Non-disclosure agreements in discrimination cases

On 11 June 2019 the House of Commons’ Women and Equalities Committee published its report on the use of non-disclosure agreements (NDAs) in discrimination cases. Whilst the benefits are recognised, the use and scope of NDAs require improvements.

Within settlement agreements, NDAs offer employees closure on a situation without fear of ‘blacklisting’ or being maligned as troublemakers.  Confidentiality enables employers to settle cases without admitting liability and to protect their reputations.  However, there is no doubt that in some instances NDAs are misused and they risk covering up unlawful misconduct and allowing it to go unchallenged.  This is particularly so if employers simply enter into NDAs without taking steps to properly investigate and address it.

Prohibiting NDAs outright would be wrong because those who have experienced discrimination or harassment ought to be able to have the freedom to seek a confidential resolution if they wish.

The Committee is correct that clearer drafting of, and more thorough advice about, NDAs is needed so that employees have a greater understanding of their choices and the scope of confidentiality.  Section 203(3)(c) Employment Rights Act 1996 is likely to be strengthened to specifically cover advice on the nature and limitations of any confidentiality clause.

In order to redress the power imbalance in negotiations, the Committee has proposed employers be responsible for the costs of employees being advised on the agreement, but also of any negotiations.  This is regardless of whether an agreement is ultimately concluded.  Will employers be less incentivised to settle cases? It may not be ideal but unless the fees are disproportionate it is unlikely to derail an otherwise commendable settlement.

The Committee also looked at why employees felt deterred from pursuing claims and instead opted to settle.  Cost was an obvious factor.  One proposal is one-way costs shifting whereby there is a presumption that the employer will pay the employee’s costs in a successful sexual harassment case.  It seems a far from convincing way of offsetting the risks and the burdens of litigation. The litigation risks will still be present.  Why should such a presumption be limited to sexual harassment claims? Should there be some reciprocal provision requiring unsuccessful employee pay the employer’s costs (similar to fundamental dishonesty disapplying cost-shifting provisions in personal injury cases)?


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