New report on non-disclosure agreements in discrimination cases

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A recent report entitled ‘The Use of Non-Disclosure Agreements in Discrimination Cases’ has been published been published by a House of Commons committee.

It finds that pursuing claims through the employment tribunals system can be challenging, in part due to power that employers have in comparison to employees. As a result, it states that employees often feel railroaded into reaching settlements that includes a non-disclosure agreements (NDAs) which are “not benign”.

To tackle this issue, the Women & Equalities Committee have made several recommendations, both to redress the imbalance in the relationship and to overhaul settlement agreements.

It calls for employers to bolster their corporate governance procedures to ensure that employees are protected against discrimination and harassment, including the requirement to have named board members overseeing policies and the use of Non-Disclosure Agreements.

If a claim is brought, the report proposes reducing the time limit in which to do so to three months. It also suggests the introduction of a new costs system, under which the employer is more likely to be required to pay the costs incurred by the employee (including for seeking legal advice) and significantly increase the damages awarded for non-pecuniary loss.

In terms of NDAs, the committee makes the case for introducing standard confidentiality clauses which are written in plain English for use in settlement agreements.

The option to secure a settlement agreement has a number of benefits, not least the avoidance of a contentious tribunal process. Whilst the report highlights a clear need for reform, the need for confidentiality within settlement remains of paramount importance for many employers. It will be important, therefore, that any changes to the system strike a balance between empowering employees and not discouraging parties from seeking a settlement agreement.