confidentiality clauses. Individuals must receive advice not only on the nature of the confidentiality requirement but also on the limitations of confidentiality clauses.
  • introducing enforcement measures for confidentiality clauses that do not comply with legal requirements in written statements of employment particulars and settlement agreements. An individual that receives a confidentiality clause in a written statement that does not meet the requirements may be able to seek a declaration or be entitled to receive additional compensation in an employment tribunal award, if they are successful in their claim.  

The Government have not yet confirmed when new legislation will be introduced to enforce these measures. However, as always, we would advise employers to be proactive in reviewing any standard documents now rather than waiting until guidance is released and the legislation comes into force. For employers it is going to be very important that settlement agreements be clear and specific about what information cannot be shared and with whom and that they are tailored for particular sectors or individual cases. Also, that clear explanations of the effect of confidentiality clauses and their limits is always given.

It is also important to remember that whilst the concern of the misuse of confidentiality clauses has been on sexual harassment so far, the same concern may just as easily arise where there has been unlawful discrimination on the basis of any other protected characteristic.

As ever, ensuring that staff policies, in particular those that address harassment and discrimination, are up to date and that staff adhere to those policies is important, alongside regular reviewing and updating of documentation such as employment contracts and settlement agreements.

Please get in touch with Tiggy or Emma if you would like to discuss any of the above in more detail or if you would like us to review your standard settlement agreements or employment contracts.

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