There has been a lot of publicity recently around the use of non-disclosure agreements (NDAs), in particular allegations that some employers have deliberately misused them to prevent reporting of sexual harassment, discrimination and whistleblowing.
In response, workplace rights body ACAS has published new advice to help employers and workers understand what NDAs are and how to prevent their misuse. This advice explains that NDAs can be used legitimately in certain situations to prevent the disclosure of sensitive commercial information or trade secrets.
The new guidance stresses that it is not appropriate to use them to prevent an individual from reporting sexual harassment, discrimination and whistleblowing now or in the future. The guidance explains that NDAs should not be used to hide a problem or brush it under the carpet.
What is an NDA in the employment context?
An NDA is not a standard term used in most employment relationships. While it is possible that it can be used as a standalone document, this is unlikely unless the employment is very high profile or there is access to extremely confidential information.
Much more likely, as is noted in the guidance, is that an NDA is a confidentiality clause contained within an employment contract, a settlement agreement, or an ACAS settlement form (‘COT3’).
Therefore, even if employers don't offer a traditional and bespoke NDA, the guidance is constructed in such a way that employers should be mindful of it when drafting various different agreements.
ACAS guidance on how to correctly offer an NDA
As outlined above the purpose of the new guidance is not to prohibit the use of NDAs but instead to ensure they are only used in appropriate circumstances, and that employees are given appropriate information prior to signing up.
The guidance explains that if an employer still wishes to use an NDA, then they should:
- always give a clear explanation of why one is being proposed and what it's intending to achieve
- ensure that a worker is given reasonable time to carefully consider it as they may wish to seek trade union or legal advice on its implications
- think about whether it's better to address an issue head on rather than try to cover it up
- never use NDAs routinely
A confidentiality clause is often an important term in a contract of employment, and usually deals with protection of business information. Prevention of these types of clauses is not the aim of this guidance.
The rationale of the guidance is more around prevention of reporting of inappropriate behaviour and avoidance of dealing with such behaviour. This is, of course, an admirable aim and is only to be encouraged.
However, conversely, if there are allegations made either in an employment tribunal claim or in an internal procedure, then it is natural that employers would wish that if a payment is made to the employee within a COT3 or settlement agreement, then the employee will agree not to continue with their complaints, nor (in general) discuss them further. These complaints may well be unproven and difficult to determine, with others named in such complaints are also affected. Some employees who have raised such complaints may also wish that they are kept confidential. Therefore, it is not as simple to say that these clauses, or agreements, are inappropriate to use. Rather, judgement must be exercised.
The guidance goes onto explain that these types of agreements should be written in clear, plain English that is simple to understand and leaves no room for ambiguity. Managers involved with these types of agreements should be well trained in using them. Businesses should have a clear and consistent policy around them that is regularly reviewed and reported on.
Furthermore, the guidance recommends that once a worker has been presented with an NDA they should be able to ask questions and seek advice before agreeing to an NDA. A staff member can also seek advice if they have concerns over an NDA they have already signed. Sources of available help include legal representatives, trade union representatives, the police and healthcare professionals. In any event, to be binding, a settlement agreement requires the employee to take appropriate independent advice (usually from a solicitor).
While this is guidance only and not legally binding on employers, it is a developing area. For some organisations in the public sector there is already direction on the use of confidentiality clauses, and the Law Society of England and Wales has also issued guidance. It remains to be seen whether there will be a legislative response or whether the advisory guidance is viewed as enough.
Get in touch
Our team of specialist employment lawyers are able to offer guidance to employers and employees in relation to NDAs. If you've any queries about drafting appropriate NDAs, or if you have been offered an NDA or settlement agreement our team of specialist employment lawyers can assist. Please just contact us on 0131 247 2534 to discuss further.