Government to legislate on use of confidentiality clauses

The Government has announced that it will implement new legislation on the use of confidentiality clauses or Non-Disclosure Agreements (NDAs) in the workplace.

Although the Government recognises that confidentiality clauses are used legitimately by most employers, it believes that there are a small number of cases in which confidentiality clauses are being used to cover up criminal acts in the workplace such as sexual harassment, assault and racist discrimination, which the Government is seeking to tackle in implementing this new legislation as part of its Good Work Plan to create a fairer workplace.

The new legislation will apply to confidentiality clauses in both contracts of employment and settlement agreements, as well as standalone confidentiality agreements, and will make the following updates to the current legal position:

• It will not be possible within a confidentiality clause to prevent an individual from disclosing information to the police, regulated health and care professionals, or legal professional (e.g. doctor, lawyer, or social worker).
• The clause must set out the above limitations of the confidentiality obligation clearly and in plain English to ensure that the individuals signing them fully understand what they are signing and their rights. The Government hasn’t yet given any indication as to whether it will issue any guidance or particular wording to be used in confidentiality clauses to address this.
• Independent advisors advising an individual on the terms of a settlement agreement will be legally obligated to advise the individual of the above limitations of the confidentiality clause in their agreement.
• New enforcement measures will be will be introduced to deal with confidentiality clauses that do not comply with the legal requirements.  It is not entirely clear what these new enforcement measures will be. However, as an example, the Government has stated that a confidentiality clause in a settlement agreement which doesn’t follow the new legal requirements will be treated as being void.

We don’t yet have an implementation date for this new legislation. The Government have simply said that this will be ‘when Parliamentary time allows’. However, as the Government will be pre-occupied with Brexit until 31 October 2019 and most likely beyond, it is unlikely that we will see any draft legislation on this until the end of this year at the earliest.

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