While the government’s decision to ban NDAs, which silence victims of workplace discrimination and harassment has been widely praised, there may be unintended effects that will primarily harm whistleblowers as well as those who have already been harassed. Eliza Nash
A late addition to the Employment Rights Bill deals with confidentiality obligations relating to harassment or discrimination. This small amendment has big implications.
The Employment Rights Act 1996 will be amended to include Section 202A. This section renders any agreement between an employee and an employer null insofar as it attempts to prevent the worker from making complaints or disclosing data relating to discrimination or harassment.
Other words, confidentiality clauses or non-disclosure agreement (NDA) will no longer be enforced to prevent employees from publicly airing accusations of harassment or discrimination.
This provision is applicable to all employment contracts, but it resonates most strongly with settlement agreements. Through these agreements, employers agree to a financial settlement for claims made or alleged by individuals in exchange for them agreeing to withdraw the proceedings and waive any claims.
These agreements also include confidentiality clauses that prevent the employee from discussing the issue publicly. This is a standard feature of such agreements, and it acts as an incentive for the employer, who will be motivated to reach an out-of-court settlement to protect its reputation as well as limit financial exposure. It does not matter if the accusations are true or false.
The law currently allows for a worker to speak up in certain situations. Whistleblowing law states that an agreement’s provisions are void if they prevent a worker from making a protected statement (likely covering harassment and discrimination). Section 17 of the Victims and Prisoners Act of 2024 also provides that NDAs won’t be enforced against victims of crimes if disclosures were made to qualified lawyers, healthcare professionals, or the police.
The Solicitors Regulatory Authority imposes strict rules to lawyers in order to ensure that settlements do not prevent individuals from reporting serious regulatory violations or criminal offences, or from cooperating with criminal investigations.
Without an NDA, employers will find settlements less appealing.
The amendment proposal goes further than that. The proposed amendment goes much further than this.
There does not seem to be any restriction on the motive behind the allegation or who is informed. The legislation would need to include a requirement of good faith before individuals could post their allegations on social media or sell them to the press.
Can’t Buy My Silence was a group led by Zelda perkins, former assistant to Harvey Weinstein, that spearheaded the campaign to change the law. It is a positive thing to try to stop employers from covering up this type of behavior, particularly if it leads them to actively tackle discrimination and workplace harassment (which will likely extend beyond the claimant in question) and improves the working environment for employees and reduces legal claims.
The unintended effects of this amendment are what is of concern. Without an NDA, employers may find settlements less appealing, particularly in cases that they deem to be without merit. The majority of individual claimants do not want to go to court or to a tribunal. They just want to know that they have been compensated and acknowledged for the wrongs done to them.
Early settlements are a way to achieve these goals. They allow the individual to continue their life without being tied down by expensive and stressful litigation. Settlements also reduce the number of cases in an already overburdened court system.
Claimants may lose heart or money if employers are less willing to settle their claims. The claimants may end up being the ones who lose out.
This scenario is not the desired outcome of new laws. It will only result in disputes taking longer to resolve and costing more money.
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