25 October 2018

Prime Minister Theresa May has told the House of Commons that her government will bring forward a consultation into non-disclosure agreements (NDAs) and their use by employers after the Telegraph reported that a "leading businessman" had paid off employees accusing him of sexual and racial harassment in return for their silence.

The newspaper was blocked from revealing the man's identity after the Court of Appeals ruled that preserving the NDA should be prioritised above public interest, despite agreeing on "the importance of freedom of political debate, the right of freedom of expression, the essential role played by the press in a democratic society ... and the important public concern about misbehaviour in the workplace as well as the legitimacy of non-disclosure agreements and other legal devices for 'gagging' disclosure by victims".

Update: The accused has now been named under Parliamentary privilege as Philip Green, Chairman of the Arcadia group of high street retailers that includes Topshop, Evans and Miss Selfridge.

Its judgment overturns that of the High Court, which had previously decided it was in the public interest for the accused to be named in the press.

Explaining its rationale, the Court of Appeals said: "The Judge has ... left entirely out of account the important and legitimate role played by non-disclosure agreements in the consensual settlement of disputes, both general but in particular in the employment field."

Suzanne McKie QC described this approach as "naive", saying "a lot of claimants are forced to enter NDAs because of the sheer cost and unpredictability of litigation".

The Telegraph's six-month investigation into the businessman in question found dozens of victims willing to speak out about the abuse they had suffered at the hands of their employer, which included bullying, racism, sexual harassment and humiliation in front of other staff. Five employees were given "substantial sums" to settle out of court.

As well as highlighting the exploitation of NDAs by some employers to cover up illegal behaviour, this case also underlines the problems inherent in the current justice system when it comes to bringing a case around malpractice or abuse in the workplace.

The fact that victims can be manipulated into accepting a cash sum rather than take their case to court shows how complicated and uncertain the current process of holding employers to account can be.

The Institute of Employment Rights recommends that a Labour Inspectorate is established to remove the onus from workers to identify and police legal breaches made by their employer, and place it instead in the hands of independent experts with the power to enter and inspect workplaces, investigate and assist in the resolution of disputes, and refer them to a Labour Court if necessary.

This is just one of the proposals in our latest publication Rolling out the Manifesto for Labour Law - 25 recommendations for reform, many of which have been adopted by the Labour Party.