As the Government’s flagship Employment Rights Bill is still working its way through Parliament, a new section has been added that will make non-disclosure agreements (NDAs) relating to discrimination or harassment unenforceable.
What are the proposed changes to NDAs relating to discrimination or harassment?
Typically, any settlement agreement with an employee (or former employee) includes an NDA requiring both parties to keep the circumstances leading up to the settlement confidential. The aim is, commonly, to allow both sides to put the dispute behind them and move on. However if the Bill becomes law in its current form, NDAs will no longer prevent employees from disclosing allegations of discrimination or harassment, nor can they prevent disclosures about how the employer responded to allegations of discrimination/harassment. Employers will have to be alive to the risk of any allegations of discrimination becoming public, as well as details of how they investigated any complaints or grievances.
That said, NDAs will still be valid in relation to other claims, so employees making statements after signing an NDA will need to be careful that they only discuss discrimination or harassment and do not mention any other claims they might have settled (such as unfair dismissal).
The Government are concerned that NDAs are being misused to silence genuine victims of discrimination. The Government believes, as outlined in the Impact Assessment it has published in relation to the changes, that its ban on NDAs will lead to more transparent and accountable workplace cultures, in turn leading to fewer people suffering discrimination at work. Whilst no doubt a laudable aim, the changes could also have unintended negative consequences – in particular:
- The Government acknowledge that employers may be less likely to settle discrimination claims if there is no longer a guarantee of confidentiality. If more claims go to trial, this will mean longer waits for compensation for those with meritorious claims, with the additional stress of having to go through a full trial.
- More claims going to trial will place more of a burden on the (already overstretched) Tribunal system and Acas, leading to even longer delays before claims are resolved.
- The law only prevents employers enforcing NDAs – it does not prevent claims for libel or malicious falsehood based on allegations of discrimination. So if an employee makes these allegations publicly, there may still be legal consequences as a result.
What can employers do about the proposed changes to NDAs?
If the changes come into force, employers will need to update any template NDAs they have. We would also recommend reviewing internal grievance and whistleblowing processes to ensure these are up to date and fit for purpose, as they may come now under external scrutiny. Employers should also plan for how they might respond to allegations against them being made publicly.
The Employment Rights Bill is due to be considered again by the House of Lords on 3 September. For more information on the Bill’s progress and the other major changes to employment law being made, contact our employment team and subscribe to our monthly employment law updated on LinkedIn here.