An argument over whether non-disclosure agreements (NDAs) should be banned has been reopened after MPs warned they were being used to “cover up unlawful and criminal behaviour”.
The Commons’ Women and Equalities Committee said the “increasingly widespread practice” may be enabling perpetrators to cover up acts of discrimination and sexual harassment at work.
It comes after the legal regulator, the Solicitors Regulation Authority (SRA), warned last year that people reporting sexual misconduct should not be “gagged by NDAs”.
NDAs – sometimes known as ‘gagging orders’ – are designed to stop employees speaking out about workplace secrets after they leave their post. However, an increasing number of reports suggest that employers are using NDAs to cover up criminal behaviour.
Warning solicitors about the unethical use of NDAs last year, Paul Philip, SRA chief executive said: “The public and the profession expects solicitors to act with integrity and uphold the rule of law. And most do. NDAs have a valid use, but not for covering up serious misconduct and in some cases potential crimes.”
Speaking out again against NDAs, the Women and Equalities Committee said workers often cannot afford appropriate legal advice and have little choice other than to reach a confidential agreement prohibiting them from speaking out.
The committee added that there is “clearly potential for NDAs to be negotiated, drafted, and/or enforced in ways which may amount to perverting the course of justice”.
Maria Miller, the former culture secretary who chairs the committee, said:
“It is particularly worrying that secrecy about allegations of unlawful discrimination is being traded for things that employers should be providing as a matter of course, such as references and remedial action to tackle discrimination.”
“After signing an NDA, many individuals find it difficult to work in the same sector again. Some suffer emotional and psychological damage as a result of their experiences, which can affect their ability to work and move on. There is also the financial penalty of losing a job and bringing a case against an employer.”
“Organisations have a duty of care to provide a safe place of work for their staff and that includes protection from unlawful discrimination.”
The committee was ‘particularly struck’ by the evidence it heard that NDAs are used so routinely when settling discrimination and harassment cases, and other employment disputes, ‘that many employers and lawyers believe them to be integral to settlement agreements’. Lawyers were told they ‘must think more carefully about why they are requesting confidentiality and whether it is needed at all’.