by Mary Kelleher August-08-2019 in Employment Law

This article features in the Legal Island Employment Law Hub, August 2019.

The impact of the #MeToo movement continues to be seen almost 2 years on. A significant issue which came to light from the #MeToo scandal was the use of Non-Disclosure Agreements (“NDAs”). NDAs, also known as “gagging” clauses, are agreements where the parties agree to keep certain information confidential. These clauses are being used to ‘silence’ vulnerable individuals from “spilling the beans” in relation to allegations of misconduct. The use of such clauses has led to widespread condemnation and debate. The appropriate use of NDAs is in the spotlight.

This is of particular interest to H.R. specialists in the context of the resolution of disputes by way of private settlement agreements. On the one hand, NDAs are a legitimate basis to protect commercial interests and confidentiality and to protect reputations to the mutual benefit of both parties. However, NDAs may be used as a mechanism to “cover up” abusive behaviour, e.g harassment or discrimination in the workplace, and to prevent disclosures of such conduct, their enforceability comes into question.

 

Current Legal Position

There are no legislative proposals in Ireland governing NDAs/confidentiality clauses in settlement agreements. However, there is increased sensitivity and scrutiny about the use of NDAs.

Arguably, without NDAs, it would be more difficult to resolve disputes privately because of the concern that even if a settlement is reached, the underlying issues may remain ‘open’ in light of the potential for further disclosures.

The current position in Ireland for a settlement agreement to be enforceable is:

  • the settlement agreement must be freely entered into, without undue pressure or undue influence;
  • the signatory must have benefited from independent legal advice; and
  • exceptions to confidentiality should be made to allow for a range of disclosures including to appropriate regulatory and/or statutory bodies and/or law enforcement agencies.

 

Protected Disclosures Act 2014

An employee’s right to make a Protected Disclosure, under the Protected Disclosures Act 2014 (the “2014 Act”), cannot be waived by signing a settlement agreement. The employee may confirm that he has no basis for making a Protected Disclosure. This serves to assure employers that there are no ‘landmines’ which could later give rise to Protected Disclosures.  Care needs to be taken when drafting this kind of provision to avoid falling foul of the 2014 Act.

 

The Legislative Position Elsewhere

Significant legislative change has followed the #MeToo movement in the US to address the use of NDAs. Closer to home, on 21 July last, the UK Government announced that it was planning to implement new legislation to “tackle misuse of non-disclosure agreements…in the workplace.” This new legislation is targeted particularly at addressing concerns about “cover ups” of sexual harassment, racial discrimination and assault.  The legislative measures which the UK Government intends to put in place include:

  • ensure confidentiality clauses cannot prevent disclosures to the police, regulated health and care professionals, or legal professionals;
  • ensure the limits of confidentiality clauses are clear; and
  • that independent legal advice is available to anyone signing a NDA.

 

Conclusion

Organisations need to take a fresh look at confidentiality clauses in settlement agreements to ensure that they are not unduly onerous on employees, particularly vulnerable employees, and that safeguards are implemented to ensure that the agreement will be enforceable. There is certainly scope for more guidance on this matter for both employers and employees. It is likely that the debate on confidentiality clauses will continue into the future.


For further information, please contact Mary Kelleher at mkelleher@hayes-solicitors.ie or any member of the Employment Law Team.

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