There has been significant concern recently about the use of confidentiality agreements or non-disclosure agreements. In response to the concerns the Advisory, Conciliation and Arbitration Service (“ACAS”) has published welcome guidance on the use of confidential clauses, or non-disclosure agreements (“NDAs”), last month (“the Guidance”).
The Guidance considers the use of NDAs in terms of settlement agreements, which confirms that NDAs should not be used to:
- Stop a worker from reporting discrimination or sexual harassment at work or to the Police
- Stop a worker from Whistleblowing
- Cover up misconduct, avoid addressing a workplace issue or mislead individuals.
The Guidance further notes that NDAs should not be used routinely and should not be used to cover up or deter workers from reporting concerns. ACAS recommends that employers should consider whether an NDA is needed and what consequences there could be if one is used.
ACAS Guidance provides circumstances in which it is appropriate for employers to use NDAs:
- To keep parts of the agreement confidential e.g the terms of the financial settlement
- To protect the client information confidential
- To prevent derogatory statements being made.
If an NDA is used then:
- It should clearly explain why one is proposed and what it is trying to achieve
- Be written clearly and in plain English
- Give the worker reasonable time to consider it, and seek trade union advice or legal advice.
Guidance is given for a business to have clear and up-to-date policies in areas such as whistleblowing and sexual harassment to encourage employees to make disclosures, as well as regularly reviewing and updating their policies, procedures and practices around NDAs and training managers on the policies. Notably, ACAS suggests that an employer should collect and routinely report on their use of NDAs or confidentiality clauses to their board, senior management or owners to ensure the business is using them appropriately.