Since #MeToo brought non-disclosure agreements (NDAs) into the spotlight in late 2017, there has been a flurry of activity from government committees and regulatory bodies seeking to implement change. The most recent activity is a government response on proposals to prevent the misuse of confidentiality clauses that was published at the end of last month.
The government echoed in its response that confidentiality clauses are useful in both employment contracts and settlement agreements. However, the government criticised their misuse, especially when used to cover up harassment in the workplace or as an intimidation tactic. As a result, the government has committed to introduce appropriate legislation “when parliamentary time allows”.
One of the focuses is on the use of confidentiality clauses in settlement agreements. It is envisaged thatthe proposed legislation would:
- ensure no provision in a settlement agreement prevents someone from making a disclosure to the police, regulated health and care professionals, or legal professionals;
- require confidentiality clauses in settlement agreements to clearly set out their limitations;
- ensure the independent legal advice that an individual must obtain before entering a settlement agreement will include advice on the confidentiality clause itself; and
- introduce new enforcement measures for confidentiality clauses that do not comply with legal requirements.
Although these proposals are not likely to be introduced in the very near future, we are still seeing the effects of the recent push for change regarding NDAs when drafting settlement agreements. The Solicitors Regulation Authority (SRA) has recently indicated that the clauses that cause them most concern include those which:
- permit disclosures only where they are “required” by law (rather than where a party chooses to make a disclosure to an appropriate law enforcement or regulatory body); or
- seek to impose restrictions on a party’s ability to participate in criminal or other proceedings, or deter them from taking part in those proceedings.
The approach recommended by the SRA is for the agreement itself to identify specifically what disclosures are not prohibited by the confidentiality clause. These exceptions will usually include disclosures to a court, regulator or other competent authority.
What the government response and the SRA’s comment highlight is that times are changing and more care must be taken in drafting confidentiality clauses. Employers should review their settlement agreements to ensure that these changes are reflected.
