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Consultation Launched on Misuse of Confidentiality Clauses

on Friday, 15 March 2019.

The government has published a consultation paper to seek evidence and views on the use of confidentiality clauses and to tackle their misuse.

This consultation has been issued in response to the recent Women and Equalities Select Committee (WESC) report, which called on the government, regulators and employers to increase their responsibility in addressing sexual harassment and discrimination in the workplace.

The WESC advocated for the restriction or banning of confidentiality clauses (non-disclosure agreements (NDAs)).

Summary of the Consultation

The government confirmed in the consultation paper that it considers that confidentiality clauses (NDAs) have an important role to play in employment context - whether they are used as part of employment contracts to protect trade secrets, or as part of settlement agreements to allow the parties to move on with a clean break.

Although the government has stated that it is not in favour of an outright ban of confidentiality clauses, it does consider that further regulations may be helpful to restrict their misuse.

The consultation requests examples of bad practice in the use of confidentiality clauses, including feedback on proposals to:

  1. ban confidentiality clauses which prevent employees from reporting or discussing potential criminal acts with the police. Should such a ban extend to any other individuals or organisations?

  2. require all confidentiality clauses to explicitly highlight the disclosures which they do not prohibit and to make any confidentiality clauses that do not comply with this requirement void. Should a specific form of wording be utilised to achieve this?

  3. ensure that any confidentiality requirements imposed by an employer on its employees are set in a form that complies with the above points, in the written statement of terms of employment that is issued at the outset of employment, and to enable employees to claim compensation for a failure to comply with this requirement if they succeed in any other claim in the employment tribunal.

  4. impose a requirement that employees receive specific legal advice on the confidentiality clause when they receive independent legal advice on the agreement.

How Will This Affect Employers?

If these proposals become law, employers will need to review and amend their employment contracts to ensure that any confidentiality provisions comply with new requirements.

You will also need to ensure that the wording used in any settlement agreements includes explicit statements about the extent of any confidentiality obligations and the requirement to take legal advice on these.

How To Take Part in the Consultation

The government is seeking views from employers and responses must be submitted by 29 April 2019 on the BEIS website.

For more information, please contact Lorna Scully in our Employment Law team on 0121 227 3719.

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