The Future of NDAs

Non-Disclosure Agreements (NDAs) have taken the spotlight recently as a method of preventing employees speaking out over alleged harassment and abuse they received at the hands of Topshop employer, Phillip Green.

While the intention behind the agreements are supposed to be to prevent sensitive data from leaking, they are now being brought into question as a result of their misuse. So, what does the future hold for the NDA?

What are they?

NDAs are sometimes known as ‘gagging clauses’, and are primarily used to prevent the discussion of confidential business information, keep trade secrets, and protect sensitive data. Typically, NDAs are reserved for more senior employees, as they will be the ones who have the most unrestricted access to material needing to be protected. As the law currently stands however, there is no restriction on when an NDA can be used, leaving them open to use for more corrupt purposes. Employers may even choose to use these agreements on all employees as standard procedure within their company.

Misuse of NDAs

There have been two high profile incidents of NDAs being used improperly in the UK this year.

The first being the President’s Club Dinner scandal. In this case, hospitality workers suffered a night of sexual harassment at the hands of the guests they were waiting on, and were asked to sign NDAs prior to the dinner in an effort to secure their silence.

The second being the more recent Phillip Green scandal, an event that prompted some sources to dub the event ‘British #MeToo’. Although the details of the case are still being contested, there is no doubt that the misuse of NDAs lies at the centre of the scandal.

Less in the public-eye is the growing number of stories of NDAs being used in conjunction with financial pay-offs to staff that raise valid grievances against their employers for inappropriate behaviour.

The Future of NDAs

Shortly after the Weinstein scandal, Theresa May promised she would ‘look at’ the use of NDAs. These latest cases have only heaped on more pressure for the government to review the way the agreements work.

Some proposed plans suggest making NDAs illegal in cases where victims have brought claims of sexual harassment.

A Whitehall source said: “The intention is to stop NDAs being used to stop the victims of sexual harassment from going to the police, and to introduce a new onus on employers to make it absolutely explicit to their staff that these agreements cannot be used in cases where a potential crime has been committed.”

How they should be used

NDAs are usually signed as part of a contract of employment, or upon termination of employment. They are predominantly used in the financial and legal sectors, where client confidentiality is a key element in the function of the role.

NDAs can also be used:

- When employees access confidential and proprietary information during the course of their job

- When services are received from a company or individual who may have access to sensitive information to provide the service

- When sharing financial, marketing, and other information with a prospective buyer of your business

- Presenting an invention or business idea to a potential partner, investor, or distributor

Legally, NDAs cannot restrict employees, or ex-employees, from making a protected disclosure or ‘blowing the whistle’. In order to avoid breaching the confidentiality agreement, the disclosure will have to meet the requirements of the legislation and be disclosed to specific parties, such as to lawyers when receiving legal advice.

Acts of sexual harassment which are in breach of the Equality Act 2010 can be disclosed in this manner, including past acts or those which are currently ongoing. The difficulty for many individuals who have signed these agreements, however, is that they often do not understand that they have not contracted out of the right to blow the whistle. They may fear the company suing them or any future reprisals for breaching the agreement, such as being dismissed if are still employed.

Expert Support

If you have an issue relating to a Non-Disclosure Agreement, or any other HR and employment law issue, contact a Croner expert on 01455 858 132