Employment
Emma Cocker
August 2024
On 6 August 2024, the Solicitors Regulation Authority (SRA) updated its warning notice to solicitors on the use of non-disclosure agreements (NDAs). In essence, an NDA is any agreement/contract or clause within a wider agreement/contract under which is it agreed that certain information will be kept confidential between the parties.
In the employment law context, NDAs are typically found in settlement agreements. These are used by employers to settle employment tribunal claims, either after proceedings have been initiated, or as a way of securing the employee’s agreement not to bring claims in the future.
The SRA first published the warning notice in March 2018, following concerns arising from the #MeToo movement that settlement agreements containing NDAs were being used to prevent the reporting of misconduct to the relevant criminal and/or regulatory authorities, in particular, sexual misconduct.
The warning notice was revised in November 2020 to make clear that inserting other types of clauses which discouraged the reporting of incidents could also amount to a breach of the SRA’s regulatory Principles and Code of Conduct. Now the SRA has further updated the warning notice, which although aimed at solicitors, is useful for employers to be aware of when they are thinking of offering an individual a settlement agreement containing an NDA.
In particular, employers ought to consider:
Is an NDA required? The SRA states NDAs “should not be used routinely” and ACAS guidance highlights that careful consideration should be given to the need for NDAs on a case-by-case basis. Only use NDAs when they are genuinely needed. Be especially careful in cases where the employee has raised complaints that could constitute criminal conduct, or conduct warranting regulatory investigation and/or action. Template or ‘off the shelf’ agreements are not likely to be appropriate, so take specific advice in each and every case.
Time limits: Solicitors should challenge unreasonable time limits proposed by the opponent to ensure the individual’s solicitor has sufficient time to take instructions, advise and respond. Be wary, as an employer, of setting unreasonable deadlines and always ensure the individual has enough time to take proper legal advice.
Funding: Consider whether the typical contribution of £500 plus towards the employee’s legal fees is fair and reasonable in the circumstances, particularly if the employee has raised serious allegations that could constitute criminal conduct, or conduct warranting regulatory investigation and/or action.
Please contact our specialist employment team if you need further guidance on employment tribunal claims or settlement agreements and non-disclosure agreements.
