Ireland: The use of non-disclosure agreements in discrimination and sexual harassment disputes under scrutiny

The Report follows the introduction of a Private Member’s Bill – The Employment Equality (Amendment) (Non-Disclosure Agreements) Bill 2021 (the “Bill”), which is designed to regulate the use of NDAs. In this article we take a look at these developments and consider what they could mean for employers in the future.

The Report

The objective of the Report is to draw together what is known about NDAs in order to provide a resource for policy-makers in their deliberations about any future regulation of the use of NDAs in the Irish context.

The Report states that it appears that NDAs are commonly used in a range of contexts within Ireland (including pre-emptively in employment agreements and in the settlement of disputes) and other jurisdictions but says that the prevalence of NDAs is difficult to determine due to the lack of transparency, and secrecy, surrounding their use.

The Report says that there are a number of challenges with the use of NDAs in sexual harassment and discrimination disputes including power imbalances between signatories and negative impacts on signatories personally and professionally. The Report also says that NDAs can allow patterns of abuse to continue undetected within an organisation or can facilitate the transfer of perpetrators from one organisation to another where they may victimise others.

The Report also highlights the difficulties with “pre-emptive” NDAs that are signed at the commencement of employment which may prevent signatories from discussing sexual harassment, discrimination or trauma prior to their having experienced it. In addition, signatories may sign NDAs with an incomplete understanding of the future consequences.

The Report says that there is consensus among stakeholders that some change is needed. However, there are differing perspectives on the optimum legislative response. Some favour the effective prohibition of NDAs in cases of sexual harassment or discrimination. Others favour the regulation of NDAs but still see an important role for them in the ethical resolution of disputes and worry of unintended consequences should they be prohibited, emphasising the importance of providing the choice of an NDA to complainants. The Report highlights that some people will only feel comfortable reporting sexual harassment or discrimination if they know that the complaint will be dealt with confidentially.

The Bill

The Bill proposes to limit an employer’s ability to enter into an NDA with an employee in circumstances where the employee has experienced or made allegations of sexual harassment or unlawful discrimination and the NDA has the purpose or effect of concealing the details relating to the complaint. The Bill sets out certain criteria that must be met in order for an NDA to be valid and enforceable in such circumstances, including:

• An NDA is the expressed wish and preference of the employee;

• The employee has been offered independent legal advice, in writing, provided at the expense of the employer;

• There have been no undue attempts to influence the relevant employee in respect of the decision to include a confidentiality clause;

• The NDA does not adversely affect the future health or safety of a third party or the public interest;

• The NDA includes an opportunity for the relevant employee to decide to waive their own confidentiality in the future;

• The NDA is of a set and limited duration; and

• The NDA is, insofar as is possible, written in plain English.

The Bill also states that an NDA shall not apply to any disclosure of information under the Protected Disclosures Act 2014 or any communication relating to the harassment or discrimination between the relevant employee and certain prescribed individuals such as the Gardaí, a legal professional, a medical professional, a prospective employer or a friend, family member or personal supporter.

The Bill provides that where an NDA was made before the coming into operation of the Bill (once enacted), the NDA will only be enforceable if it was made in accordance with the Bill and the requirements set out above, save for any provisions protecting the identity of the employee, which shall remain in effect.

This Bill is currently before Seanad Éireann, Third Stage, and it remains to be seen whether it will progress in its current form or at all.

Commentary

Employers should keep an eye on this area in the coming months. Employers may want to review their template settlement agreements to ensure that the confidentiality, non-disclosure and / or non-disparagement clauses do not have any potential unethical implications if used in circumstances of a sexual harassment or discrimination dispute.

In all cases where an employer is entering into a settlement agreement with an employee, the employee should be advised to seek independent legal advice and given the opportunity to obtain such advice. The employer should ensure that the employee understands the implications and effect of entering into the agreement and of any confidentiality, non-disclosure and / or non-disparagement clauses. The employee should not be placed under any duress or coercion to sign the agreement and should be free to choose whether to sign the agreement or not.

Given that hearings before the Workplace Relations Commission are now held in public, there could be an increased demand for disputes to be settled confidentially with the aid of an NDA and this is something the Report has identified. This may lead to further scrutiny in relation to the implications of NDAs and we will continue to watch this space.

Report of the Department of Children, Equality, Disability, Integration and Youth on the prevalence and use of NDAs in discrimination and sexual harassment disputes – report available here.

The Employment Equality (Amendment) (Non-Disclosure Agreements) Bill 2021 – Bill available here.