Confidentiality Clauses - Proposals for Reform

The government has issued a consultation document seeking views on new measures to prevent the misuse of non-disclosure agreements in situations of workplace harassment or discrimination.

The consultation document is announced on the back of several high-profile stories in recent months involving wealthy business people and so-called ‘hush payments'.

Confidentiality Clauses and Non-Disclosure Agreements (NDAs)

Confidentiality clauses serve a useful purpose in the employment context. They are used in two main ways:

  1. As part of employment contracts (i.e. to protect trade secrets).
  2. As part of settlement agreements, for example to allow both sides of an employment dispute to move on with a clean break.

There are some limits on their use: mainly that confidentiality clauses are void if they purport to prevent someone making a protected disclosure, or taking a case to a tribunal (unless within a COT3 or settlement agreement).

Preventing Harassment and Discrimination

In the executive summary of the consultation paper, the Government wrote:

“As part of our commitment to this upgrade, we are now consulting to ensure that harassment or discrimination of any sort cannot be tolerated in the workplace. The purpose of this consultation is to seek evidence and views of the use of confidentiality clauses in the employment context, and to propose further regulation to tackle their misuse.”

Kate Fretten, Employment Partner, says ““The perceived misuse of NDAs and confidentiality clauses has hit the front pages in recent months.

Used for the right reasons, they can be valuable and important tools for both employers and employees, however we have seen the damage they can cause.

If you would like to discuss NDAs or confidentiality clauses, our Employment Team are experienced, knowledgeable and more than happy to help.”

 

At Frettens, all of our solicitors offer a free initial meeting or chat on the phone to answer your questions. If this article raises issues for you or your business, please call us on 01202 499255 Kate or Paul will be happy to discuss it with you.