Best practice guidance on confidentiality agreements issued by Equality and Human Rights Commission

The Equality and Human Rights Commission has issued guidance on using confidentiality agreements. The guidance is wide-ranging but only applies to confidentiality agreements that could stop a worker speaking about an act of discrimination, harassment and victimisation. 

The guidance does not have statutory force and so courts and tribunals are not obliged to take it into account when deciding discrimination cases.  However, they may do so where relevant.  

Terms and conditions of employment

The guidance recognises that employers are entitled to protect confidential information, such as trade secrets, customer contact lists and sensitive pricing information. However, the Equality and Human Rights Commission found evidence that some confidentiality provisions in terms and conditions of employment are drafted in a way which stops workers discussing discrimination that may occur in future or they are are unclear on whether the worker can discuss discrimination occurring in the future. The guidance states it should be clear from the wording what the worker can and cannot do and that the agreement does not stop the worker speaking about any form of discrimination. It also states employers should not put workers under pressure to sign a confidentiality agreement as it will not be enforceable if there is duress. They should give workers time to read the agreement and discuss it with a trade union representative, lawyer or other adviser. 

Settlement agreements and Acas COT3 agreements

Confidentiality provisions entered into when settling a dispute tend to be drafted in a way that stops the worker discussing acts of discrimination, either expressly or by implication. For example, a provision that stops the employee talking about the circumstances that led to them signing the agreement could do this. 

The guidance says employers should consider on a case by case basis whether a confidentiality agreement is needed. Confidentiality provisions should not be included in template agreements but added only if required. In most cases it will not be necessary or appropriate for an employer to use confidentiality agreements that stop a worker talking about acts of discrimination. However, they may be appropriate in some cases. Examples include where the worker or victim of discrimination would like to keep the act of discrimination confidential or when needed to protect the reputation of someone found to have been falsely accused of discrimination, following a thorough investigation and fair hearing of the complaint.  

Before including a confidentiality provision in a settlement agreement the employer should weigh up the following factors:

• Whether there is a clear reason why it is needed 
• The benefit to the employer of including it  
• The impact on the worker
• The impact on the culture of the organisation 
• The benefits of not using it.

Where an employer uses a confidentiality provision, they should word them to deal with the particular circumstances of the case. The wording should not go beyond what is necessary and appropriate. The employer should inform the worker why it considers a confidentiality clause should be used so the worker can discuss this with their independent adviser.

The wording of the agreement should allow the worker to have discussions with a relevant regulator, the police, lawyers, tax advisers and medical professionals bound by obligations of confidentiality, HMRC and immediate family members. It should also allow discussion with a potential employer where and to the extent it is necessary to discuss the circumstances in which their previous employment ended.

Paying for legal advice

The employer should pay for the worker to receive the legal advice needed for a settlement to be binding and should pay even if the worker ultimately finds the terms unacceptable and reasonably decides not to sign the agreement. 

Tackling discrimination

The guidance also states that large employers and those operating across multiple sites should keep a central record of confidentiality agreements. This will help them ensure they are not overusing confidentiality agreements to mask systemic problems. In addition, where a settlement agreement is entered into, the employer must not treat this as the end of the matter. They must still investigate the allegations where possible and take reasonable steps to address the discrimination and prevent it occurring in future. Otherwise the employer will not be able to rely on the reasonable steps defence to defend future claims.