Why we need to ban NDAs

Sometimes I think our profession is much like the British weather, we have an obsession in talking about its shortcomings, but yet nothing can be done to change it. My frustration is compounded in the rare moments where we genuinely have an opportunity to act for the betterment of the world of work, but instead choose to hide behind indecision and equivocation. There is no clearer example of this than the ongoing debate on the use of NDAs (non-disclosure agreements) in settlement agreements.

The broad reaction from the legal and HR professions (and their governing bodies) is weak and depressingly similar, “it depends on how they’re used”. Ultimately suggesting that the clauses themselves aren’t bad, it’s just the bad people (their members) who use them. This is akin to asking the National Rifle Association to opine on gun control. Because every NDA included in a settlement agreement will have had a lawyer draft it and another read it on behalf of the employee. 

Let’s just pause there for a second and let this sink in. In every case where a settlement agreement has been used with an NDA to silence a victim of sexual harassment, racial discrimination or bullying, the overwhelming likelihood is that a legal professional has not only acted for the perpetrator, but for the victim as well.  Let’s not let ourselves off the hook here either, the `HR profession is in many, if not most, cases entirely complicit too – they just don’t exist in all organisations. So is it a surprise that we argue for their continued usage?

In the same way that gun control is the only sensible way to ensure that people are protected  from the harm that these weapons can cause, the only way to ensure that NDAs are not incorrectly applied is to ban their use in settlement agreements. When I make this point the familiar riposte is to talk about business interests and confidentiality and make a bold statement that these are in the interests of the employee. This is intentional obfuscation, so let’s take some time to put these myths to bed. 

You can have a confidentiality clause without containing an NDA, in fact the Law Society describes it as follows, “Confidentiality clauses, which may include terms commonly referred to as non-disclosure agreements, within settlement agreements are used to stop commercial information from being shared inappropriately and to avoid reputational damage.” It is this last point that is central to their use, where clauses are inserted to prevent the employee from talking about the incident that led to the use of the agreement or indeed to disclose the existence of the agreement itself. No-one is talking about banning confidentiality clauses that reaffirm those that already exist in a contract of employment, just the use of NDAs to silence.

Now the idea that this is in some way in the interest of the employee. I’ve asked on numerous occasions for someone to give me an example where this is solely the case, where there is no interest in reciprocity from the organisation. Unsurprisingly, I’m still waiting to hear of one.  And of course the logic of this assertion is flawed in itself, because if non-disclosure was generally in the interest the employee, then they wouldn’t be looking to disclose it in the first place. The fact is that this argument is generally uses as a sinister arm twist, “it will be in your best interest if we say nothing about this matter…so you better not either…”.

NDAs are about power, they are about control, they are clauses that are used to silence those that are generally victims of organisations that have gone wrong. There may be the very odd case where they could legitimately be argued for, but their punitive use far outweighs any benefit. Every case of sexual harassment, discrimination, bullying, intimidation and unfair treatment that leads to the use of such a clause is a terrible indictment on the HR profession and our colleagues in the legal profession too. There is only one safe answer and that is an outright ban. Until that comes about, until our professional bodies find their backbones, I ask you to take the lead and to change your practice now.

The only precedent that matters

Many times throughout my career, I’ve discussed the issue of precedent. I imagine in HR departments up and down the land, people are arguing what might or might not set one.

Pronunciation /ˈprɛsɪd(ə)nt/
An earlier event or action that is regarded as an example or guide to be considered in subsequent similar circumstances.
there are substantial precedents for using interactive media in training’

Law – A previous case or legal decision that may be or (binding precedent) must be followed in subsequent similar cases. ‘we hope to set a legal precedent to protect hundreds of miles of green lanes’

For me, this is one of the examples where the law has strayed too far into the workplace. We quote decisions made as if they are legally binding, when of course they are entirely within the remit of our organisation. The fear of treating people as individuals is one of the reasons that stands in our way of creating really powerful cultures.

“If we allow them xxx, then everyone will want one”
“If they can do xxx, then we will need to allow everyone”

“It will set a precedent”

If you’re making a decision based on the facts of a case or situation, if you’re taking into consideration the various aspects, then there is no need to fear anything. If a similar situation occurs, it either has the same fact and aspects – in which case you can make the same decision again, or it doesn’t – in which case you have the reason and explanation for making a different call.

Too often we use an argument of precedent as a shield to hide behind, that stop us engaging with the human factors of a case or situation. We avoid the need to thoughtfully consider the specific aspects by creating a one size fits all solution, which we refuse to move away from at any cost.

Fairness isn’t about treating everyone identically, it’s about applying the same consideration to every situation. The only precedent that matters, is making good decisions.

Reforming around the edges

Yesterday saw the government propose slight changes to the Employment Tribunal service in the UK with the introduction of a £250 fee to lodge a case, refundable if you win but not if you lose.  Heralded by Chancellor George Osborne as,

“….ending the one way bet against small businesses”

There is some sense in the intention behind the proposals.   Throughout my career I’ve seen a number of employees and ex-employees lodge Tribunal claims when there was little if any merit in them.  In some cases, there was simply two “views” of the events that took place and in these cases I would find it hard to see any way in which you could eradicate the proceedings.  If an employee feels aggrieved then they feel aggrieved, a £250 fee will hardly change their behaviour and the rights and wrongs of the events need to be assessed by an independent third-party. ACAS have often played a valuable part in these proceeding in the past.

On the other hand, however, a number of complaints that I have seen in the past that can only be described as vexatious. It brings to mind the conversation that was had with a “legal advisor” to an employee who during a disciplinary investigation had gone onto long-term sick leave.  The advisor approached us in a very aggressive manner and said that they had a case for unfair dismissal and that we would need to settle RIGHT NOW.  This of course led us to point out (calmly) that,

  1. There hadn’t been a dismissal
  2. As we hadn’t concluded the investigation, we couldn’t know whether it would lead to dismissal, and
  3. Even if it did, unless he was Mystic Meg it would be hard to tell whether that dismissal was unfair (given points 1 and 2 above)

But we’re experienced HR professionals and new a line when we saw one.  But, for me, this highlights a bigger area that needs to be tackled if we are going to get a sensible even-handed approach to employment relations: shoddy legal practice and shady employment lawyers.  The individual in this case was working for a charitable organisation that received Lottery funding in order to operate, the website at the time boasted about how much money he had made for various clients (some of which I’m sure were deserved).

As a company, in such circumstances you’re left with a choice.  If the individual proceeds then you need to engage lawyers or spend a lot of time working on the case yourself.  This incurs either direct cost or indirect through time, cost and time that many organisations just don’t need to incur.  So the natural inclination in many cases is to get the cheque book out and settle. Job done.  Everyone is a winner…..almost.

If the Government really wants to tackle the problem of vexatious claims then it needs to tackle the legal advisors that pursue them.  They are the people who can change and challenge the compensation culture, but of course it is a really hard thing to tackle.  People have the right to legal support and whilst there are many reputable legal advisors out there, how do you sort the wheat from the chaff? The bullying, threatening, inappropriate behaviour of a few, who know that the chance of winning is slim, but know that if they push employers enough, it becomes financially impractical to defend.

The whole thing is a bit of a mess, there are far too many Tribunal cases taking place and far too many claims being made that never reach Tribunal because the cases have been settled beforehand.  Nothing, sadly, is going to change soon and these proposals won’t make much of a difference. What is really needed is a review of the whole tribunal system and the way in which employees are represented.  Until that time, just expect £250 to be added to the demands for settlement.

Business will bear the cost. Again.