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Settlement agreement confidentiality clauses are standard. Nevertheless, where the scope of the clause extends too far, such clauses can end up being unenforceable due to illegality. For instance, where the effect of the confidentiality clause ends up preventing the employee from exposing wrongdoing/criminal acts by prohibiting them from speaking out, then not only are such clauses illegal and unenforceable, but they have often been dubbed “gagging clauses”.
Typically, settlement agreement confidentiality clauses incorporate the following standard terms:
Confidentiality clauses have become controversial in recent times as some employers extended them too far to the point where they ended up amounting to gagging clauses, as they effectively covered up wrong doing, criminal activity, negligence, incompetence, etc. That is, the employer either sought to, or had been perceived to have sought to, prevent employees from disclosing such information, where disclosure would be deemed to be in the public interest. One example of this was the scandal surrounding Mid Staffordshire NHS Foundation Trust. in which it was found that numerous patients had died due to poor care. It was argued that this issue could have been exposed a lot sooner had potential whistleblowers not been prevented from speaking out by confidentiality clauses. In response to this scandal, the Department of Health stated:
The government has taken a series of steps to encourage an open dialogue, including changing the NHS constitution to enshrine the fact that NHS organisations should support staff who raise concerns, ensure those concerns are fully investigated and ensure that there is someone independent, outside of their team, to speak to. That change also set out a legal right for staff to raise concerns about safety, malpractice or other wrongdoing without suffering any detriment. We have consistently made clear to the NHS that local policies should prohibit the inclusion of confidentiality gagging clauses in contracts of employment and compromise agreements which seek to prevent the disclosure of information which is in the public interest. Sir David Nicholson, head of the NHS commissioning board, has also written to NHS organisations reminding them of their responsibilities in relation to compromise agreements. As we made clear……., the culture in the NHS needs to change and high-quality patient care must be paramount.
Confidentiality clauses are usually mutually beneficial for both employer and employee and have no wider adverse ramifications for anybody outside of those parties, so long as they are drafted properly. As previously indicated, the standard terms contained within the confidentiality provisions are as follows:-
So long as the confidentiality clause is confined to those elements, then normally that is perfectly acceptable as such clauses are mutually beneficial for both parties and have no wider adverse impact on anyone outside of the two contracting parties. However, the problems arise where the employer looks to extend the ambit too far, to the point where they seek to prevent the employee from raising legitimate concerns that are in the public interest, thereby rendering the confidentiality clause void and unenforceable. It would become void and unenforceable once it is deemed to obstruct and infringe upon the employees right to make a protected disclosure (i.e. whistleblowing) under the Public Interest Disclosure Act (PIDA) 1998 (as amended by the Enterprise and Regulatory Reform Act 2013). Under that Act, an employee can make a protected disclosure against their employer so long as they have a reasonable belief that disclosure is in the public interest.
Accordingly, when drafting the confidentiality clause for the settlement agreement, it is essential to ensure that it is appropriate given the circumstances, and that is is compliant with the PIDA 1998. In that respect, it should be made explicitly clear within the settlement agreement that the confidentiality clause does not prevent the employee from raising legitimate concerns that are in the public interest, and that it does not either override, supersede, or supplant their right to speak out/provide disclosure under PIDA 1998.
Should you have been offered a Settlement Agreement (which used to be known as Compromise Agreements) which you require independent legal advice upon, then please call one of our settlement agreement solicitors immediately on 0333 301 0700, or complete the contact us form below. We will then arrange an appointment for you with one of our settlement agreement solicitors to go through the Settlement Agreement.
We can normally see you the same day that you contact us. Completion time depends upon how complex the dispute is, and a willingness by both sides to resolve matters. Nevertheless, as settlement agreement solicitors, we are normally able to broker a resolution and complete the overwhelming majority of settlement agreements very quickly.
Our Settlement Agreement Solicitors Have Extensive Experience In Handling Settlement Agreements On Behalf Of Both Employers And Employees
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