In the wake of the #MeToo scandal, the use of non-disclosure agreements (NDAs) has come under the spotlight. There are many misconceptions that exist around NDAs, but there are steps employers and in-house legal teams can take to keep themselves right in the face of increased scrutiny.
What is an NDA?
Confidentiality or non-disclosure agreements (NDAs) are legal contracts that restrict what the parties can say about a matter (often labelled in the media as 'gagging clauses').They are often used by businesses and employers to safeguard trade secrets and business know-how.
#MeToo exposed the misuse of NDAs by some employers, and their lawyers, to silence victims of sexual harassment. Given the public outrage that followed, employers could be forgiven for wanting to avoid them altogether. However, there are situations where NDA's are perfectly legitimate and, when used correctly, can give employers comfort on sensitive matters.
Using an NDA
While recent media and government focus has been on the misuse of NDAs to hush up allegations of misconduct, NDAs are actually common in a wide range of scenarios. Some examples include:
In March 2018 the Solicitors Regulation Authority (SRA) issued a practice direction to practitioners, reminding them of the risks associated with using, or advising on the use of, NDAs and warning against inappropriate use.
The Women and Equalities Committee ('the Committee') has now published its report on the use of non-disclosure agreements in discrimination cases. This followed on from the Committee's 2018 report on sexual harassment in the workplace which raised the question of whether legally compliant NDAs might be deterring complainants from raising concerns about sexual harassment - an issue the Government has since pledged to consult on.
The Committee believes that employer misuse of NDAs is only one part of a wider problem, with legislative, regulatory and even judicial measures currently failing to protect employees from discrimination and abuse of power.
A number of the recommendations aimed at dealing with these and other problems linked to preventing harassment and discrimination at work are set out below:
While the proposals above are only a snapshot of the recommendations made, it is clear that the government is being pressured to ensure that more is done to prevent harassment and discrimination in the workplace and lift the lid on unscrupulous employers who misuse NDAs.
With NDA's firmly under the microscope, employers and in-house lawyers should consider the following questions when considering their use:
NDA's will remain a hot topic of discussion and their use will likely face on-going controversy in a MeToo era. However it's important to remember that when used appropriately and created by legal professionals for legitimate purposes, they can be a valuable tool in safeguarding a business.
This article was first published by People Management