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New legislation to tackle misuse of confidentiality clauses

New legislation to tackle misuse of confidentiality clauses

Posted on 22 July 2019

In an unusually swift response to the consultation on NDAs, the government has announced that it will introduce legislation to tackle misuse of confidentiality clauses. Part of a wider response to harassment in the workplace, which includes the recently launched consultation on sexual harassment (see our article here), the new legislation aims to prevent confidentiality clauses, or NDAs, being used to silence victims of harassment and discrimination. The new legislation will:

  • Require confidentiality clauses to specifically carve out the disclosure of information to the police, regulated health professionals and legal professionals from their scope.
  • Ensure that those signing confidentiality clauses are informed about what those limitations mean – this should be expressed in plain English in the settlement agreement or in the written statement of terms which must be provided to employees at the start of employment.
  • Require independent legal advice on settlement agreements to cover the nature of and limitations on confidentiality clauses contained in the agreement.
  • Introduce new enforcement measures for confidentiality clauses that do not comply with legal requirements. For employment contracts, these measures will form part of the current employment tribunal regime for a failure to provide a written statement, entitling the employee to additional compensation in some circumstances. In relation to settlement agreements, the government has said that such non-compliant confidentiality clauses will be void in their entirety – certainly a strong incentive for employers to get it right or risk losing the confidentiality protection altogether.

While recognising that confidentiality clauses serve a legitimate purpose in the employment context, as part of both employment contracts and settlement agreements, it is their use to hide workplace harassment or to prevent victims from speaking out that has prompted the reform. Many employers have already changed their NDAs in response to revised best practice, but others will need to ensure that their confidentiality and non-slagging provisions in settlement agreements have the appropriate carve outs. Employers will also need to review their employment contracts and other written statements of terms in light of the new legislation. As usual, the government has promised guidance to help employers and their advisers comply with the new legislation, and has stated that the legislation will be introduced when "Parliamentary time allows". That may not be quite as swift as the response to the consultation.

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