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Banning so called ‘NDAs’?

11 April 2019 by Paul McFarlane

Banning so called ‘NDAs’?

After multiple scandals and the popularity of social media movements regarding sexual harassment, confidentiality clauses are being questioned

Since news of the Harvey Weinstein scandal broke and subsequent growth of the #MeToo movement there has been much public disquiet about the use of confidentiality clauses (often, but mistakenly, referred to as ‘NDAs’) to silence victims of sexual harassment. There have been calls, in some quarters, for their use to be banned.

However, there are some limits on their use: mainly that confidentiality clauses are void if they purport to prevent someone making a protected disclosure, or taking a case to a tribunal (unless within a COT3 or settlement agreement).

The government is now consulting on further measures:

  • legislating to ban confidentiality clauses which prevent a victim reporting or discussing potential criminal acts to/ with the police
  • ensuring any confidentiality clauses in employment contracts (as contrasted with settlement agreements) are included in the written statement of particulars of employment issued at the start of the employment relationship
  • requiring all confidentiality clauses to highlight the disclosures which confidentiality clauses do not prohibit, and making any confidentiality clauses which do not comply with this void in their entirety.

This consultation ends on the 29 April 2019. 

Unconscious Bias

The term unconscious bias refers to the ‘invisible’ factors that shape our decision making and influence our behaviour and choices. Research suggests that everyone has their own particular set of unconscious biases which, although they may be wholly involuntary, may influence decision making.

In a recent high profile employment tribunal case, Kings College Hospital NHS Foundation Trust was ordered to pay £1m in damages to a former employee after an employment tribunal found that he had been unfairly dismissed and subject to race discrimination.

The claimant, Richard Hastings, a black man of Caribbean origin who worked as an IT manager at the Trust, was dismissed on the grounds of gross misconduct after becoming involved in an altercation with a delivery driver. He alleged that he was subject to racial abuse and offensive language during this exchange. 

The employment tribunal found that the Trust’s investigation into this incident was tainted by unconscious bias and the Claimant’s account treated with “unwarranted distrust and disbelief” because of his ethnicity. It found that opportunities to corroborate the Claimant’s version of events were missed in favour of the “desire for an easy solution” based on erroneous first impressions. 

Allowing unconscious bias to effect decision making will be unlawful if, as in the case above, the bias relates to a protected characteristic such as race, gender, disability or sexual orientation. The Equality and Human Rights Commission (EHRC) Code of Practice emphasises that the relevant protected characteristic does not have to be the only or even the main cause, of any alleged unfavourable treatment. A perception or misconception, which contributes only incidentally to a decision, can still taint that decision with discrimination. 

Legal Advice 

Legal advice given by a lawyer to a client is usually private and confidential between the parties and cannot be referred to in employment tribunal proceedings (‘legal advice privilege’). However there are some important, if rarely used, exceptions to this rule.

In the recent case X v Y Limited, the Employment Appeal Tribunal (EAT) held that an e-mail from an in-house legal team to a client, advising on an individual’s potential inclusion in a planned redundancy exercise, should not remain confidential and could be used as evidence in the employee’s claim of discrimination.  

The claimant, a senior lawyer, had been employed by the respondent legal practice for 27 years until his dismissal in January 2017. His employer told the employment tribunal that there were ongoing concerns about his performance at work. In turn he alleged that his firm had discriminated against him on the grounds of his disabilities and had failed to make reasonable adjustments, issuing both an employment tribunal claim and subsequent grievance.

Shortly afterwards, he overheard a conversation in a pub about the redundancy exercise and the opportunity to “manage him out” through severance or redundancy. He was also anonymously sent a copy e-mail from his employer’s in-house legal team advising on his complaint, which suggested that the redundancy exercise might provide the context for his exit from the business. When the claimant was selected for redundancy, he made a further employment tribunal claim alleging that he had been victimised because he had made previous complaints. 

The employment tribunal that first heard the claim held that the claimant could not refer to the e-mail, as it was covered by legal advice privilege. However, surprisingly, the EAT disagreed with this, holding that advice “sought or given for the purposes of effecting iniquity” is not confidential. This exception is usually only applied to cases where fraud or serious criminal activity is alleged. The EAT felt that the redundancy was effectively being used as a “cloak” for dismissing the claimant who was troublesome to his employer because of his continuing allegations of discrimination. There had been an intention to deceive the claimant and potentially to deceive the employment tribunal. 

The e-mail was therefore not protected by legal advice privilege and could be referred to by the claimant in his discrimination claim. The EAT firmly rejected any suggestion that the pub conversation could be protected by legal advice privilege. 

Whilst this case does not change the basic principle that legal advice will usually be confidential, it does seem to broaden the circumstances where legal advice privilege might be lost. So much more nuanced circumstances where an employer and their legal advisor are exploring options for resolution to a workplace problem may no longer be covered by legal privilege. The Court of Appeal is set to reconsider this decision later this year. 

Business Transfers

Hare Wines Ltd v Kaur, the Court of Appeal considered whether a dismissal for purely 'personal' reasons, for example arising from a poor working relationship with a colleague, prevented a dismissal from being automatically unfair for being related to a transfer.

The claimant, Ms. Kaur, and a colleague had long-standing difficulties working with each other. That colleague was to become a director of a company that was taking the claimant’s employer. Before the transfer, the outgoing employer (the ‘transferor’) dismissed the claimant. The employment tribunal held that the dismissal was for a reason related to the transfer and so automatically unfair.

The employment tribunal found that the claimant was dismissed because the incoming employer (the ‘transferee’) did not want her, as it was concerned about the poor working relationship continuing, so did not wish the claimant’s employment to transfer over under TUPE. Therefore the reason for dismissal was the transfer. The Court noted that dismissals for economic, technical or organisational (‘ETO’) reasons connected with transfers can be fair. However, a ‘personal’ motive (such as a breakdown in relationships) will not stop a transfer-related dismissal from being automatically unfair.

Paul McFarlane is a partner in employment, pensions and immigration at Weightmans LLP

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