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Government Reforms (2): Consultation on confidentiality clauses

What do we already know?

Confidentiality clauses or non-disclosure agreements (‘NDA’s) serve a useful purpose in the workplace. They can be used primarily in two ways: as part of employment contracts, to protect trade secrets for example, and as part of settlement agreements, for example to allow both sides of an employment dispute to move on with a clean break.

There are some limits on their use: mainly that confidentiality clauses are void if they purport to prevent someone making a protected disclosure, or taking a case to a Tribunal (unless within a COT3 or settlement agreement).

What’s new?

The Government has issued a consultation document which asks for  views on new measures to prevent the misuse of NDAs or confidentiality clauses in situations of workplace harassment or discrimination.  The consultation closes on 29 April 2019, and you can access it here.

The Government recognises that confidentiality clauses can be appropriate in both:

However, the Government wants to target the unethical misuse of, or lack of transparency in, confidentiality clauses and is consulting on whether it should:

Comment:  It will be a relief to employers that, although the consultation paper suggests some significant changes, the Government has stopped short of deciding to ban confidentiality clauses relating to harassment and discrimination altogether.

Confidentiality provisions often benefit staff as well as employers.  For example, they enable sensitive matters to be kept private by all involved, and facilitate settlement to the benefit of both parties.

However, it is worth noting that the proposals are not limited to disclosures about harassment and discrimination. The reforms would apply to all confidentiality clauses in both settlement agreements and employment contracts – including the proposal that the entire clause in a settlement agreement should be void and unenforceable if it does not include the required new wording.

Whatever the outcome of the consultation, we would recommend that all confidentiality clauses expressly state what disclosures an employee is not prohibited from making. They should also be drafted in plain English. The types of disclosures that should be allowed and expressly referred to when drafting employment contracts and settlement agreements, in addition to protected disclosures, include but are not limited to disclosures to:

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Review Solicitiors