In the era of #MeToo, can businesses still use Non-Disclosure Agreements…

21st May 2019

...to settle employee disputes?

The use of so-called Non-Disclosure Agreements (NDAs) has been making headlines recently in the wake of the #MeToo movement. A host of celebrities and business leaders, including Harvey Weinstein, Philip Green and President Donald Trump, have been accused of using NDAs to ‘hush up’ allegations of bullying and sexual harassment.

Given all the negative press surrounding NDAs and confidentiality clauses, do businesses need to be careful about how, and when, they use confidentiality clauses to settle workplace disputes?

Tessa Robinson, an Employment Law Solicitor at Furley Page’s Thames Gateway Chatham office, explains: “Confidentiality clauses were originally designed to stop employees sharing trade secrets when they moved to another company. In recent years NDAs have become synonymous with hushing up allegations of bullying and sexual harassment.

“However, the vast majority of so-called NDAs are settlement agreements, which are legitimately used by employers to protect commercial interests and reputation when settling employment claims brought by their workers.”

Claims that are settled under a settlement agreement are usually without the admission of liability and are often used to avoid the legal fees and time to defend a claim at tribunal.

Robinson continued: “A key benefit to both the individual and the employer is that the matter is dealt with swiftly. At present, tribunal hearings are being listed for around 12-18 months after a claim has been lodged, and many people simply don’t want to wait that long to resolve an issue.

“As well as valid allegations of bullying, sexual harassment or commercial impropriety, employers also face vexatious claims from disgruntled employees who are simply trying their luck. The use of settlement agreements with a confidentiality clause means employers can deal with the issue quickly and without the risk that unjustified allegations will be made public after the settlement is agreed.”

Current guidance states that confidentiality clauses should be specific as to what they cover, while stating that an individual is still able to make a disclosure of whistleblowing, or report any instance of misconduct, wrongdoing or a criminal offence.

Robinson concluded: “Employers can still use confidentiality clauses in settlement agreements, but they must follow these guidelines and seek legal advice to ensure the NDA offers the necessary protection.

“Failure to do so will likely mean that the entire settlement agreement will be void.”

For more information about Furley Page's Employment Law services, contact Tessa Robinson by email at tar@furleypage.co.uk or call 01634 828277.

You can also follow the firm on Twitter @furleypage and on LinkedIn.

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