Government Asked To ‘Reset The Parameters’ Of Controversial Agreements

The House of Commons’ Women and Equalities Committee has today published its report into the use of non-disclosure agreements in discrimination cases.

The Committee, which is appointed by the House of Commons to examine the expenditure, administration and policy of the Government Equalities Office, launched its inquiry last year.

The group of MPs are concerned about the use of non-disclosure agreements relating to sexual harassment in the workplace and believes that in some cases, allegations of unlawful discrimination are not investigated properly – or at all – by employers. 

NDAs are legally drafted contracts under which employers usually agree to pay departing employees rather than face a tribunal claim.

The report makes a series of recommendations which include the Government ensuring that NDAs cannot prevent legitimate discussion of allegations of unlawful discrimination or harassment.

In asking for an urgent and immediate step change in the use of NDAs in discrimination cases, it says the Government should strengthen corporate governance requirements to require employers to meet their responsibilities to protect those they employ from discrimination and harassment.

Named senior managers at board level or similar should in the future oversee anti- discrimination and harassment policies and procedures and the use of NDAs in discrimination and harassment cases.

Maria Miller, the Conservative former culture secretary who chairs the committee, said: “It is particularly worrying that secrecy about allegations of unlawful discrimination is being traded for things that employers should be providing as a matter of course, such as references and remedial action to tackle discrimination.

“After signing an NDA, many individuals find it difficult to work in the same sector again. Some suffer emotional and psychological damage as a result of their experiences, which can affect their ability to work and move on. There is also the financial penalty of losing a job and bringing a case against an employer.

“Organisations have a duty of care to provide a safe place of work for their staff and that includes protection from unlawful discrimination.”

Commenting on the changes, Melanie Stancliffe, an employment partner at Irwin Mitchell, says:

Expert Opinion

“We at Irwin Mitchell welcome the publishing of this report and support its aims of ensuring that allegations of unlawful discrimination and sexual harassment discrimination in the workplace are dealt with fairly.

“Some of the report’s proposals are radical and if implemented will lead to widespread change.

“The report suggests that compensation needs to be substantially increased – to both compensate the successful victim and "punish" employers, presumably in the expectation that businesses will stamp out cultural problems in their workplaces if their bottom line is affected.

“It also recommends that tribunals work on the assumption that an employer will be ordered to pick up the legal of costs of the successful employee – something it refers to as ‘one way cost shifting’. This is significant because annual statistics for 2017/18 indicate that the average award for sex discrimination was just over £13,000. Complex sex discrimination claims can be extremely expensive and many employees don’t have the resources to pursue them. If awards were increased and costs awarded, more solicitors may offer the sorts of ‘no win no fee’ arrangements common in personal injury claims. This is likely to encourage more victims to bring claims.

“The other interesting suggestion is that employers should pay more to ensure that employees receive full legal advice before they enter into settlement agreements.

“Settlement agreements are already subject to strict rules and have to be counter signed by a solicitor, or someone else who is authorised to advise on them. The committee suggests that these rules are not robust enough and that employees don’t receive enough advice about whether the terms on offer are reasonable.

“That’s not my experience, in fact most lawyers will advise their clients about what they could expect to receive if their claim went to tribunal and ultimately, deciding whether or not to accept the offer is one the client has to make – not their lawyer.

“Most employers will also make a contribution towards the employee’s legal costs of taking advice. These are rarely sufficient to cover the costs and it’s interesting that the committee suggests costs should reflect the actual cost of providing advice and should be made even if the employee then decides not to sign the agreement. Many employers will be very uncomfortable with that suggestion and amazed that they might be asked to pay their employees legal costs of negotiating a higher settlement.”
Melanie Stancliffe - Partner

The full report can be downloaded from here - download the report