Both reports consider the potential broader impact of such clauses upon workplace culture.
The LSB report considered an NDA to be misused if its purpose is to conceal alleged unlawful activity, such as harassment or discrimination, or potentially legal but unethical acts such as workplace bullying.
The report recognised existing requirements in codes of conduct from bodies such as the Solicitors Regulation Authority, which already states that NDAs are used improperly if they act as a means of preventing or deterring the reporting of misconduct or a serious breach of regulatory requirements to a responsible body.
In the context of these developments, it is important to recognise that the protection of confidential information is a standard provision in settlement agreements where an employer is agreeing to part ways with an employee, for any reason.
Confidentiality requirements are an important tool for the protection of confidential and proprietary information to which employees may have access in the course of their work.
And when an employment relationship comes to an end under a settlement agreement, both parties are likely to value carefully considered confidentiality provisions.
In line with the SRA warning notice, it is already important that agreements do not prevent disclosures to regulators or whistleblows under the Public Interest Disclosure Act.
Nor should an NDA improperly prevent individuals from seeking advice from professionals, such as medical practitioners, who are bound by a duty of confidentiality.
This should be expressly stated in the agreement. However, the focus on a speak-up culture and scrutiny of NDAs does not mean those who raise complaints have immunity from legitimate steps taken by their employer if an individual’s behaviour otherwise crosses the line.
The appeal courts have recognised that a distinction can be drawn between the fact of a whistleblow and the associated behaviour of the person raising it, such as the offensive or abusive way it was made, or the fact that it involved irresponsible conduct.
Nevertheless, all signs point to regulators moving towards ever tighter restrictions on the use of confidentiality clauses for individuals settling claims or ending their employment having raised allegations of non-financial misconduct.
An elegant solution
Evidence given to the women and equalities committee in December 2023 indicates that the government is also looking into “an elegant solution” for preventing the misuse of NDAs more widely.
The call for a ban in the use of NDAs in harassment cases in the "Sexism in the City" report is likely to act as a further prompt for a review of the law in this area.
In the education sector, the Higher Education (Freedom of Speech) Act 2023 already became law in May 2023 and now prevents universities from using NDAs in relation to complaints involving sexual misconduct, abuse, harassment or bullying.
