Education briefing - EHRC takes a firm approach: new guidance on confidentiality agreements in discrimination cases

• United Kingdom

• Education - Briefings

22-10-2019

The Equality and Human Rights Commission (EHRC) has published guidance on the use of confidentiality agreements in discrimination cases. The guidance contains a helpful explanation of the law applying to such agreements and also seeks to push back on the routine use of confidentiality clauses by employers when settling discrimination disputes. It is important that HR professionals and in-house lawyers at institutions familiarise themselves with the guidance, which was produced by the EHRC at the request of the Government.

Background

The use of non-disclosure or confidentiality clauses in employment contracts, particularly following the #MeToo revelations, has been under scrutiny by the Government for many months, with mounting pressure for tighter legal regulation.

Between 4 March and 19 April, the Government consulted on ‘measures to prevent misuse of confidentiality clauses in situations of workplace harassment or discrimination’. In July, the Government published its response to the consultation exercise confirming that legislation will be introduced to:

• ensure that a confidentiality clause cannot prevent disclosures to the police, regulated health and care professionals and legal professionals;
• require that limitations imposed by confidentiality clauses are clearly set out in employment contracts and settlement agreements;
• improve the independent legal advice available to an individual when signing a settlement agreement; and
• introduce new enforcement measures for confidentiality clauses that do not comply with legal requirements.

In addition, Acas and the EHRC were tasked with producing new guidance, the latter being published last week (link here). For further information on the background to the Consultation and its proposals, read our briefing.

The EHRC guidance

Scope

The guidance covers confidentiality agreements (also known as confidentiality clauses, non-disclosure agreements (NDAs) or “gagging clauses”) under which it is agreed that certain types of information will not be discussed or divulged to third parties. Reflecting the EHRC’s remit, the guidance is concerned only with confidentiality agreements that could stop a worker speaking about any act of discrimination, harassment and victimisation. The guidance covers a broad range of employees and workers, including agency workers, apprentices and job applicants (collectively referred to in the guidance as ‘workers’) and applies to England, Scotland and Wales.

Aims and status

The guidance refers back to the EHRC’s 2018 report ‘Turning the tables: ending sexual harassment at work’, which concluded that there are many reasons why workers may not feel able to speak up about discrimination and that confidentiality agreements are part of the problem.

The EHRC recognises that confidentiality agreements in the context of discrimination can have legitimate uses, such as where a worker wants to keep complaints private. However, it is concerned that agreements may be used inappropriately, resulting in a “chilling effect” within organisations where workers feel unable to speak up.

As such, the guidance aims to help employers to understand when confidentiality agreements can be used legitimately and when these agreements will not be enforceable and to help employers to better understand how to:

• ensure that confidentiality agreements are drafted appropriately for the situations they encounter;
• ensure workers understand what they are entering into; and
• maintain proper oversight of the use of confidentiality agreements.

Although the guidance is not a statutory code, meaning that an employment tribunal is not obliged to take it into account, it may still be used as evidence in legal proceedings where it is relevant, and is therefore likely to be referred to.

Key content for institutions

The guidance:

• explains when a confidentiality agreement will be unenforceable, such as where a worker is under duress to sign it or the agreement seeks to prevent lawful whistleblowing, reporting a criminal offence, cooperating with a criminal investigation or making other disclosures required by law/a regulatory duty, or it includes a penalty clause
• requires employers, as a matter of good practice, to ensure that workers understand the limitations of a confidentiality agreement through clear drafting and explanations, giving workers time to reflect and take advice as appropriate, providing a signed copy for their records and ensuring that internal policies/training/induction process clarify how discrimination can be reported and that reports will be taken seriously
• states that where confidentiality agreements are used, they should not normally impose an obligation on a worker that is not also imposed on the employer

The guidance also provides advice on using confidentiality in settling discrimination disputes (in settlement agreements and Acas COT3 agreements). For example:

• not having a blanket policy of always including confidentiality clauses. It goes further by stating that “most cases” will not require a confidentiality agreement to stop a worker discussing an act of discrimination and may only be appropriate where, for example, it is at the worker’s request, to protect a witness, to protect a worker who has been falsely accused or during the course of an investigation or tribunal proceedings to avoid those processes being prejudiced;
• only including confidentiality agreements where justified, having weighed up the reason, benefit to the employer, impact on the worker and the organisation’s culture and the benefit of leaving it out;
• avoiding standard wording, instead tailoring the agreement to the particular circumstances and going no further than necessary and appropriate - for example, if the institution’s main concern is the worker discussing with other workers how much compensation they have been paid, then the confidentiality agreement could be drafted to prevent them discussing that without preventing them from discussing the act of discrimination itself. Employers should take advice as necessary on their use of confidentiality and wording;
• informing the worker why it is including a confidentiality clause, as this will enable the worker to consider with their independent adviser whether it is reasonable for a confidentiality agreement to be used;
• listing in the agreement, as a matter of good practice, those people or organisations with whom the worker may discuss the issues covered by the agreement - these go beyond those currently required by law, such as a trade union and immediate family (provided they are also asked to keep the matter confidential);
• paying for the worker’s reasonable costs to receive independent advice on the terms of the settlement agreement, including where the worker reasonably decides not to sign the agreement, and giving the worker at least 10 days to take and consider that advice. The guidance states that whilst an employer can place a reasonable limit on the costs it is willing to pay for the worker to take independent advice, this should be sufficient to allow the worker to take advice from an independent adviser on the settlement agreement (including any confidentiality agreement, and to ask their adviser to seek changes to it if necessary). Although what is considered reasonable will vary from case to case – it suggests that the employer should take advice from the lawyer who has drafted the agreement and take into account the views of the worker’s independent adviser; and
• not treating settlement as the end of the matter if acts or allegations of discrimination have not been investigated or action taken to prevent a reoccurrence. In this respect, the EHRC points out that employers may be vicariously liable for current and future discriminatory acts between workers if it has failed to take reasonable steps to address the immediate act which is the subject of the settlement agreement

This central record could include:

• when confidentiality agreements have been used;
• what type of claim they were used for;
• who any allegations of discrimination were made against;
• what type of confidentiality agreement was used; and
• why they were used

On keeping such a record, institutions should ensure they comply with data protection legislation.

To check that confidentiality agreements are not being misused or overused the guidance advises that:

• the employer’s board of directors (or equivalent) should have oversight of the central record of confidentiality agreements – so in education institutions this will be the board of governors;
• the use of a confidentiality agreement should be signed off by a director (or equivalent) or by an appropriate delegated senior manager- so likely to be a member of the SMT;
• confidentiality agreements should, where reasonably possible, be signed off by someone who was not involved in the act of discrimination or in hearing any grievance related to it; and
• the board of directors (or equivalent) should ensure that policies and procedures require managers to escalate concerns about the workplace culture, systemic discrimination or repeated or highly serious acts of discrimination by one individual.

Finally,  the guidance reminds institutions to consider whether the use of confidentiality agreements complies with their general public sector equality duty to have due regard to the need to:

• eliminate discrimination, harassment and victimisation;
• advance equality of opportunity between people who have a protected characteristic and people who do not; and  
• foster good relations between people who share a protected characteristic and people who do not.

The guidance suggests, for example, that the use of confidentiality agreements to limit discussion of harassment may impact on an institution’s ability to eliminate harassment by preventing it from demonstrating how those who harass others will be dealt with, from identifying repeat harassers, or hindering its ability to collect data about harassment and tackle its root causes, or preventing lessons being learned

Comment

It has been clear for some time that the routine use of confidentiality clauses in agreements settling discrimination disputes would need to be reviewed and the EHRC guidance is useful clarification as to how those practices will need to change. Many employers in the sector have already reviewed their use of confidentiality clauses and, for those, much of this guidance will reflect steps they have already taken, or are intending to. Compliance with the guidance will be seen as a benchmark for institutions with a stated commitment to a “zero tolerance” approach to harassment.

It is important that all institutions familiarise themselves with the guidance, consider whether there are any further steps they should be taking, and take advice where necessary. Institutions will also need to review and update the drafting of their standard settlement agreement templates to reflect the guidance and consider whether to adopt a formal policy – or at least clear internal guidance – on their approach to confidentiality clauses and arrangements for governing body oversight on their use.

This is not the final word on NDAs. Further guidance is expected to be published by Acas and, as outlined above, we also await legislation in this area.