Are You Using Non-Disclosure Agreements Inappropriately?

The use of non-disclosure agreements (NDAs) and confidentiality clauses are common place within the corporate realm to protect commercially sensitive information.

Such obligations are often used within corporate transactions, employment contracts and settlement agreements to protect trade secrets and the reputation of an organisation by restricting what the other party can reveal. The use of NDAs or confidentiality obligations provides an enforceable contractual obligation and sanctions for breach, should the other party disclose the protected information.

However, in recent years the #MeToo campaign has highlighted situations where NDAs or confidentiality obligations within settlement agreements have been used inappropriately to deter victims of sexual harassment from disclosing the details to authorities. The campaign has prompted increased scrutiny around the use of NDAs and highlighted the potential repercussions on advising and drafting such clauses.

Several reports have emerged alongside Government responses relating to the use of confidentiality clauses and NDAs. For example, the Equality and Human Rights Commission (EHRC) published its report “Turning the tables: ending sexual harassment at work” in March 2018 which made several recommendations for change to enhance protection of victims of sexual harassment in work. In addition, the Women and Equalities Committee (WEC) published numerous reports in 2018 regarding sexual harassment in the workplace. In November 2018 and June 2019, the WEC launched an inquiry into the use of NDAs in harassment and discrimination cases. Some of the recommendations included better guidance for employers handling investigations into grievances relating to discrimination or harassment and legislation to regulate the drafting and wording of confidentiality clauses.

As a result, the Government launched a consultation from March to April 2019 on measures to prevent misuse of confidentiality clauses in situations of workplace harassment in situations of workplace harassment or discrimination. They acknowledged confidentiality clauses have a right and proper place in the employment context, but those using the clauses to prevent victims from speaking out, or to intimidate them must be prohibited.

A spotlight was also shone on the use of NDAs and confidentiality obligations within the higher education sector following a BBC News investigation in 2020. The BBC News investigation identified that nearly a third of universities have used NDAs for student grievances since 2016. The grievances ranged from sexual harassment claims, complaints of false advertising of courses to accommodation issues. Universities UK condemned the use of NDAs as a tool to silence students.

The Government stated that this was “unacceptable” to use NDAs for student complaints and that it would legislate to stop such agreements being misused across all areas of society. A university pledge has been developed following the work of campaign groups, to end the use of NDAs by Universities. The pledge commits Universities to not use legally binding NDAs against students and staff who come forward to report abuse, amidst fears that victims are being pressured into signing agreements which stop them from speaking out and protect the reputations of perpetrators.

A number of Universities in Northern Ireland have recently signed the pledge, including Queen’s University, Ulster University, Stranmillis University College, St Mary’s University College and the Open University. A step which was welcomed by the Economy Minister Gordon Lyons, who stated “I welcome the collective leadership shown by Northern Ireland’s higher education sector in signing a pledge which demonstrates their clear opposition to the buying of victims’ silence.”

The pledge signed by higher education institutions in Northern Ireland demonstrates a positive step taken to protect their staff and students from being silenced from sharing their experiences. It is anticipated that further scrutiny will be applied to organisations which continue to use NDAs and confidentiality obligations for the purpose of “gagging” complainants and advice should be sought before their use.

If you would like any further information or advice, please contact Rachel Toner from the Commercial team at Carson McDowell.

*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.