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hello and welcome to the view from Mayor Brown podcast this is a fortnightly podcast series for employment lawyers and HR practitioners which highlights developments in case law legislative changes of importance to UK employers it is presented by Nicholas Robertson the head of Mayor Browns London Employment team the time spent listening to these podcasts can count towards your training requirements at the end of the podcast we will explain how to get in touch if you have any comments or questions hello and welcome to podcast number 143 as we will all be aware non-disclosure clauses are very much in the news at the moment I will come in a moment to exactly why that is but I think there is little doubt that the topic is a pretty high-profile one for employers and employees and employment lawyers so I wanted to spend a podcast episode just talking about non-disclosure clauses in employment contracts and settlement agreements as always you can access the podcast of our iTunes or on the mayor brand website or YouTube and the Twitter feed Nicholas Robertson at Nicholas rrb r-11 and that's where we post out links as I have said Oh whilst we're doing a bid please don't forget the special guest podcast we did with David Reed QC last week which came out on previous its on privacy and employment tribunals and we thought it was a great idea to have David come in and talk about privacy issues in employment tribunals can you keep sensitive confidential documents out what about difficult matters relating to embarrassing or personal fact patterns in the case sexual misconduct allegations for example what can the tribunal keep in an out to the public domain do do have a listen David as always is a excellent guest right we're back to NDA sets let's let's talk about terminology let's deal with that start with these sort of clauses and articles written about them we refer to them as NDA's non-disclosure agreements but in practice in my experience it's relatively unusual of something which is a specific agreement just dealing with non-disclosure it's far more likely that these are clauses with another agreements which have the impact of restricting disclosure I do think it's important however we recognize we're not just dealing with specific non-disclosed agreements we're looking at clauses which have the the the intent or effect of preventing or prohibiting or restricting disclosure so when I refer to NDA's please understand them as you would have an NDA clause as well as an NDA agreement clearly the concern with NDA is that they can be used to gag victims of an unlawful action very effectively if you put the right clause in a contract of employment or a settlement agreement or something similar the argued runs you could prevent individuals making any disclosure in that way it's argued Cyril Harris's can get away with paying off victims and gagging them at the same time from reporting their concerns to the harasser it is alleged as free to strike again so the first point is to look at situations where NDA's or NDA clauses perhaps miraculously can be found obviously we will all be familiar that NDA's can be found in settlement agreements secondly they're going to be clauses in employment contracts which may have the effect of restricting an individual's ability to report wrongdoing to appropriate authorities or to the police for example think of confidentiality clauses in contracts employment the same would apply the consultants agreement I think it's relatively unusual to have an NDA document as a standalone document but I have heard of cases perhaps in the entertainment world with very hope high-profile individuals where employers employees rather who are going to do some work with that high-profile individual perhaps around their home for example have to sign non-disclosure clauses about not revealing anything they see actually having done it first after this podcast last week I was out for lunch on Sunday with someone who told me they'd ended up with a Christmas TV show and I decided non-disclosure agreement before they were allowed to take part so maybe these things are more common than I realized or maybe I just don't move on the right circles certainly no one's asked me to appear on a Christmas show we have to put my own one on at this rate anyway I said I talked a little bit about why NDA's in an employment context is so much in the spotlight obviously part of this goes back to the Harvey Weinstein stargher which is of course continuing it was said there are a number of complaints of cases against in which was settled it seems these causes had MDA these lease agreements had NDA clauses in them the most notorious word English law respect is the one which aidez elder Perkins I've not seen the document itself although it may be potentially available online the suggestion is that it was eight pages of extensive restrictions on disclosure she was unable for examples to her doctor what had happened family members can only be told if they signed a similar agreement she would not she was not permitted to retain a copy of the agreement whatever the circumstances it was definitely extreme version of a normal NDA cloud clause in a settlement agreement however the combined effects of illicit publicity around that and the allegations filling the rise of the hashtag me tooth movement being that there have been a number of official reviews of NDA's in the employment sector in the UK in the last 12 months we've had an SRE warning notice to solicitors sent out in March there's an e HRC report the women inequalities committee the House of Commons reporter and so on indeed they've just announced a new inquiry into MDA sin harassment and discrimination cases the government is announced is looking at proposals in this area too so EDA is finished right no wrong if you look in a bit more detail on what some of the reviews have said it's all quite revealing let's start with the women and equality Select Committee report from earlier this year the report makes number of comments they say that the government's equalities office had confirmed the committee that in the equalities office view NDA's form in legitimate part of an employment contract the committee report acknowledges this but says they are concerned about them being used unethically by some employers in an aside but this is referenced directly in the report there is of course the suggestion the waitresses who are working that infamous presidents club event had to sign advance NDA's so they may have a case in point here secondly the women of equalities report acknowledges that there is a place for NDA's in settlement agreements they say they have grave concerns quote-unquote about unethical use and they say the law and protected disclosure is unclear obviously in theory an attempt by an employee through a controller by an employer through a contractual route to prevent someone exercising the statutory rights blow the whistle through appropriate means to an appropriate regulator is unenforceable but I do think it's fair for the committee to break the point that the statutory tests for what is or isn't appropriate disclosure is it's official in the public to qualify etc etc do make it a fair comment that the law protected disclosure is unclear confidentiality clauses included documents may be unclear to and they may affect any function us NDA's the committee would not say they record the fact in the Commission report that the SRA told the committee that in 2016 a solicitor was disciplined for including in a compromise agreement a clause restricting the reporting of misbehavior to a regulator it's not clear I should say whether that is a solicitor acting in relation to complaint within their own business or whether that was on advising a client and some but this list of got disciplined for the advice given to that party I'll come back to that at the end of the day the the report acknowledges says rather that the government should come up with an approved standard set of confidentiality clauses to do with the concerns the confidentiality clauses could operate as informal gagging clauses they would like the definition to protected disclosures and whistle in the whistleblowing legislation to include a clear approval for disclosure of sexual harassment to the police and any regulator they also want the government to make it an offence for an employer or a professional advisor to propose a confidentiality clause designed and intended to prevent or limit protected disclosures or criminal offences it should be a professionally disciplined or offense for confidentiality agreements to include potentially unenforceable clauses the SRA as I say sent out a warning notice dismissed as March 2018 and it's crucial to appreciate this applies to solicitors in England Wales both in relation to their own business and when they are representing clients these are duties that apply to lawyers personally handling representing clients the SRA warning notice pic starts by picking up on the widespread perception that NDA's results with low levels of reporting of inappropriate sexual behaviors they expressly recognized a tender in the arts where MDAs can be appropriate to protect commercial interests confidentiality and reputation the SRA notice goes on to say that whilst NDA's are not prohibited they must not leave an individual feeling unable to notify the SRA or other regulator or law enforcement authorities about alleged wrongdoing the law firms themselves if it's a matter within the law firm must also remember to esra of any alleged condoms finally ing to the notice it is inappropriate to use NDA's to improperly threatened litigation or to threaten adverse consequences to get people not to make protected disclosures or to a report to the regulator or authority or enforcement authorities that concerns about wrongdoing the war Lotus says that his solicitors failed to take this on board they are potentially in breach of the SRA principles which are of course crucial in short they said that NDA's are inappropriate as they prevent or deter someone from reporting conduct misconduct making protected disclosure reporting an offence to a law enforcement authority or cooperating in a criminal investigation well thinking therefore about confidentiality clauses it's quite easy to see that a confidentiality clause might be thought to deter people from assisting in an investigation the SRA notice goes on to say that the NDA must not influence the substance of any report or cooperation and must not prevent someone who's entered into an NDA from keeping it receiving a copy of that NDA I think it's extraordinary but I've never come across any suggestion that removing a copy from an individual would work seems to be a bit impractical how's the individual supposed to know what they can account to if they haven't got a copy of the agreement anyway the SRA notice puts paid to that the SRA also say that the person expected to agree the NDA must not quote be given the impression unquote that disclosure is prohibited always otherwise it must be made very clear where does the disclosure is permitted I think therefore it simply cross referring to a statutory section in light of the SRA notice would be potentially given the impression that more was prohibited from being disclosed than was truly the case the SRA say that if the individual is not represented than the obligation on the solicitor is heightened to make sure that the true position is absolutely clear again obviously if we have settled appeals the individual will always have taken independent legal advice however think about contracts employment and confidentiality clauses there's of course it is much less likely the individual will have legal representation finally the SRA say that the NDA must not include cause is known to be unenforceable so clearly you can't put it in blanketed the edge was sucking experience and then say you dude had enforcing it the equality and Human Rights Commission report on ending sexual harassment at work was also produced in March 2018 it has a section dealing with NDA's although of course the report goes much wider in the relevant section they say they want the government to legislate to provide a clause which prevents disclosure of future acts of discrimination harassment or victimization they would want us to see that clause be void they will just a cheat code a practice on sexual harassment which would set out circumstances in which confidentiality clauses would be void they say that the best practice of their days is to pay employees legal costs enough to receive independent legal advice to include the reasonable costs of agreeing changes to terms employees should be given a reasonable time to consider settlement to allow the employee to be accompanied by a trade union representative or colleague we're discussing the settlement agreement confidentiality clauses should only be used at the employee's request they say save and expects exceptional circumstances they want an annex to be put in any settlement agreement explaining why the confidentiality clauses are being included what their effect is and they go on to say that non-disclosure agreements at the start of employment relationships should never be used I think by margin this is the most extreme of the views perhaps unsurprisingly given the context in which the report is being written obviously in settlement agreements a number of these things already happened given that individuals have the right to independent legal advice in order for the settlement agreement to be valid and enforceable however I think if we ever did get to a situation where confidentiality clauses could only be inserted at the employee's request many more cases would fight to inclusion I also think the non-disclosure starting on disclosure clauses at the starting-point relationship were very rare but as I mentioned I think there can be a place for them obviously they shouldn't gag any wrongdoing prevent any wrongdoing being disclosed appropriately then we have the ABC case which I dealt with in a previous podcast in some detail and so I'll only deal with it briefly the question of the court of appeal in that case is whether an employer and senior executive could get an injunction to prevent the Daily Telegraph from publishing information attained apparently in breach of certain NDA's the NDA's had been included in settlement agreements where apparently five employees had made separate allegations about inappropriate behavior by a senior executive is the employees signed settlement agreements containing NDA's and where both parties agreed to keep the subject matter and the complaints confidential there was an exclusion for the right for individuals to make legitimate disclosures including reporting any criminal offenses the individuals had of course obtained legal advice before entering their settlement agreements the court of appeal if you remember granted the injunction has said that provided the NDA was freely entered into without improper pressure and with the benefit were appropriate of independent legal advice and with due allowance for disclosure or wrongdoing in to the police then the regulatory or regulatory body then there were public policy reasons in favor of upholding Express contractual obligations of confidentiality these could well outweigh the right to freedom of expression of the party that wishes to publish that information the court of appeal was I think it's fair to say ferry pro MDAs say we played an important part in the consensual settlement of disputes and the employees miss themselves we wish to maintain confidentiality in relation to the settlement of the dispute with the employer it was noticeable in this case I think that three of the five employees expressly said they wanted the injunction to be continued so they were on the side of the employer so where does that leave us well first of all I think there's a myth abroad that says NDA is somehow objection or immoral per se and the party should not rely on NDA's we've certainly had employee advisors trying to assert that to us I think this is simply not the case none of the bodies that have looked at NDA's have got anything close to saying NDA's should be prohibited the government equalities office the women of the qualities committee and the SRA all recognize a role for NDA's equally however I think employers and lawyers are going to have to look closely at contracts employment and settlement docking documents to ensure that nothing is said in those documents that might be thought to inhibit a party from disclosing wrongdoing etc to the appropriate parties I gave one example earlier on I think if you refer simply cross refer to the relevant section of permitted roses that will be not be enough that would assume that the employees independent legal advice is usually not the case but entering the contract of employment they just don't have that have taken independent legal advice probably that means that the contract needs to be super clear but we think in the contract - employment out the settlement agreement is going to be important there is a suitably explicit clause saying that nothing in the settlement agreement prevents the individual from cooperating with criminal investigation or for making any report or disclosure to any law enforcement or regulatory authority including the police or were otherwise required by law I think it's a it's probably also important to have some sort of reference in there to protect a disclosure I think the contract employment needs to say something similar in it to the other thing that we're looking at at the moment is adding something to the signature clause for settlement agreements for the individual to say perhaps that his or her legal adviser has advised them in the set that the settlement agreement does not promote prevent them from making any report or disclosure to the appropriate authorities I'd be really interested if anyone listened to the podcast has any views on this I think that NDA's are in principle unobjectionable provided they have the appropriate caveats but equally if you're actually for employers you're going towards ensure that those carve-outs are in the settlement agreement probably order to maintain your professional standards so I'd be really interested if anyone else as I say is making changes to their documents or to their practice do do get in touch do let me know but in the meantime I thought flagging up those potential changes and mending up confidentiality clauses and your settlement precedents I hope that would be useful next week or shortly after it we'll be back with the normal three Hays podcast so thank you very much for listening so that was our latest podcast we hope you found it useful if you have any questions or comments please email Nik on n Robertson at Mayor Brown com our podcasts are an overview of cases how the law applies in any particular case will obviously depend on the individual circumstances so please take legal advice if any of the matters discussed are relevant to issues that you are dealing with and thank you for listening