Changes in the law are required to protect employees from the misuse of non-disclosure agreements (NDAs), according to an 11 June report from the Parliamentary Women and Equalities Committee. 
The report – which stemmed from research the Committee undertook last year on the factors behind workplace sexual harassment – opens with the blunt paragraph: “It is completely unacceptable that allegations of unlawful discrimination and harassment in the workplace are routinely covered up by employers with legally drafted NDAs. It is clear that in some cases allegations of unlawful discrimination are not investigated properly – or at all – by employers. The difficulties of pursuing a case at employment tribunal, and the substantial imbalance of power between employers and employees, mean that employees can feel they have little choice but to reach a settlement that prohibits them speaking out.”
As News & Views reported in a blog of 23 April, the misuse of NDAs has been particularly prevalent in the UK academic sector, with BBC News revealing that universities have spent almost £90 million since 2017 on NDA-covered payoffs to former employees.
A response to the BBC probe from Universities UK suggested that agreements designed to protect the confidentiality of academic research had been repurposed to prevent outgoing employees from speaking out about experiences of bullying, harassment and discrimination.
In its recommendations, the report urges the government to change the law to curb such misuse of NDAs. It also stresses that any new laws should i) strengthen corporate governance rules to require employers to meet their responsibilities to protect staff from discrimination and harassment, and ii) require named senior managers at board level or similar to oversee anti-discrimination and harassment policies and procedures and monitor how NDAs are used in cases with discrimination and harassment dimensions.
With any law changes yet to take shape, let alone effect, how should any boss seeking to become a better leader react to the report in the meantime? For example, should senior teams implement its recommendations to get ahead of the curve?
The Institute of Leadership & Management head of research, policy and standards Kate Cooper says: “The interesting thing for me here is the assumption that somehow NDAs are being used to cover up all sorts of bad behaviour, as if there aren’t myriad other ways to do so. Bad behaviour in organisations is routinely covered up and colluded with, and is just as routinely left unchallenged and unexamined. It is not spoken about often enough, regardless of whether or not NDAs exist.”
She argues: “The real question is not whether, or how, NDAs should be used more appropriately – because it’s quite clear that NDAs should only ever be deployed in cases of commercial sensitivity, where there are sound, competitive reasons why employees should not discuss the jobs they have just left. The real question is: what is the underlying culture of the organisation? What kind of inclusivity and fair-treatment codes does it enforce to ensure that there is nothing to cover up?”
Cooper notes: “When senior managers find out that certain employees have transgressed those codes, what sort of disciplinary procedures exist to ensure that those workers are properly dealt with? Prompt and decisive action against members of staff who are responsible for poor conduct obviates the improper use of tools such as NDAs to silence the people who have made the complaints.”
She adds: “Having such systems in place requires a measure of courage and self-reflection on the organisation’s part. Leaders must be ready and willing to square up to moments of discomfort that come from discovering that their organisation has been engaged in activities designed to divert it from confronting what it has really been doing underneath. That requires a type of leadership that is bigger than the effects of any potential regulation. So, while we may have organisations who report on their ethnicity pay gaps before they are legally required to do so, that sort of pre-emptive action is only part of the solution. The whole is a 360-degree grasp of the culture you are creating, and how you are creating it.”
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