What do we already know?
We updated you in our July and August Newsletters on the Government’s consultations in relation to sexual harassment in 2019 (see here and here). We also updated you in our November Newsletter on the Government’s response to the Women and Equalities Committee’s (WESC’s) report on the use of non-disclosure agreements (NDAs) in discrimination cases (available here).
The consultations and response to the WESC report proposed legislative changes to curb the misuse of NDAs and, pending this, the Government directed both the Equalities and Human Rights Commission (EHRC) and ACAS to produce guidance on NDAs.
We are expecting legislation in relation to the use of NDAs in due course.
The Advisory, Conciliation and Arbitration Service (ACAS) has also now published guidance, to provide greater clarity on the law and good practice around the use of confidentiality clauses or NDAs.
In contrast to the EHRC’s guidance (which was only concerned with the use of NDAs in discrimination cases), the ACAS guidance acknowledges their application in a broader range of employment disputes. In so doing, the guidance distinguishes between such clauses used in a settlement agreement (or ACAS COT3 settlement) which seek to keep confidential the particular details of an agreement, and those which seek confidentiality for the very fact that an agreement has been made.
The ACAS guidance also identifies other potential uses of confidentiality clauses, for example in employment contract terms which aim to prevent an employee disclosing sensitive commercial information to third parties.
However, the new guidance makes it clear that NDAs must not be used to stop someone from:
- reporting discrimination or sexual harassment at work or to the police;
- whistleblowing (workers who expose wrongdoing in the workplace); or
- disclosing a future act of discrimination or harassment.
The ACAS also guidance cautions against routinely using confidentiality clauses and recommends that employers first check:
- if a confidentiality clause is needed;
- if a confidentiality clause could cause serious moral or ethical issues; and
- what the consequences of using such a clause might be.
If an employer still wishes to use an NDA then ACAS advice is that employers should:
- always give a clear explanation to the individual of why one is being proposed and what it is intending to achieve;
- ensure the individual is given reasonable time to carefully consider it as they may wish to seek union or legal advice on its implications;
- consider the nature and extent of the confidentiality and how these may be impacted upon by the situation;
- think about whether it is better to address an issue head on rather than try to cover it up;
- use clear, plain English in the agreement which is simple to understand and leaves no room for ambiguity;
- train managers who are involved with these types of agreements; and
- never use NDAs routinely, but rather have a clear, consistent policy around them which is regularly reviewed and reported on.