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Confidentiality clauses in settlement agreements – developments following #Metoo

15 May 2019

Background

Sexual Harassment within the work place has been subject to increased scrutiny following recent high profile allegations, including those made against Harvey Weinstein which lead to the #Metoo movement gaining much attention last year.

Following on from this, the government have undertaken a consultation to review the current law on sexual harassment to see how improvements can be made.

Government review

The Women and Equalities Select Committee have now produced a report setting out recommendations.

One of the key recommendations, is for a statutory code of practice to be implemented to set out to employers what steps they need to take to ensure that they are preventing sexual harassment at work.

In addition, the following issues will also be reviewed further

  • What protection can be put into place for volunteers and interns within the workplace.
  • The law on third party harassment (where an employee has been subjected to harassment by a third party who's not their employer).
  • The limitation period in relation to sexual harassment, and potentially all discrimination claims. At present there is a limit of three months less one day from the act in which someone has to bring a claim. The government is now considering increasing this to 6 months.

Confidentiality clauses in settlement agreements in the wake of #MeToo

Non-Disclosure Agreements (NDA) have been the subject of much scrutiny from the media, especially following the allegations made against Philip Green. In particular focus has been on confidentiality obligations in relation to harassment cases, with reports suggesting victims are being forced to sign NDAs and are not able to speak out about their treatment.

It is important to understand however that there is distinction between NDAS and Settlement Agreements.

NDAs are often standalone agreements that are signed, or required to be signed, to protect legitimate business interests where there's commercial sensitivity or trade secrets, such as when entering into a commercial contract with a supplier.

Settlement Agreements are used to resolve disputes or to terminate employment on mutually agreed terms. In the context of settling harassment and discrimination cases, most agreements will include a confidentiality clause, which sets out what an individual can or cannot talk about once they've signed. These clauses often include a proviso preventing the individual talking about the circumstances leading up to the payment of the compensation within the settlement agreement. For this reason, they can be considered as controversial.

Enforceability of confidentiality clauses

The Women and Equalities Select Committee are now considering the use of non-disclosure agreements and whether or not they're lawful, as well as how far a clause can go to prevent a victim from speaking out.

A recent development has seen the Solicitors Regulatory Authority, the body which regulates solicitors in England & Wales, put out a warning notice to set out how wide these clauses should be. The Law Society has also provided their own guidance.

Within these recommendations, it is clear that confidentiality clauses within settlement agreements, whilst lawful, need to be drafted to ensure that they do not prevent an individual from disclosing something to a regulator or going to the police.

It is also recommended that the agreement is clear that individuals are able to disclose matters to health care professionals, such as doctors or therapists, so that they are able to seek the support they need without fear of repercussions.

Clearly this is an area of law that is still developing and under review, and we will keep you updated.

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