No more bound and gagged?

A parliamentary inquiry into the use of non-disclosure agreements should back sensible and proportionate solutions rather than a knee-jerk reaction to the current media frenzy, argues Angus Farr, chair of the LSCA Business Board.

February 2019

31 January 2019 saw the deadline close for submissions to the Women and Equalities Committee inquiry into Non-Disclosure Agreements (NDAs).

Until relatively recently, plenty of people were routinely bound by NDAs issued by current and previous employers. Such agreements commonly revolve around gagging clauses preventing disclosure of confidential information.

NDAs were used quite routinely and quite properly by businesses in all sectors. And employees were acquiescing very willingly with ‘eyes wide open’ to both the implications and rewards of doing so.

All that has seemed to have changed in the wake of #MeToo where it’s been suggested that NDAs have been (ab)used to silence or deter allegations of inappropriate behaviour.

NDAs have certainly been hitting the headlines like never before, in cases like the Presidents Club dinner, the Stormy Daniels affair and the use of parliamentary privilege to name Sir Philip Green. Indeed, even the House of Commons has spent nearly £2.5m on NDAs in the past five years!

All this seems a far cry from their original purpose which was to prevent loose talk about trade secrets.

I think NDAs do still have a useful role in business but certainly as a legitimate remedy to a problem rather than as scare tactics or blanket deterrence. The issue here it seems is whether there’s a danger that organisations using them quite correctly may be tainted by association, ie, if ‘so and so’ has used them to hide unsavoury behaviour, is that what you’re using them for as well?

Maria Miller, chair of the Women and Equalities Committee, said: “Use of NDAs in sexual harassment cases is only part of the picture. This new inquiry will focus on their wider use in other cases involving other forms of harassment or discrimination.”

Interestingly, questions that her inquiry will focus on include whether NDAs should be restricted in harassment and discrimination cases and the objectivity of legal advice employees receive (which is paid for by the employer). The inquiry will also think about the responsibilities of boards and directors and whether organisations should be obliged to disclose the numbers and types of NDAs.

We will see what conclusions she comes to, but I do hope they are sensible and proportionate rather than a knee-jerk reaction to the current media frenzy.

Angus Farr is chair of the LSCA Business Board.

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