Menu
The use of NDAs – how far can you go following Government guidance?

News /

Following an inquiry launched by the Women and Equalities Select Committee (“WESC”) of the UK Parliament in 2018 into sexual harassment in the workplace and its subsequent report of 11 June 2019, the Department for Business, Energy & Industrial Strategy (“BEIS”) launched a further consultation on 4 March 2019 in response to the recommendations set out by WESC. BEIS proposed a number of key measures to prevent the unethical use of non-disclosure agreements (“NDAs”) and confidentiality clauses to silence victims of workplace harassment or discrimination. On 22 July 2019 the Government issued a response to BEIS’ proposals, which confirms it will legislate to implement a number of key changes to the use of NDAs and confidentiality clauses.

The current position

Confidentiality clauses and NDAs are common provisions drafted into employment contracts and settlement agreements that seek to prohibit the disclosure of information. Whilst it is recognised that these clauses can, and mostly do, serve a useful and legitimate purpose both during and after employment, for example to prevent disclosure of sensitive and proprietary information to competitors, there is a concern that these clauses have been used to prevent victims of harassment and discrimination from speaking out, or to cover up examples of these cases.

The new measures

In order to combat this, the Government has avowed to implement key guidance on the drafting of confidentiality clauses and NDAs that will be as follows:

  • Confidentiality clauses and NDAs will not be able to prevent individuals from reporting a suspected crime to the police, regulated health and care professionals or legal professionals.
  •  ­Confidentiality clauses in settlement agreements and NDAs must clearly set out their limitations. The limitations of a confidentiality clause or NDA in an employment contract must be included as part of the mandatory written statement of particulars.
  •  ­The independent legal advice which an individual must obtain on entering a settlement agreement, under s203(3) of the Employment Rights Act 1996, will be extended to include specific advice on the nature and limitations of any confidentiality clauses or NDAs. The SRA has produced updated guidance to help inform the relevant independent adviser.
  •  ­There will be new enforcement measures for confidentiality clauses and NDAs that fail to comply with the new legal requirements. Some suggested measures are that additional compensation will be available to individuals – in certain circumstances – when they bring an employment tribunal claim and it is subsequently found that the requirements for a clear and express confidentiality clause have not been met.

Steps to take

The Government will formally respond to the WESC inquiry in due course, although no timing has been given. According to the Government’s published response dated 22 July 2019, the relevant new legislation will be brought forward "when Parliamentary time allows". However, these proposals have considerable cross-party support and so are likely to come into force soon and employers should be prepared.

Employers should undertake a review of how confidentiality clauses and NDAs are currently being used, and in what circumstances, ensuring they do not fall foul of these new requirements, and that they are only being used for legitimate reasons. The wording of these clauses should be carefully evaluated, and any necessary changes made to bring them into line with these new proposals. Solicitors and other legal professionals, such as in-house counsel, should familiarise themselves completely with these new proposals and the SRA guidelines so that any future settlement agreements should be drafted in a manner adhering to these proposals, in addition to ensuring that, when advising those entering into settlement agreements, they explain clearly the limitations of any confidentiality clause. It is also useful for employers to be aware of the new requirements to which their legal advisers should be adhering.

Laura Livingstone

Laura Livingstone Partner, Head of Employment

Related sectors:

Related news & insights

Insights / Climate Change Litigation Continueth – The Scottish Case: Greenpeace v. BEIS and the OGA (and BP too)

15-10-2021 / Energy & Infrastructure

The Scottish Court of Session has declared that dealing with the global environmental impact of the consumption of oil is a political matter for the UK Government, not a legal issue for the UK Courts in considering the validity of approval to drill new oil wells in a single field.

Climate Change Litigation Continueth – The Scottish Case: Greenpeace v. BEIS and the OGA (and BP too)

News / AfCFTA and Energy & Infrastructure

11-10-2021 / Energy & Infrastructure, Maritime

This article is the third in a series of articles looking at the impact of the African Continental Free Trade Area (the “AfCFTA”) on various practice areas and industry sectors that our clients operate in. This article focuses on Energy and Infrastructure and addresses some of the key questions our clients have asked us.

AfCFTA and Energy & Infrastructure

Insights / Supreme Court clarifies lawful act of duress

21-09-2021 / Energy & Infrastructure

In Times Travel (UK) Ltd v Pakistan International Airlines Corporation (Rev 2) [2019] EWCA Civ 828, the Supreme Court confirmed the existence of the doctrine of ‘lawful act duress’ under English law and its limited scope in commercial transactions.

Supreme Court clarifies lawful act of duress

News / Shell agrees pay out to Nigerian community to settle long-running oil spill dispute

17-08-2021 / Energy & Infrastructure

In 1991, the Ejama-Ebubu people began a legal campaign to hold Shell Nigeria (“Shell”) accountable for an oil spill that occurred in 1970. Shell accepted that these oil spills had occurred, but argued that these were caused by “third parties” during the Biafran war, for which Shell should not be held liable. Almost 20 years later, in 2010, a Nigerian Federal court ordered Shell to pay 17 billion naira to the Ejama-Ebubu community. Shell has unsuccessfully attempted to challenge this ruling over several years and, in November 2020, the Nigerian Supreme Court ruled that Shell could no longer appeal the decision.

Shell agrees pay out to Nigerian community to settle long-running oil spill dispute

News / The Bribery Act: ten years on

19-07-2021 / Energy & Infrastructure

The Bribery Act: ten years on

Quick links

The Legal 500 2021

“Very available and responsive to company developments in real time. Frank, clear advice – not just the ‘easy’ answer.”

The Legal 500 2022

“The solicitors who have handled our employment related issues are of the highest quality in terms of their specialist area of expertise, their professionalism and their approach to us as clients and as people. Special mention has to be made of Laura Livingstone. Laura became a key member of our team and felt more like a colleague than an external adviser – a colleague you could rely upon. Laura’s attention to detail, professionalism and responsiveness was second to none. Laura has come to know and understand us as individuals and this has enabled her to personalise her advice and even sometimes to preempt our future requirements. We have a very special and extremely valuable relationship with her and the firm.”

- The Legal 500

The Legal 500 2022

“Ince are an excellent “fit” with our specific needs. The firm has consistently provided a broad range of personnel-related advice and in our experience that advice has been consistently of the very highest professional standard: it has been timely, comprehensive, accurate and at a cost which is commensurate with the budget of an organisation of our size.”

- The Legal 500

The Legal 500 2022

“The firm has an unusually high degree of insight into the practices and policies required by the Gambling Commission as regards compliance with its own requirements and conditions – particularly Andrew Tait, derived from his previous in-house experience.”

- The Legal 500