Written submission from Brahams Dutt Badrick French LLP (NDA0016)
Brahams Dutt Badrick French LLP is a specialist employment law firm based in the City of London. The majority of our practice is advising senior executives on employment law matters, most commonly relating to the termination of their employment. We advise clients on confidentiality terms within settlement agreements, which in this context have been described as NDAs, on a daily basis and have significant experience in dealing with the issues that arise.
We address the questions asked by the Commission in the Terms of Reference below. Our managing partner, Gareth Brahams, gave evidence in his role as (then) chair of the Employment Lawyers Association to the Committee earlier this year.
1.1 Not in our experience. Confidentiality provisions are included in every settlement agreement, regardless of the circumstances leading up to the termination of employment. However, the wording is often scrutinised more closely in instances where there have been allegations of harassment. In these circumstances the wording is more important to the individual and they often insist on certain former colleagues being specifically referenced.
2.1 In our experience there is as much benefit for individuals as there is for their employers to negotiate a settlement and maintain confidentiality over these types of issues. We believe that banning NDAs would be counter productive and would not lead to a reduction in harassment. Were NDAs to be banned, or their use severely restricted, we believe this would result in fewer individuals raising these sorts of issues because the opportunity to resolve matters confidentially (which is the preference of the vast majority of complainants) would be taken away. They would also know that it reduces the incentive for employers to negotiate settlement packages and the money that individuals are paid is very important in giving them some financial security while they work through the issues that have arisen as a result of the harassment.
2.2 Reducing the ability of parties to settle matters confidentially will mean that individuals would have to pursue Employment Tribunal claims to be able to recover compensation. This is a very time consuming, stressful and expensive process and most individuals (particularly victims of harassment) would rather settle their claims quickly than have to go through a potentially traumatic Tribunal process. Further, with the recent introduction of the online database of Employment Tribunal decisions, on which all Tribunal judgments are published, the names of claimants and details of their claims, including the treatment they suffered, can become easily publicly accessible by a google search. Whilst anonymity is possible, it requires a separate application and is far from automatic. This means that it can be more difficult for individuals to move on from what has happened to them and has a more significant effect on claimants with unusual names (often from ethnic minorities).
3.1 If anything, we believe that there needs to be greater transparency internally on instances and allegations of harassment. In large organisations there appears to be a lack of awareness of patterns of behaviour as these issues are often dealt with by different departments and there is no overarching monitoring taking place. This means repeat offenders are often not identified and therefore not dealt with. An obligation could be imposed on companies (especially larger companies) to have to hold details on settlements and the underlying issues which gave rise to the confidential settlement centrally – this means that it can be more easily flagged if the name of an individual and/or the type of issue complained of is repeated.
3.2 It could also be useful to implement a ‘cooling off’ period whereby an individual has a period of time, for example 7 days, during which he/she could back out of the obligations of the NDA. This could reduce the pressure on individuals who feel that they have to sign up to agreements urgently. That said, the rightly controversial clause in Zelda Perkins’ agreement had that provision but it achieved little.
3.3 Some improvement has been made in recent months as many standard form agreements now make it clear that the NDA cannot prevent employees from speaking to the police and/or regulators. Mandatory wording could be introduced to make the scope of the NDA explicitly clear so that individuals do not feel that they are ever prevented from speaking to the police, regulators, doctors etc.
4.1 In our experience, grievances do not often assist individuals. Employers can seem too afraid of upholding allegations which could give rise to Tribunal claims. As such, issues are not investigated or decided fairly or properly leaving them to fester and develop. There is no easy solution for this problem and it means that individuals are reluctant to raise a grievance as they lack faith that matters will be resolved such that they can remain in employment.
4.2 One change that may be helpful in this area is to introduce a ‘cooling-off’ period once allegations are upheld – i.e. if an allegation of discrimination/harassment is upheld then the employer is given a certain period of time to rectify the issue and/or take appropriate steps during which time the individual cannot bring a Tribunal claim. Any Tribunal claims could then be limited to the fact that the employer had not taken steps to deal with the harassment and/or that the steps taken were not appropriate (rather than for the discrimination suffered). Whilst this would limit the scope of the claim brought by individuals, it would encourage these issues to be dealt with and resolved internally better than the current provisions on internal grievances. If the employer does not uphold the grievance then there would be no change to the matters that could be included in the claim. While this may not be a perfect solution, we consider that it is worth further thought.
5.1 The quality of legal advice does vary and the contribution offered by employers is often very low. Case law has determined that the only obligation on the solicitor or other qualified adviser is to advise narrowly on the terms and effects of the agreement, not whether in fact the deal is a good one. One option would be to introduce a minimum fee threshold of at least £500 plus VAT (index linked). This would widen the choice for individuals and hopefully lead to them taking advice from better firms rather than opting for the cheapest so they don’t have to pay any legal fees.
5.2 Solicitors are under a professional obligation to avoid conflicts of interests. The fact that the employer is paying the bill does not affect our fundamental aim, which is to act in the best interests of our client. As a firm we explain this to individuals in advance of being instructed but it has not been a significant issue in our practice. If this is something that individuals are worried about, perhaps guidance from the Law Society would be helpful.
5.3 Whilst most employers will make their limited contribution to whichever firm of lawyers the employee instructs, some employers adopt a different approach, only agreeing to pay for advice received from particular law firms. We do believe this kind of arrangement creates the perception of a lack of independence and possibly also the reality and ought to be banned.
6.1 We have not experienced this directly but that is not to say that it does not happen. It could be that companies are using different law firms for different matters to prevent a pattern becoming known externally.
7.1 As we have suggested above, details of NDAs entered into should be held centrally by companies so patterns of behaviour can be monitored, captured and dealt with promptly. This obligation could be imposed on the board of directors so these issues are taken more seriously.