Why banning NDAs may not work as anticipated

“The Employment Rights Bill will ban employers from using non-disclosure agreements (NDAs) that silence workplace harassment and abuse,” says the announcement on amendments to the new Employment Rights Bill.

The much-anticipated amendment has been met with both jubilation and horror at its potential impact, and the opposing reactions don’t necessarily follow the traditional divide of employer v employee.

Against a ban

Andrew Brown is a Partner, Anderson Strathern (Picture: Chris Watt)

Employment law barrister, Daniel Barnett, has described it as “a potentially massive own goal” because “employers may be less willing to settle discrimination, and harassment claims if they can’t insist on confidentiality”.

Others who act mainly for employees, also against a ban, have said: “Most don’t want to shout about being abused at work, they want to move on with some compensation that represents justice to them”.

NDAs don’t just affect scenarios where the abuse is proven. They can relate to cases where both sides have agreed that, in return for a payment, the arguments and evidence won’t be aired in court or Tribunal. In most cases, for any settlement agreement to be valid, the employee must take independent legal advice; that should protect them from being hoodwinked into signing something they don’t understand.

A victim of abuse will suffer considerable stress in having to give evidence. That’s the point Daniel Barnett is making – if both parties are effectively precluded from reaching an agreement because an NDA cannot be included, victims might be forced into either giving up entirely or giving evidence.

For a ban

Many of the concerns being expressed about the ban relate to an individual who has been abused and is brave enough to pursue a claim. The ban on NDAs, however, has the laudable aim of contributing to the prevention of harassment from continuing in workforces more widely. An NDA could potentially allow an organisation to delay active preventative steps. We’ve seen many examples in recent years. So even if there is a risk it won’t be in the interests of specific individuals (if fewer employers settle), perhaps a ban is in the interests of the public more widely?

Will employers now have a sudden appetite for court or Tribunal? Or is that risk overstated? It seems likely that most employers worried about their reputation would still prefer to settle (even if parties aren’t bound by confidentiality) rather than opt for public litigation.

For a balanced approach

Those who remember what happened at the BBC and the NHS would agree something should be done. However, we must always be careful of unintended consequences and put in place mitigations – which the law already recognises, at least to some extent.

NDAs are unenforceable in certain situations. Where a disclosure is made ‘in the public interest’ and discloses a breach of a legal obligation (including harassment), the NDA does not preclude that disclosure; the individual must tell the appropriate people, however, in order that it can be properly addressed. In extreme cases, even disclosure to the media can be permissible. Standard template agreements very often come with a list of circumstances where the NDA does not apply (including reports to the police). If there is the ability to report something to the police, regulators and politicians, does it also need to be reported more widely? Can a balance be struck?

Further amendments may ensure rogue employers are held to account, but without preventing the type of settlement that’s in everyone’s interests. No matter how strongly people might feel at the moment, we won’t know the impact, for good or for bad, until the law is finalised and operating in practice.

Andrew Brown is a Partner, Anderson Strathern