Recent amendments to the Employment Rights Bill include proposals to prevent confidentiality clauses related to allegations of discrimination and harassment.
In this article we provide a definition of confidentiality clauses, when these are introduced in Employment Tribunal claims, and the proposed changes to confidentiality clauses under the Employment Rights Bill. We also highlight the implications and benefits the changes will bring for employers.
A confidentiality clause is a term in an agreement which has the purpose of preventing, to some extent, the disclosure and use of specified information. This will commonly prevent either party from disclosing information which is material to a particular transaction or relationship.
It's common for Employment Tribunal claims to be settled outside of proceedings by way of a settlement agreement. These agreements will almost always contain clauses on confidentiality around the existence of the settlement, the terms of the agreement and the circumstances leading up to termination of employment.
As currently drafted, the Employment Rights Bill would prevent confidentiality clauses related to allegations of harassment, including sexual harassment, and discrimination in settlement agreements or other agreements, for example employment contracts. The intention behind the changes are clear. Deputy Prime Minister Angela Rayner stated in relation to the changes:
‘We have heard the calls from victims of harassment and discrimination to end the misuse of NDAs. It is time we stamped this practice out – and this government is taking action to make that happen. The Employment Rights Bill will ban any NDA used for this purpose, so that no one is forced to suffer in silence.’
It's already common within settlement agreements to have provisions allowing disclosure to, for example, immediate family members or where this is required by law. However, these changes would go one step further by preventing any restrictions that prevent the worker from disclosing allegations related to discrimination and harassment. Interestingly, this does not extend to allegations regarding a failure to make reasonable adjustments.
These changes would follow the lead in other jurisdictions such as Ireland, the United States and areas of Canada where there has been a shift against such clauses.
One of the key attractions for employers entering into a settlement agreement, such as a COT3 agreement, is avoiding the reputation risk of a public judgment. Therefore, these changes may lead to fewer employers being willing to enter into these settlement agreements given the continued risk of reputational damage. This is particularly the case where they believe that they have a strong chance of winning at a final hearing and receiving the vindication of a public judgment.
On the other hand, the changes are likely to encourage employees who have been subject to discriminatory conduct to speak out and take encouragement from others who have done so. Similarly, this may encourage employers to take active steps to prevent this conduct from taking place at all.
For further information and advice, please contact our employment team.
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