Settlement Agreements

Is a Settlement Agreement the same as a Non Disclosure Agreement and can I really be silenced ?

There has been a great deal of focus in the media recently following some high profile cases which have involved employees being paid off and believing that they have been effectively gagged from going public with some serious misconduct in the workplace. The cases involving Harvey Weinstein and Phillip Green in particular have led to a sense of outrage that these seemingly rich and powerful men can pay people off and continue behaving in the most abhorrent way.

The frequent and inter changeable use of the terms Non Disclosure Agreements (“NDA’s”) and confidentiality agreements by the media has caused some confusion as to what these terms mean. NDA’s as stand alone agreements are rare in the context of employment disputes and are more  frequently used in the commercial context by businesses seeking to legitimately protect commercially confidential information from being shared inappropriately. Settlement Agreements are more commonly used in the employment context to settle workplace claims and these Agreements will usually contain a confidentiality clause. A Settlement Agreement is not the same as a NDA but the confidentiality clause within the Settlement Agreement has a similar effect.

It is important to remember that neither a NDA nor a Settlement Agreement can prevent anyone from legally blowing the whistle and making a protected disclosure or a complaint to a regulator or a law enforcement agency.

To qualify as a whistle blower an individual must be able to demonstrate that they reasonably believe that the information they are disclosing shows at least one of six categories of wrongdoing; these are (i) the commission of a criminal offence, (ii) breach of a legal obligation, (iii) miscarriage of justice, (iv) danger to health and safety, (v) damage to the environment and (vi) a deliberate attempt to conceal any of these wrongdoings.

In the context of the #metoo movement, the allegations have usually centred around harassment (which covers sexual assault) with the common misconception that employees or former employees are prevented, either through a NDA or a Settlement Agreement, from repeating allegations of sexual harassment. As a direct consequence of the whistle-blower laws, neither documents can do this. Any allegations of harassment or assault would fall under the category of breach of a legal obligation (the Equality Act 2010 which prohibits any harassment on the grounds of gender, race, disability, sexual orientation, age and religion or belief) and or the commission of a criminal offence (in cases involving assault). It is also arguable that if the culture at that particular workplace is one of tolerating harassment there is danger to the health and safety of other employees by exposing them to harassment. You can see that these types of allegations can potentially fall under 3 of the six categories of wrongdoing mentioned above.

If an individual can satisfy the whistle-blower status (by showing at least one of the 6 categories above) he or she can only make  disclosure to the following categories of people : (i) the employer, (ii) the person responsible for the failure or wrongdoing, (iii) legal advisors (iv) government ministers, (v) a person prescribed by an order  made by the Secretary of State – this includes the HMRC, NHS England, the FCO or Ofcom or (vi) a person who is not covered by this list provided certain conditions are met – this could include MP’s, the police and sometimes the media. However, in order to qualify for protection under the whistleblowing regulations the individual must make the disclosure in accordance with a number of conditions.   

The Law Society has recently become involved on the issue of NDA’s and confidentiality clauses in an attempt to ensure that these are not used inappropriately and unfairly to silence victims and therefore allow perpetrators of illegal acts to simply pay their way out of very damaging situations. All signs are that NDA’s / confidentiality clauses are here to stay but they are going to be subject to greater regulation. The Law Society guidance sets of disclosures which cannot be prevented by these NDA’s / confidentiality clauses and therefore Settlement Agreements, these include (i) blowing the whistle, (ii) reporting misconduct to a regulator, (iii) reporting an offence to the police and / or co operating with a criminal investigation and (iv) reporting, in the public interest, any serious wrongdoing to a law enforcement agency, relevant regulator or equivalent person.

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