UK: Confidentiality Concerns

"Gagging clauses" have come in for some bad press over recent times, especially where matters of wider social and public concern have been involved. Nowhere is this more true than in the context of the #metoo movement, where the use of non-disclosure agreements has been widely criticised. Legitimate concerns have been raised as to the ability of perpetrators to squash adverse publicity, silence their victims and avoid detection. The clauses themselves may perhaps not have been that unusual in terms of their drafting. We will likely never know. But their context and effect on keeping women's voices out of the public arena for so long has succeeded in attracting high levels of criticism.

These concerns have fostered wider unease. Recently the House of Commons came under fire for spending almost £2.5 million on non-disclosure agreements entered into with employees over the last five years (data which was only released in response to a request under the Freedom of Information Act). Calls then followed for such clauses to be made "a thing of the past".

But is there a case for confidentiality clauses in some circumstances? Those involved in the daily tussle of HR and ER disputes will recognise the use of confidentiality clauses within settlement agreements as a common occurrence. Rather than having a malign motive, in these contexts they are seen as an important step in drawing a line under any potential dispute, for the benefit of all concerned. Indeed, confidentiality obligations of some form are often imposed on the employer as well as the employee.

In a snapshot, what is the current legal position and where might we be headed?

  • Whistleblowing: Under the Employment Rights Act 1996, any clause is void in so far as it purports to prevent employees from making protected disclosures. However, the general view is that failing to include a specific carve-out for protected disclosures will not render the confidentiality clause void in its entirety. In other words, "in so far as" can be read along the lines of "to the extent that". Blanket confidentiality provisions often remain the preference on this basis.
  • Regulated firms and whistleblowing: Large banks and certain other regulated firms are required under FCA and PRA rules to ensure that employment contracts and settlement agreements do not deter staff from whistleblowing. In contrast to the general position, blanket provisions without carve-outs or statements confirming the employee's ability to make a protected disclosure are likely to fall foul of these rules.
  • Turning the tables: Ending Sexual Harassment at Work was published by the Equality and Human Rights Commission earlier this year and recommended a number of changes, including:

    • a legislative ban on the use of clauses seeking to prevent disclosure of future acts of harassment, discrimination or victimisation; and
    • a statutory code of practice dealing with the circumstances in which clauses in a settlement agreement may (or may not) validly prevent the disclosure of allegations of past acts.
  • The SRA has issued a notice reminding practitioners not to use non-disclosure agreements inappropriately.

Pressure continues to mount. But, for the time being at least, these types of clause remain commonplace within negotiated employment settlements (potential adverse publicity notwithstanding).

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