Legal Changes Likely in the Future Concerning Non-Disclosure Agreements (NDA’s)

A trend setting topic at the moment is undoubtedly and confidentiality agreements. The legislative spotlight is fully on them and there are likely to be Non Disclosure Agreements further requirements coming down the line as to what they can and cannot provide for. Rarely perhaps has there been so much universal focus on a legal issue as there is on this at the moment.

The House of Commons Women and Equalities Select Committee, the Department for Business, Energy and Industrial Strategy, ACAS, The Law Society and the Employment Lawyers Association amongst others are all focussing on this in a big way right now. Triggered not least by the worldwide publicity of cases such as the allegations surrounding the Hollywood ‘mogul’ Harvey Weinstein and the President’s Club situation in which women had to sign agreements not to disclose details of their experiences while catering at a charity dinner.

Such publicity has provoked the government to consult extensively on how to legislate to ensure that harassment, discrimination and/or any ‘whistleblowing’ in the public interest cannot be ‘swept under the carpet’ by means of an NDA, while enabling employers to protect valid confidential information of a commercial nature such as trade secrets and intellectual property rights.

With this in mind The Law Society has recently issued a public notice which provides that both parties need to be clear on what exactly the agreement is restricting the employee/worker from doing. This logically makes clear that an NDA must not attempt to restrict anyone’s right to disclose to relevant authorities, including the police and regulatory bodies, any wrongdoing and the employee/worker must be given a copy of the agreement. (That maybe sounds obvious but there appear to have been situations uncovered in the course of the government’s recent review of NDA’s of individuals being prohibited by the agreement from keeping a copy for their own records).

Possible future developments include:

  • Employment Tribunals having authority to award additional compensation if any confidentiality clause does not meet the new drafting requirements
  • Mandatory ‘standard’ clauses in settlement agreements
  • A minimum consultation period for an employee to take advice on an NDA and possible further legal cost provision from the employer to provide for more detailed legal advice to the employee specifically on the details of the NDA
  • As further ‘food for thought’ for now, consider the recent developments over in New York State, where a Bill on sexual harassment is likely to be passed shortly to provide:
  • Employers to be prevented from including non-disclosure provisions in settlement agreements for all discrimination claims
  • Prohibition on including terms to prevent disclosure of the underlying facts and circumstances to the claim or action unless the complainant specifically requests such confidentiality
  • A 21 day period for the complainant to consider the proposed confidential provision(s) and even then a further 7 day period in which the complainant can revoke the agreement
  • The limitation period in which to file a complaint of sexual harassment with the Division of Human Rights to be extended to three years. (In the UK there may well be an increased limitation period but it is unlikely to be for such a length of time as this)
  • The availability of punitive damages.
  • Whether we follow any of these developments and if so to what extent only time will tell, but one thing remains certain. It is always advisable to take legal advice whether you are an employer, employee or worker!

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