What’s the secret? Exploring the potential effects of the proposed NDA ban

“The Employment Rights Bill will ban employers from using non-disclosure agreements that silence workplace harassment and abuse,” says the foreword to the announcement on amendments to the new Employment Rights Bill. Andrew Brown looks at the various views and potential consequences for employers and employees.

The long-awaited and much-anticipated proposed amendment has been met with a mixture of jubilation and horror at its potential impact.

The opposing reactions don’t necessarily follow the traditional divide of employer vs. employee. Well-respected employment law barrister, Daniel Barnett, has described it as “a potentially massive own goal” because, in his view, “employers may be less willing to settle discrimination and harassment claims if they can’t insist on confidentiality”.

Others who act mainly for employees, also concerned about the impact of the ban, have said: “Most … don’t want to shout about being abused at work, they want to move on with some compensation that represents justice to them”.

Non disclosure clauses don’t just affect scenarios where the abuse is proven. Perhaps in most cases, they relate to cases where both sides have agreed that, in return for a payment of compensation, the arguments and evidence won’t be aired in court or Tribunal in most cases for any settlement agreement to be valid, the employee must take independent legal advice which should protect them from being hoodwinked into signing something they do not understand.

There is no denying that an individual who has been the victim of abuse will suffer considerable stress in having to give evidence in court or Tribunal. And that’s the point which Daniel Barnett is making – that, if both parties are effectively precluded from reaching an agreement due to confidentiality, victims might be forced into either giving up entirely or giving evidence.

Many of the concerns being expressed about the ban relate to an individual who has genuinely been the victim of abuse and has been brave enough to pursue a claim. The ban on NDAs, however, has the laudable aim of contributing to the prevention of harassment and abuse from continuing in workforces more widely. It is inevitable that an NDA will have a deterrent effect at least on some individuals and could well delay active steps being taken to prevent further abuse. We’ve seen many high-profile examples of that in recent years. So even if there is a risk that it won’t be in the interests of specific individuals (if fewer employers settle), perhaps a ban is in the interests of the public more widely?

The ban on NDAs is not a ban on settlement. Will employers now have a sudden appetite for court or Tribunal? Some say yes. It seems likely, however, that most employers worried about their reputation would still prefer to settle (even if parties are not bound by confidentiality) rather than opt for public litigation. Most will surely take the probably small risk that an employee settles and then publicises their allegations on social media.

Despite the strength with which opinions are being expressed online, many with an understanding of what happened at the BBC and the NHS some years ago would agree that something should be done. However, as one commentator put it, we must be careful of ’the law of unintended consequences’.

NDAs are already null and void in certain situations. Where a disclosure is made ‘in the public interest’ and discloses a breach of a legal obligation (which would include harassment), then the NDA does not preclude that disclosure; the individual must tell the appropriate people, however, in order that it can be properly addressed. In extreme cases, even disclosure to the media can be permissible. Standard template agreements very often now come with a list of circumstances where the NDA does not even apply (including reports to the police). If there is the ability to report something to the police, regulators and politicians, does it also need to be reported more widely? Can a balance be struck?

Further amendments through the course of parliamentary debate may well ensure that rogue employers are held to account, but without preventing the type of settlement that is in everyone’s interests. No matter how strongly people might feel at the moment, we won’t know the impact, for good or for bad, until the law is finalised and operating in practice.

How we can help

If you require assistance or advice with any of the topics mentioned in this article, contact us here or email Andrew.Brown@andersonstrathern.co.uk.