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Non-Disclosure Provisions

Volume 788: debated on Monday 22 January 2018


Asked by

To ask Her Majesty's Government whether they intend to review the legality of non-disclosure provisions in settlement agreements.

My Lords, non-disclosure provisions in settlement agreements are allowed by law and can have a legitimate purpose. They cannot prevent any disclosure that is required or protected by law. The Government have committed to look at the structures around non-disclosure agreements and the evidence that is coming forward about how they are being used.

My Lords, I am grateful to my noble and learned friend for his commitment to look at this complex area of the law. Although he is right that there are protections for certain kinds of disclosure, we still hear about powerful individuals and institutions using non-disclosure agreements—or “gagging orders”—to cover up wrongdoing or serious management failure. I have two questions for my noble and learned friend. As part of his review into this area, could he also look at the roles and responsibility of the lawyers involved in drawing up these agreements, especially when allegations of unlawful behaviour are made? Secondly, what are the Government doing to satisfy themselves that, in the public sector, taxpayers and licence fee payers are not paying for things to be covered up which they have a right to see exposed?

My Lords, the Employment Rights Act 1996 makes any non-disclosure provisions between any employer and employee unenforceable unless the employee has had independent legal advice. The position of the legal profession, to that extent, is monitored. ACAS has a statutory code and practical guidance on settlement agreements which make it clear that no settlement agreement can include clauses that attempt to prevent or restrict an individual from making a protected disclosure. That applies to the public sector as well as elsewhere.

My Lords, the noble Baroness raises an important point, because it is wrong that confidentiality, or gagging, clauses in settlements should be used to conceal wrongdoing. But confidentiality clauses do play an important part in encouraging ADR—particularly mediation or arbitration—and in encouraging parties to settle cases rather than fight them in public, all of which we are keen to promote. Will the Government consider further how we might restrict the improper use of such clauses, particularly in employment and sexual cases, without undermining their legitimate use?

The Government are conscious of the importance of confidentiality clauses, particularly between employers and departing employees. It may, for example, be important to protect confidential information material to a business. But we are equally concerned to ensure that the limitations are legitimate and that it is not possible to exploit such clauses in order to turn them into what are sometimes termed gagging clauses.

My Lords, I think all of us, including the Minister, can agree that there are certain clear examples of cases where no court or tribunal should attempt to enforce one of these clauses, because it would be contrary to public policy. For example, the victim of a sex offence should be able to go to the police without anyone enforcing a clause against her. But it gets more complex beyond that. Does the Minister agree that if there are victims who are, de facto, chilled from coming forward, the Government have a role in clarifying and possibly legislating in this area?

My Lords, the Government have committed to consider the report of the committee that is looking into this issue, and will then determine what further steps should be taken. We would prefer to react to the outcome of that report rather than anticipating it.

My Lords, my noble friend Lady Stowell referred to the problem with lawyers. This is a problem that has emerged particularly in Hollywood, where a very powerful industry, which unfortunately has been responsible for exploiting often young women in particular, has allowed them to obtain at least some form of legal advice, but there has nevertheless been a considerable inequality of bargaining power between the two. Does my noble friend not think that the Government ought to be looking at a presumption that unless there is equality of bargaining power, these sorts of agreements should be unenforceable?

My Lords, I am not sure that the introduction of some form of legal presumption is necessary. Thanks to the Employment Rights Act 1996, if an employee is not given independent legal advice, any non-disclosure provision becomes unenforceable.