Sexual Harassment and Non-Disclosure Agreements the British #Metoo scandal

30th October 2018 Employment

Last week, Lord Hain named Sir Philip Green as the ‘leading businessman’, behind the Court of Appeal’s injunction preventing the Daily Telegraph from publishing allegations of sexual and racial harassment against him, in what can only be assumed to be the case of ABC v Telegraph Media Limited [2018].

Whilst, Lord Hain’s naming now renders the Court of Appeal’s injunction ineffective, the judgment does contain some interesting dicta on the role of non-disclosure agreements within sexual harassment cases which is worth exploring.

A very brief background

On 16 July 2018, a journalist from the Daily Telegraph contacted Sir Philip Green and two of his companies (‘the Appellants’) with a view to obtaining their comments on a story which it was proposing to publish. The story was to centre on five employees’ allegations of sexual and racial harassment against Sir Philip Green, how their allegations had been handled (including the use of settlement agreements) and the inclusion of non-disclosure agreements within the settlement.

The Appellants quickly made an application to the High Court for an interim injunction to prevent the Daily Telegraph from publishing the story. The High Court refused to grant the injunction and the case proceeded to the Court of Appeal. The Court of Appeal granted the injunction, although Lord Hain’s disclosures have subsequently rendered it pointless. That being said, there is useful dicta from both Courts’ judgments on the role of non-disclosure agreements in cases of alleged sexual harassment, which should be considered.

What is a non-disclosure agreement?

Non-disclosure agreements are legal contracts between two or more parties that commit one or both to not disclose specific information such as alleged sexual harassment, often in return for a financial payment.

Sexual harassment and non-disclosure agreements

The recent Report of the House of Commons Women and Equalities Select Committee entitled ‘sexual harassment in the workplace’ (“WESC Report„), discusses the use of non-disclosure agreements and their legitimacy in cases of sexual harassment.

The WESC Report notes concerns that non-disclosure agreements are being used to ‘silence’ victims of sexual harassment in the workplace and prevent cases being brought into the public eye. The WESC Report calls for the use of non-disclosure agreements to be better controlled and regulated to ensure that they are not used unethically in cases where sexual harassment is alleged.

The High Court Judge in his judgment relied on the WESC Report to support his argument that it would be in the public interest for the Daily Telegraph to publish their article. It was noted that there was clear public concern about misbehaviour in the workplace and non-disclosure agreements should not be used to ‘gag’ victims.

Whilst the Court of Appeal did not disagree with this dicta, they commented that the WESC Report also noted that non-disclosure agreements do have a place in settling complaints of sexual harassment in the workplace, the problem is that currently there is insufficient oversight and regulation of their use. As part of the WESC report it has been recommended that the Government legislate to require the use of standard, approved confidentiality clauses. These should include clear, plain English wording setting out the meaning, effect and limits of confidentiality clauses including a clear explanation of what disclosures are protected under whistleblowing laws and cannot be prohibited or restricted. The Court of Appeal noted that the non-disclosure agreements in this case, authorised disclosures in a range of cases including to regulatory and statutory bodies. As such, on the face of them they did not have any of the vices criticised by the WESC Report. Therefore, it was not necessarily in the public interest for the article to be published.

Can non-disclosure agreements still be used in sexual harassment cases?

It appears from the Court of Appeal’s judgment and the WESC Report itself, that non-disclosure agreements can still be used in cases of sexual harassment. However, such confidentiality clauses will need to be tightly drafted to ensure that the retention of whistleblowing rights is explicit and clear, and in accordance with the Solicitors Regulatory Authority’s March 2018 warning, not to use NDAs to subdue whistleblowing or reporting an offence or co-operating with a criminal case. Further, the WESC Report goes further and recommends that it be an offence for an employer or their professional adviser to propose a confidentiality clause designed or intended to prevent or limit the making of a protected disclosure.

As such, whilst the use of non-disclosure agreements in sexual harassment cases is likely to be retained the law governing them may be tightened, including the possibility of the introduction of criminal liability where professional advisers do not draft and utilise NDAs appropriately.

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Charlotte Beeley is a Solicitor located in Manchesterin our Employment department

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