Crackdown on Unethical NDAS: New law proposed to address proliferating use of ‘gagging’ clauses

August 7, 2019

2 min read

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What's going on here?

The UK government announced it will introduce new legislation to protect workers from misuse of non-disclosure agreements (NDAs), particularly against covering up workplace harassment.

What does this mean?

NDA is a catch-all term that covers confidentiality clauses as well as standalone agreements between parties. NDAs are commonly used in the commercial sphere to regulate and protect how sensitive information (such as intellectual property, trade secrets or client/customer details) is used during and after a business relationship or transaction has ended.

Last year, Zelda Perkins (Harvey Weinstein’s former assistant) sparked public debate at the Women and Equalities Committee on the unethical use of NDA ‘gagging’ clauses that limit employees from disclosing abusive workplace practices. Technically, this is void and unenforceable. However, in reality, employees still feel compelled not to speak out due to written and verbal warnings or legal action from their former employer. For example, Sir Phillip Green’s (Topshop owner) attempt to apply an injunction to silence former Topshop employees from speaking out against its toxic culture.

In response, the UK government will pass legislation to make it clear that victims cannot be prevented from reporting crimes, harassment or discrimination to the police, healthcare or legal professionals. Employers must make full disclosure as to the NDA’s content and employees will have the right to be informed and seek independent legal advice before signing.

What's the big picture effect?

Although no timetable has yet been set on implementing the legislation, it is a first step to addressing the overuse of NDAs and ‘gagging’ clauses across the public and private sector.

Obvious examples are sexual harassment cases in the entertainment industry, such as the Weinstein scandal. However, Jess Phillips (MP, sitting on the Women and Equalities Committee) notes complaints on NDA gagging clauses range from workplace harassment at supermarket retail, banking and accounting firms to medical negligence at the NHS.

Therefore, the government taking steps to setting limits to the proliferating nature of NDA ‘gagging’ clauses is welcomed, and it will bring clarity to employees who may not fully understand their rights under the complex web of whistleblowing laws.

However, many question whether this is enough.  The scope of the proposed legislation will not cover discussions of, or disclosing allegations of, sexual comments or bullying staff in the workplace (i.e. not whistleblowing). This has wider costs.  Millions of pounds of public sector money are spent on hiding potential workplace inefficiency and wrongdoing each year. For the private sector, silenced victims cannot speak out against toxic workplace cultures.

In general, this is a positive step for setting a higher standard of accountability. It remains to be seen, however, whether further steps (if any) will be taken on further protection of employee rights.

Report written by Roslyn Lai

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