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Reset the parameters around the use of NDAs

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The Women and Equalities Committee, report, non-disclosure agreements, NDAs, harassment, discrimination, bullying‘A convenient vehicle for covering up unlawful activity with legally sanctioned secrecy’.

The Women and Equalities Committee’s report on the use of non-disclosure agreements in discrimination cases, published recently, shows unequivocally that in many cases signing a non-disclosure agreement is not benign.

Non-disclosure agreements (NDAs) are often referred to as ‘confidentiality clauses’.

They are seen as an important part of business and employment law, as they prevent would-be partners or investors or current or past employees from revealing a company’s plans, secrets, or just ideas. These NDAs are usually signed when discussions are being held or an employee is hired.

They are also known as ‘gagging orders’ or ‘hush agreements’.

But they are also used when disputes, such as sexual harassment claims or wrongful dismissal, are resolved outside of a tribunal hearing.

Earlier this year, for example, a BBC investigation revealed that over the past two years universities have spent £87m on pay-offs with ‘gagging orders’ to keep allegations of bullying, harassment or sexual misconduct quiet.

The difficulties of pursuing a case at employment tribunal and the substantial imbalance of power between employers and employees mean that employees can feel they have little choice but to reach a settlement that prohibits them from speaking out.

And in some cases allegations of unlawful discrimination are not investigated properly – or at all – by employers.

And it is completely unacceptable, the Committee said, that allegations of unlawful discrimination and harassment in the workplace are routinely covered up by employers with legally drafted non-disclosure agreements (NDAs).

In their report, MPs condemn the routine cover-up of allegations of unlawful discrimination and harassment in the workplace, and the fact that some employers fail to investigate allegations of unlawful discrimination properly – and they have challenged the government to act to change this now.

The government, they said, must reset the parameters around the use of NDAs and address the failure of the employment tribunal system to ensure that all employees who have experienced discrimination have a meaningful route of redress.

The report highlights the difficulties of pursuing a case at employment tribunal and the substantial imbalance of power that can exist between employers and employees which can drive employees to feel that they have little choice but to reach a settlement that prohibits them from speaking out.

The Committee has proposed a range of solutions.

The government should:

Ensure that NDAs cannot prevent legitimate discussion of allegations of unlawful discrimination or harassment, and stop their use to cover up allegations of unlawful discrimination, while still protecting the rights of victims to be able to make the choice to move on with their lives;

Require standard, plain English confidentiality, non-derogatory and similar clauses where these are used in settlement agreements, and ensure that such clauses are suitably specific about what information can and cannot be shared and with whom;

Strengthen corporate governance requirements to require employers to meet their responsibilities to protect those they employ from discrimination and harassment; and

Require named senior managers at board level or similar to oversee anti-discrimination and harassment policies and procedures and the use of NDAs in discrimination and harassment cases.

And the Committee renewed its earlier calls for the government to place a mandatory duty on employers to protect workers from harassment and victimisation in the workplace.

It also recommended that tribunals should be able to award punitive damages, and that awards for the non-financial impact of discrimination should be increased significantly.

And the MPs called for these actions must be taken urgently, to bring about an immediate step change in the use of NDAs in discrimination cases.

The Chair of the Women and Equalities Committee, Maria Miller MP, said: “We heard during our previous inquiry into sexual harassment in the workplace that the current use of non-disclosure agreements in settling such allegations is at best murky and at worst a convenient vehicle for covering up unlawful activity with legally sanctioned secrecy.

“It is particularly worrying that secrecy about allegations of unlawful discrimination is being traded for things that employers should be providing as a matter of course, such as references and remedial action to tackle discrimination.

“After signing an NDA, many individuals find it difficult to work in the same sector again,” she continued.

“Some suffer emotional and psychological damage as a result of their experiences, which can affect their ability to work and move on.

“There is also the financial penalty of losing a job and bringing a case against an employer.

“Organisations have a duty of care to provide a safe place of work for their staff and that includes protection from unlawful discrimination.

“Some organisations now routinely settle employment disputes without the use of NDAs. We have put forward a range of measures to ensure more follow suit.”

To read the full report, click here.

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