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Education briefing - Further clarity on the use of NDAs – new ACAS guidance published

  • United Kingdom
  • Education - Briefings

18-02-2020

The Advisory, Conciliation and Arbitration Service (ACAS) has published guidance which aims to provide greater clarity for employers, managers, HR professionals, workers, worker/trade union representatives and job applicants on the law and good practice concerning the use of confidentiality clauses (including in settlement agreements) or non-disclosure agreements (NDAs). This is the latest in a series of developments triggered by the #MeToo movement against sexual harassment.

Background

Many #MeToo campaigners questioned the way NDAs or confidentiality clauses had been used to “silence” victims of sexual harassment. This led to an inquiry, and subsequent report, by the House of Commons Women and Equalities Select Committee (WESC) concerning NDAs in discrimination and harassment cases. A Government consultation followed, which proposed legislative changes to curb the misuse of NDAs. For further information on the background to the consultation and the Government’s response see our education briefing of 23 July 2019.

Pending these legislative changes, the Government directed both the Equalities and Human Rights Commission (EHRC) and ACAS to produce guidance on NDAs. The EHRC’s guidance on NDAs was published in October 2019 (read our education briefing of 22 October 2019) and, last month, the EHRC also issued technical guidance on sexual harassment. For further background information read our education briefing of 17 January 2020.

Scope

Last year’s EHRC guidance was concerned only with the use of confidentiality clauses in discrimination cases. However, the ACAS guidance acknowledges that there are questions concerning their application in a broader range of employment disputes as well. In so doing, it distinguishes between such clauses used in a settlement agreement (or ACAS COT3 settlement) which seek to keep confidential the particular details of an agreement (such as the sum of money agreed in a settlement agreement; some or all of the other settlement terms; and/or some or all of the circumstances leading to the settlement agreement), and those which seek confidentiality for the very fact that an agreement has been made. Other potential uses of confidentiality clauses are identified, for example, employment contract terms which aim to prevent an employee disclosing sensitive commercial information to third parties.

The guidance makes it clear that confidentiality clauses will sometimes be lawful and appropriate, but this is not always the case and they can raise serious moral or ethical issues. In this regard the guidance gives examples of circumstances where it may be inappropriate and/or unlawful to use confidentiality clauses, including when agreements are used to cover up or deter workers from reporting matters including any form of discrimination, harassment, sexual harassment or whistleblowing and where the issue affects a number of other workers, and keeping some or all of the details of a settlement confidential, could have wider impacts due to a lack of transparency or lead to further complications

The EHRC guidance cautioned against resorting to confidentiality clauses on a routine basis. The ACAS guidance adopts a similar approach, recommending employers should first check:

  • if a confidentiality clause is needed
  • if a confidentiality clause could cause serious moral or ethical issues
  • what the consequences of using such a clause might be

To assist employers, various practical examples are provided of workplace issues which ACAS considers could be more effectively resolved by adopting an alternative approach to a confidentiality clause – though the guidance accepts that they will vary depending on matters such as the size of the employer, the seriousness of the situation and what solutions might be considered acceptable by those involved.

In the section on tackling misuse of confidentiality clauses the guidance states that, whilst there are some legitimate uses for confidentiality clauses, there are many situations where they are not appropriate or lawful and that it is important for workers and employers to understand there are limits, and that misusing confidentiality clauses can be very damaging. In particular ACAS focus on the issues of whistleblowing, sexual harassment and discrimination, providing further guidance on the restrictions applying to confidentiality clauses in these areas.

The guidance goes on to suggest that:

  • any manager who is responsible for proposing, deciding or agreeing a confidentiality clause should only do so when they are fully informed and have access to legal advice and support
  • employers should routinely monitor any policy, practice or procedure which could result in the use of a confidentiality clause or be affected by confidentiality clauses
  • it can be helpful for an employer to collect and routinely report on their use of confidentiality clauses to their board, senior management or owners
  • where there is a recognised trade union, employers should work with the trade unions to review, identify, analyse and challenge the use of confidentiality clauses

Finally, the guidance incorporates checklists of issues for employers to consider when proposing, negotiating or drafting a confidentiality clause and also for handling conversations about confidentiality clauses.

Comment

This new ACAS guidance does not amount to a statutory Code of Practice, so Employment Tribunals will not be obliged to take it into account. However it may still be used as evidence in relevant proceedings and does contain clear explanations and practical examples which will do much to raise awareness of an often misreported area of employment law.

The Government has not yet indicated when the promised legislation relating to confidentiality clauses will be introduced. Our advice, however, is that institutions should not delay reviewing their contracts and settlement agreements to ensure any use of confidentiality clauses is managed on a case-by-case basis and is clearly explained to workers.

 

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