Published 17th April 2019
Employers and employees often enter into settlement agreements in an effort to bring claims to a cheaper and quicker end. These settlement agreements often include confidentiality clauses which have recently been generalised as non-disclosure agreements (NDAs). A recent BBC article has highlighted the use of such clauses in settlement agreements, outlining that universities across the UK are allegedly abusing NDAs, having interviewed academics who raised certain concerns and complaints and were then effectively “settled away” and are now subject to “gagging orders”.
This issue has been the subject of increased criticism, caused predominantly by the #MeToo movement. It cannot be denied that this is evidently a reoccurring issue within the legal system, in which gagging orders are being used by some companies to silence victims of discrimination.
We strongly believe that a victim of discrimination, of any kind, should not be silenced and must be given the opportunity to speak up where they wish to share their experience to empower others.
However, we are concerned that as part of its coverage by the media there has been an undeniable negative association attached to confidentiality clauses and “gagging orders”. Confidentiality clauses are typically included to prevent employees from disclosing certain information (usually the value and terms of the settlement), however their newfound stigma now dominates and clouds the initial purpose of protecting both parties.
It is important to remember that some claims from an employee are not strong enough to win in tribunal. The arguments often relied upon consist of “he said/she said” and may be noted as merely hearsay. Nevertheless, these disputes are commonly the subject of settlement agreements, in which sums of money are being paid despite these claims not being legally proven. The fact remains that individuals are receiving sums of money which may have never been awarded had this process been followed through via a tribunal.
Employers enter settlement agreements based on the notion of some kind of confidentiality and had this notion not been present in the first place, the pathway for these allegations may have turned out very differently. We would admit that NDAs are becoming expected where settlement is reached. However, it would not be realistic to expect a company to enter into a settlement agreement and pay (sometimes large) sums of money without some guarantee of confidentiality in return.
More importantly, settlement agreements essentially shield (potentially vulnerable) victims from having to go to tribunal, protecting them from being subject to lengthy and stressful procedures, including cross-examination on evidence (this is particularly significant with regard to sexual harassment allegations).
It is vital that we bear in mind that companies too require protection of their reputation and the reputation of their employees. This is especially the case where certain sensitive accusations have not been proven. Also, as the BBC acknowledges, confidentiality agreements protect a company’s trade secrets; this is a legitimate interest to protect.
Also, in our experience, employees are often keen to avoid proceedings in tribunal. This is even more so now that tribunal records are posted online for all to see. If the claim is not settled beforehand, then the employee risks a new prospective employer searching their name on tribunal records and finding their previous cases. This could give rise to the impression that they are a trouble maker before they even start. In this way, confidentiality agreements protect the employees just as much as the employer. Both parties also reap the benefits of lesser costs incurred where a settlement is reached.
It is important to note that settlement agreements and confidentiality clauses cannot stop an employee or ex-employee from whistleblowing and being protected as such.
Does the ongoing media coverage of “gagging orders” misdirect us from the real problem at hand? There is no denial that there are ongoing unacceptable behaviours and inaction from certain employers, as employers simply pay off individuals rather than addressing the issues raised. Realistically, companies should be giving more effect and consideration to their anti-harassment and anti-bullying training and policies.
To some extent, the use of NDAs deserves all the criticism it gets. However, in practical terms they are not entirely motivated by a will to shut down concerns raised by employees, but a valid approach by companies to protect themselves.
As an aside, we note that a number of the women in the BBC interview have, by their own admission, breached their NDAs. This is not recommended, as this constitutes a breach of legal obligations and could result in the individual in question being subject to the sanction of repaying any sums awarded back to their employer.
Thank you for taking an interest in our article. If you have an issue with a settlement agreement or have any further questions on this article Thrive Law can offer independent and confidential advice on HR and employment law, for both employers and employees. If you think we could help you, simply email firstname.lastname@example.org or contact Jodie on 0113 869 8101 for a no obligation chat. For more information visit our website www.thrivelaw.co.uk and follow us on social media, on Twitter and Instagram at @iamjodiehill & @thrive_law.
By: Alicia Collinson and Uthman El-Dharrat