UK: Government consultation on regulation of confidentiality clauses in settlement agreements and employment contracts

Further to its response to the Women and Equalities Select Committee report last December (see here), the Government is consulting until 29 April 2019 on proposals to regulate confidentiality clauses (commonly referred to as “NDAs” or non-disclosure agreements) in employment contracts and settlement agreements.  The Government has rejected calls to ban the use of such clauses in harassment and discrimination cases, but instead proposes:

  • clarifying in law that no provision in an employment contract or settlement agreement can prevent someone making “any kind of disclosure to the police … whatever the issue or disclosure, regardless of whether it meets any legislative whistleblowing tests”. The consultation asks whether this should be extended to disclosures to any other persons, and whether any other limitations should be imposed.
  • requiring a clear, written description of rights to be given to the employee before anything is signed, to be included in confidentiality clauses in employment contracts or within a settlement agreement. The Government does not feel that a prescribed form of wording is helpful, as it could quickly become out of date, but suggests legislation that requires confidentiality clauses to make clear that they cannot prevent whistleblowing disclosures, reporting of criminal offences, discussing any matter with the police, or highlighting other relevant statutory obligations such as disclosing information to a court. In relation to employment contracts, the confidentiality provisions and limitations on them should be summarised in the written statement of particulars (and would be subject to the current enforcement provisions allowing tribunals to increase compensation awards by 2 to 4 weeks’ pay if other claims are brought successfully). A confidentiality clause in a settlement agreement that does not meet the new wording requirement would be void in its entirety.
  • in relation to settlement agreements, extending the requirement for the employee to receive independent advice so that, for the settlement agreement to be valid, the advice must cover the nature and limits of any confidentiality clauses in the settlement agreement and the disclosures a worker is still able to make.

The Government is not proposing making it a criminal offence to propose a confidentiality clause designed to prevent whistleblowing or reporting of a criminal offence given the difficulties of enforcement. Equally, there is no mention of any proposal to require businesses to notify the use of settlement agreements with non-disclosure provisions to some form of regulator. The consultation document is here.

The proposals go slightly further than the SRA warning notice and Law Society guidance issued earlier this year, in particular in suggesting that any confidentiality clause should expressly permit discussing any issue with the police and requiring independent advice on a settlement agreement specifically to cover the scope of the confidentiality clause. Pending the outcome of the consultation, it would be prudent to update existing template settlement agreements to comply with current best practice as set out in the SRA/Law Society guidance, in particular to make clear what types of disclosure remain permitted notwithstanding the confidentiality agreement.

Having an express carve-out for permitted disclosures will become critical should the proposals be adopted, as a failure to do so would prevent an employer from enforcing the confidentiality provision in its entirety. Employers would also need to consider revisions to confidentiality clauses in employment contracts and written statements of particulars – the consultation does not address to what extent it will be necessary to amend these for the existing workforce or whether the obligation will only arise if an existing employee requests a new statement or is issued with a new statement due to some other change in terms. Employers could also face demands for a higher contribution to an employee’s legal fees on a negotiated settlement given the greater extent of the required independent advice.

Anna Henderson
Anna Henderson
Professional Support Consultant, London
+44 20 7466 2819

UK: interim injunction prevents workplace culture disclosures to media

The appropriate use of confidentiality agreements in the employment context has come under a lot of scrutiny given the #MeToo campaign; a recent case illustrates how the courts may approach the issue of enforceability.

In Linklaters LLP v Mellish, Linklaters was granted a temporary injunction to restrain the defendant, its ex-global director of business development, from disclosing certain confidential information obtained from, and relating to, his employment, which Linklaters contended was confidential information relating to partners and/or employees of the firm and protected by express duties of confidence owed to it by the defendant, pursuant to his contract of employment. (Linklaters did not seek to restrain the defendant from publicising in general terms his ‘impressions of the current culture at Linklaters’.)

Following the termination of his employment, the defendant had indicated that he would give interviews concerning the ‘current culture’ at Linklaters in respect of women in the workplace, as demonstrated by three specific incidents. The Queen’s Bench Division held that there was clear evidence of a threat or intention to give interviews for publication about matters that had come to the defendant’s attention in the course of his employment, that the likelihood that Linklaters would succeed at a trial was sufficient to justify injunctive relief and that the rights of the third parties involved (in particular, employees and ex-employees who had raised grievances with an expectation of confidentiality) bolstered the case in favour of granting an injunction.

The right approach for the court to take, when faced with a contest between public interest considerations and a contractual duty of confidence, was to ask itself not just whether the information was matter of public interest, but whether, in all the circumstances, it was in the public interest that the duty of confidence should be breached. While there may be a legitimate public interest in firms performing their moral and social duties to their staff, this did not override the legitimate interest in maintaining confidentiality. There might be cases in which the details of individual acts of alleged or establish misconduct, combined with one another, created a compelling picture of persistent or habitual wrongdoing, serious enough to satisfy the relevant tests. In some cases, the public interest in correcting misleading public statements could come into the picture. However, there was no such evidence in this case.

Anna Henderson
Anna Henderson
Professional Support Consultant, London
+44 20 7466 2819

UK: Government response to sexual harassment report: New statutory Code of Practice and more consultation

The Government has today published its response to the Women and Equalities Select Committee report published in July of this year (see our blog post here) on sexual harassment at work.  It has noted the lack of data and research on this issue, as highlighted by the Committee, and therefore, for the most part, its response is to consult and collect more data in order to identify the most effective interventions.  However, it has agreed with the Committee that a new statutory Code of Practice should be introduced, to be developed by the Equalities and Human Rights Commission (EHRC).

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Hong Kong: Proposed changes to discrimination laws

On 30 November 2018, legislation was gazetted which proposes various amendments to the Sex Discrimination Ordinance, Disability Discrimination Ordinance, Family Status Discrimination Ordinance and the Race Discrimination Ordinance. The proposed amendments reflect eight of the recommendations from the Equal Opportunities Commission Report on the Discrimination Law Review. Key changes include extending protections against discrimination on the ground of breastfeeding and extending protections against disability and racial harassment by customers.

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Australia: Navigating the Christmas season in the #MeToo era: 5 tips for planning a fun (and liability-free) work event

The spotlight on sexual harassment in the workplace has never been brighter. The #MeToo movement has empowered people to draw a sharp line in the sand about inappropriate sexual behaviour in the workplace. The number of high profile men – politicians, entertainers and business leaders, plus the many, many others whose conduct escapes the public scrutiny, continues to escalate. We’ve published five tips for planning a fun work event during the festive season on our website. Click here to discover what these tips are. Continue reading

Australia: Workplace violence and red collar crime: Is it more threatening than you think?

Workplace violence is a significant and ongoing risk that employers should be alive to because it affects employee health, safety and wellbeing, which in turn impacts on productivity, absenteeism, sickness and replacement costs, to name a few.  In respect of the individual, it often causes physical or psychological injury and can even lead to death. In respect of the employer and industry more broadly, it can play out as an expensive scenario in terms of resources, money, time, good will, reputation and increased workers’ compensation and insurance premiums. Unfortunately however, the extent and prevalence of workplace violence in Australia is somewhat unknown. This is partly due to definitional ambiguities, the absence of national data being collected in this area and under-reporting. Continue reading

UK: parliamentary committee proposes reforms to laws on sexual harassment in the workplace

The House of Commons Women and Equalities Committee has published its report on sexual harassment at work, including the following recommendations:

  • a mandatory duty on employers to protect workers from harassment and victimisation, supported by a statutory code of practice and enforcement powers for the Equalities and Human Rights Commission including financial penalties for breach
  • protection should be extended to interns and volunteers
  • the reintroduction of employer liability for third party harassment (including first occurrences), statutory questionnaires, and tribunal powers to make wider recommendations (for the benefit of persons other than the claimant)
  • punitive damages to be available, and costs should normally be paid by the losing employer in a sexual harassment case
  • 6 month time limits for harassment claims (currently 3 months), put on hold while internal procedures are completed
  • mandatory use of approved text for confidentiality clauses which should include clear, plain English wording setting out the meaning, effect and limits of confidentiality clauses, including a clear explanation of what disclosures are protected under whistleblowing laws and cannot be prohibited or restricted
  • it should be a criminal offence for an employer or their professional adviser to propose a confidentiality clause designed or intended to prevent or limit the making of a protected disclosure or disclosure of a criminal offence; use of provisions in confidentiality agreements that can reasonably be regarded as potentially unenforceable should be clearly understood to be a professional disciplinary offence for lawyers advising on such agreements
  • whistleblowing legislation should be amended to clearly cover disclosures of sexual harassment to the police and all regulators, including the Equality and Human Rights Commission and Health and Safety Executive, and to any court or tribunal
  • sexual harassment by regulated persons should clearly be a breach of regulatory requirements by the individual and their organisation; such breaches must be reported to the appropriate regulator and must be taken into account when considering the fitness and propriety (or equivalent) of regulated individuals and their employers.

The government has yet to respond to the recommendations. In the meantime, employers may want to review existing harassment policies and procedures to ensure they are effective and consider refresher training for staff.