News and Events

New report on Non-Disclosure Agreements in Discrimination Cases

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The Women & Equalities Committee of the House of Commons has produced its report on The Use of Non-Disclosure Agreements in Discrimination Cases.

This is an extract from the summary, which sets the tone:

"The difficulties of pursuing a case at employment tribunal and the substantial imbalance of power between employers and employees, mean that employees can feel they have little choice but to reach a settlement that prohibits them speaking out.Our Report shows unequivocally that in many cases signing a non-disclosure agreement is not benign."

The report contains many recommendations; these are some of them :

• require standard, plain English confidentiality clauses where these are used in settlement agreements

• consider one-way cost shifting (so the employer is more likely to be ordered to pay the employee's costs)

• massively increase damages for non-pecuniary loss (ie the Vento guidelines)

• increase the time limit for bringing a discrimination claim from three months to six months

• require employers to pay the cost of employees seeking legal advice, and of negotiating the terms in a proposed settlement agreement, regardless of whether the agreement is eventually signed

• strengthen corporate governance requirements to require employers to meet their responsibilities to protect those they employ from discrimination and harassment;

• require named senior managers (not HR) at board level or similar to oversee anti-discrimination and harassment policies and procedures and the use of NDAs in discrimination and harassment cases.

My view? Many of the recommendations in the report are sensible (although I'm not so sure about compelling employers to pay the employee's legal fees even when the employee refuses to sign an agreement). But although the Committee touches upon the benefit of settlement, it fails to grapple with the fact that many employers simply will not settle unless they can ensure confidentiality, for they might otherwise prefer to roll the dice and contest the allegations in a tribunal. As James Laddie QC, who comments on Twitter, puts it:

"I believe the committee understates the value of NDAs. In most (not all) cases, they are essential to parties avoiding an expensive and traumatic hearing that neither side wants. It's true that NDAs harm the public interest inasmuch as they make it much more difficult for allegations of discrimination & harassment to come to light. But the public interest in enabling litigants to settle their disputes is at least as important."

If you want to read a summary of the report, don't read the short summary at the beginning. Instead, read the longer summary from page 49 onwards.