NDAs in employment settlement agreements have grabbed the headlines recently due in no small part to high profile cases involving well known executives such as Harvey Weinstein and Philip Green and the scandal of the treatment of hostesses at the ‘President’s Club’ charity event in early 2018.
This prompted a range of enquiries and reports into the use of NDAs in the employment context and particularly in discrimination and harassment cases from official and quasi official bodies including Public Concern at Work, the Equality & Human Rights Commission and the Women & Equalities Parliamentary Select Committee (“WESC”).
On the back of this the Government launched a consultation exercise into the possibility of regulating the use of NDAs in employment cases which closed on 29 April 2019. In addition, legal regulators including the SRA and the Law Society have issued guidance notices to practitioners warning them that solicitors involved in the drafting or use of ‘inappropriate’ NDAs are likely to face regulatory sanctions.
One such case currently before the Solicitors Disciplinary Tribunal is that of Mark Mansell, the partner at magic circle law firm Allen & Overy who acted for Miramax in its negotiations with Zelda Perkins. Zelda Perkins was an employee of Miramax who alleged sexual harassment against Harvey Weinstein and then settled her claim under a settlement agreement which included a very tightly drawn NDA. After she gave evidence of her experience to the WESC, which she described as ‘oppressive,’ disciplinary charges were levelled at Mr Mansell.
The report of the WESC on the use of NDAs in discrimination cases was published on 11 June 2019 and includes recommendations for reform and severe criticism of the use of NDAs because (it is said) they are used by employers to ‘routinely’ cover up discrimination and harassment in the workplace.
The Government’s response has been more cautious, suggesting that some additional regulation of NDAs may be appropriate, including making it compulsory for such clauses to include express wording making it clear what disclosures remain permitted once an agreement is signed and imposing a requirement that the employee receives independent advice on the meaning and effect of an NDA. The Government currently seems disinclined to legislate to introduce mandatory standard form NDAs or to criminalise the inappropriate or unethical use of NDAs.
Meanwhile, the courts have taken a robust approach to upholding NDAs and have repeatedly emphasised the public interest in enforcing agreements freely entered into and particularly where both parties have received legal advice and the underlying agreement settles a dispute.
The point is often made by Judges and other commentators that settling disputes is a good thing (for both parties) and that binding confidentiality is often a condition of reaching a settlement. NDAs also have existing legal limits and cannot in any event be used to supress whistleblowing disclosures or disclosures to law enforcement agencies or prevent cooperation with criminal or civil legal processes.
Employers should stay tuned and be ready to adapt to any new regulation of NDAs.
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