The government has recently indicated that it is considering a ban on UK employers using Non-Disclosure Agreements (NDAs) to cover up cases of sexual misconduct and harassment in the workplace as part of the overhaul of employment rights.
NDAs are commonly used to settle disputes as part of broader Settlement Agreements, which are legally binding contracts used where an employee agrees to keep matters confidential and not pursue a claim against their employer in return for an enhanced financial package.
Some complaints, such as whistleblowing and reporting criminal offences, cannot be silenced by NDAs, however, NDAs can still currently be used to cover up sexual harassment allegations. The Employment Rights Bill already includes a provision adding sexual harassment to the list of whistleblowing protections. If enacted, sexual harassment allegations will no longer be silenced using NDAs, but the government is considering going one step further with an outright ban on NDAs for sexual harassment.
The most significant risk to employers of facing a claim for sexual harassment is the reputational damage that will inevitably result in a public Tribunal hearing. However, the idea of bringing an Employment Tribunal claim is not very appealing to an employee due to the rule that each party must bear its own legal costs, and backlogs in the Tribunal system which mean it can take a long time to reach a final hearing. Furthermore, compensation for sexual harassment is not punitive for the employer and the legal costs of pursuing a claim in the Tribunal can often far outweigh the likely compensation that would be awarded to a successful claimant. A Settlement Agreement is therefore usually the easiest and least costly way to bring the matter to a conclusion for both parties. Without the ability to include an NDA in a Settlement Agreement and ensure the confidentiality of the matter, employers are more likely to wait to see if a case is going to the Tribunal, before offering a Settlement Agreement.
In many cases, the confidentiality surrounding such Agreements is justified, for example, where both parties prefer the matter to remain confidential or where the validity of the complaint is genuinely contested by the employer. However, NDAs also have the effect of silencing victims and preventing them from speaking up about their experiences, covering up serious acts of sexual misconduct and protecting and allowing powerful individuals and organisations to avoid accountability for their actions.
Following the #MeToo movement, and the numerous recent high-profile cases reported in the media, there is a growing campaign towards breaking NDAs, particularly where there is a mass of victims. The potential reputational damage to organisations is significant in cases where it is clear NDAs have been used to cover up the historical actions of an abuser.
The banning of NDAs would aim to protect individuals, tackle unacceptable workplace culture, and create a level playing field for employees and businesses.
Ultimately, however, NDAs are only part of the problem of workplace harassment and discrimination. Of upmost importance is for employers to lead an organisation with transparency and progressiveness, value diversity and inclusion, promote a zero-tolerance culture towards all forms of discrimination and harassment and create a safe and supportive working environment.
To find out more about the information in this blog, or for more information about the sexual harassment training we offer, please contact our Employment Team on 0345 646 0406 or complete an online enquiry form, and a member of the team will be in touch.