On 8 July, the UK Government announced plans to end the use of non-disclosure agreements (NDAs) in cases involving harassment and discrimination.

The use of NDAs has received increasing attention since the #MeToo movement gained prominence in 2017, following Zelda Perkins’ decision to speak out about Harvey Weinstein’s alleged harassment, in breach of an NDA she had signed with her former employer, Miramax. Ms Perkins later gave evidence to the UK Women and Equalities Select Committee, describing the pressure she and her advisors faced during the negotiation process and raising concerns over the breadth of the non-disclosure provisions in the settlement agreement that she had been asked to sign. These provisions reportedly restricted her from discussing her experiences, even with a therapist, and required her to make efforts to avoid disclosure in any subsequent criminal proceedings. Ms Perkins described the negotiation process as traumatic and expressed a loss of confidence in the legal system.

Since then, there has been considerable debate regarding the use of NDAs to restrict individuals from sharing experiences of harassment or discrimination in the workplace, and the potential wider impact on addressing such conduct.

Ms Perkins has since advocated for reform through the “Can’t Buy My Silence” campaign, calling for an end to the use of NDAs in this context.

In response, the Government has announced that the forthcoming Employment Rights Bill will include a new provision (at Clause 22A) which would render void any clause intended to prevent a worker from speaking about workplace harassment or discrimination (as defined in the 201o Equality Act). The new provisions would introduce a concept of “exempted” NDAs, which may be included only at the request of the worker, provided certain conditions are met—such as the worker having received independent legal advice and having given fully informed consent. Further details are expected to be set out in secondary legislation.

While efforts to address discrimination and harassment are widely recognized as important, these proposals may give rise to certain practical challenges. In practice, where an employee raises a complaint of harassment or discrimination, the employment relationship is often difficult to maintain, and parties may seek to agree terms for the employee’s departure in lieu of litigation. Typically, such settlements may include a compensation payment, and employers typically seek to include confidentiality provisions to protect their reputational interests. Employees have the option to proceed with litigation or to accept a settlement, which may provide financial support during a transition period.

There are already regulatory safeguards in place intended to prevent coercion during settlement negotiations. Firstly, no settlement agreement can be validly entered into unless the employee has taken independent legal advice. In addition, the Solicitors Regulation Authority has previously issued a “Warning Notice” reminding solicitors of their professional obligations when advising on NDAs, including not to take unfair advantage or prevent individuals from contacting public authorities. Breaches of these obligations may result in disciplinary action.

Under the proposed regime, employers would not be able to request NDAs in settlement agreements relating to harassment or discrimination allegations, but could include such provisions only at the request of the worker and subject to specified requirements. It is not yet clear what impact these reforms will have on workplace culture and the management of complaints. Campaigners appear to be proceeding on the basis that a ban on the use of NDAs will discourage unwanted and discriminatory conduct. In an impact assessment published by the Government on 17 July, it described the policy objective of the proposed reform as, “to prevent employers from misusing NDAs to silence workers about allegations of harassment and discrimination. The intended outcome is to reduce the power imbalance between employers and employees…the overarching objective of the policy is to change business culture to reduce harassment and discrimination.”

It remains to be seen whether these objectives will be met. It cannot be assumed that employees who harass or discriminate against others are motivated by a belief that their employer will subsequently use an NDA to silence their victims. Accordingly, the proposed ban will not necessarily result in a reduction in this kind of misconduct. The impact assessment also acknowledges that other consequences of the new regime could include fewer allegations being resolved by settlement, and an associated increase in litigation. These seem more likely outcomes than the utopian suggestion in the same paper that, “If workers are no longer forced to sign NDAs…they will be able to speak about their experiences, seek redress, and remain in the workforce without fear of retaliation.” There are many complex reasons why workers who suffer discrimination or harassment at work do not feel able to speak freely about what has happened or to remain working for the same employer, none of which will be addressed by the proposed ban.

The Employment Rights Bill is currently being examined by the House of Lords, following which it will return to the House of Commons and will likely pass into law later this year. To date, the House of Lords has not raised any objections to the proposed ban and as things stand, it appears likely that the proposals will receive the necessary approvals. If enacted, the new regime is likely to have a significant impact on the way employers respond to allegations of harassment and discrimination, as well as on the drafting of NDAs more generally, including the need to clarify that such clauses do not contravene the new provisions. 

Only time will tell exactly what the future holds should the proposed reforms be enacted. In the interim, employers may wish to review their current policies and practices to ensure compliance with existing obligations, including the duty to take reasonable steps to prevent sexual harassment, which came into force in October last year.