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Non-Disclosure Agreements

Volume 790: debated on Tuesday 1 May 2018


Asked by

To ask Her Majesty's Government what steps they are taking to ensure that non-disclosure agreements are not used to cover up criminal behaviour or silence victims, and that there are no financial or other consequences imposed when a breach of an agreement is in the public interest.

My Lords, non-disclosure agreements cannot prevent any disclosure required or protected by law. A court could find a non-disclosure agreement to be void or decline to give effect to it for reasons of public policy. The Government are looking at the structures around non-disclosure agreements and the evidence coming forward about how they are being used.

Noble Lords will know that after the great surge of disclosure when Harvey Weinstein’s sexual abuse came to light, those very serious allegations gave light to many other instances of women in the workplace experiencing sexual abuse and drew attention to bullying experienced by men and women both. A light has been shone on the fact that non-disclosure agreements are used all too often to silence complainants who have experienced harassment of a sexual nature that sometimes falls short of criminal behaviour. Do the Government agree that they should give a clear statement, and, if possible, bring legislation, to say that it is not right to use non-disclosure agreements in this way for the purpose of silencing complaint?

The second matter is that we also know that many employment contracts now contain a clause to say that there has to be recourse to arbitration if there are any complaints or matters of dispute to avoid court hearings. Again, that silencing is often used to prevent those who are suffering harassment and abuse in the workplace from taking their cases forward. Should something not be done about that?

My Lords, the Employment Rights Act 1996 makes two things clear. First, if an employee does not get independent legal advice regarding such an agreement it will be void. Secondly, it ensures that where a non-disclosure agreement has been entered into it does not affect the right of the employee to make a protected disclosure—that is, a disclosure that pertains to various forms of wrongdoing and is made to a protected party.

But protected disclosure does not cover all forms of sexual harassment or harassment in the workplace. Is there not a duty on lawyers to make it clear to their clients, whether employers or employees, that non-disclosure clauses in contracts of employment or settlement agreements cannot be used to conceal criminal conduct or to prevent the reporting of conduct that amounts to sexual harassment, particularly where it involves an abuse of power by a senior over a junior or where it is repeated and habitual?

My Lords, the Protection from Harassment Act 1997 includes the matter of sexual harassment. On the need to disclose to employees their rights in this context, I reiterate that, to have an enforceable non-disclosure agreement, it is necessary that the employee should have been given the opportunity to take independent legal advice.

By chance I recently came across the case of an employee of a charitable body that operated in the private and public sectors and had contracts with employees that prevented them taking away any correspondence between themselves and the employer in the event of their leaving for any purpose at all, as far as I could understand the contract. I wonder whether that is lawful. I should add that the case was in Scotland. I am not sure whether the same laws apply in Scotland in this case as would apply in England. Can the Minister offer the House any guidance on whether such a contractual arrangement between an employer and employee is legal?

My Lords, I cannot comment in detail on the particular case outlined, but there are legitimate reasons why an employer would wish to retain correspondence or other confidential information pertaining either to its business or to its charitable functions and not wish it to be taken away. There can be a legitimate basis for such a provision.

My Lords, are not large amounts of money often paid to individuals which may satisfy that individual but are not in the public interest? Should we not do away with some of these disclosure deals?

My Lords, in circumstances where a person accepts a sum of money which is beyond reasonable indemnity for any loss they have suffered on the grounds that they will not disclose wrongdoing or a criminal offence, they themselves are liable to commit a criminal offence.

My Lords, the Minister will remember, I think, a very similar Question being asked on 22 January. It is now a glorious May Day. Given the complexities and competing public concerns around this issue, might the Government not consider setting out a clear timetable for clarity in policy and potential legislation in this area?

My Lords, the House of Commons Women and Equalities Select Committee is currently conducting an inquiry into sexual harassment in the workplace and has taken evidence about the misuse of NDAs in that context. The Government want to see what the committee has to say about that before reaching their own conclusions. In other words, we will make an informed decision on the matter.

My Lords, I am sure that the whole House deprecates the use of non-disclosure agreements to bully employees or former employees, and appreciates that the Government are looking carefully at this. However, does my noble and learned friend agree that non-disclosure agreements originally came into being to protect, quite legitimately, trade secrets and other matters that it was in the interest of both parties should remain secret? I hope that the Government will bear that in mind when deciding what to do in this area.

My Lords, my noble friend is absolutely correct: non-disclosure agreements have an entirely legitimate use, particularly in the context of protecting confidential information of an employer upon the departure of an employee.