What is the news?
Sir Philip Green has been branded as the businessmen at the heart of the ‘UK #MeToo scandal’. Accusations have been made that he was trying to act above the law by using non-disclosure agreements/settlement agreements to prevent employees from “going public” over their discriminatory treatment.
What does the news mean?
The revelation came from the former leader of the House of Commons, Lord Hain, who exercised parliamentary privilege when “naming and shaming” Green in the House of Lords yesterday afternoon. It follows the Court of Appeal’s decision which allowed an injunction to be brought by Green against the Daily Telegraph preventing the newspaper from publishing his identity amidst allegations of racial and sexual abuse of staff.
The case involved five former employees who made allegations of ‘discreditable conduct’ and subsequently entered into non-disclosure agreements. In signing up to the agreements, the parties agreed to keep its terms confidential however they were permitted to exercise their rights to report criminal offences.
What do we think of the news?
Settlement agreements are commonly used to bring an employment relationship to an end. They are a compromise for an employee and employer, in that usually the employee will receive a sum of money in return for them waiving their right to bring claims against the employer. The settlement agreement will ordinarily include a clause that the exiting employee cannot publish or cause to be published derogatory comments about the employer. This has always been considered a reasonable expectation – it is also often a reciprocal obligation so that the employee’s reputation is protected as well – given the nature of a settlement agreement and that it often arises when there is a dispute. However, it appears that within these settlements there were more stringent non-disclosure terms and large sums of cash paid.
It means that non-disclosure clauses are starting to be scrutinised in light of the worldwide #MeToo movement. As can be seen from this case, there may be an argument that these agreements are being used beyond their intended use. There have been calls for change from various individuals including MP Jess Phillips who believes ‘our laws allow rich and powerful men to pretty much do whatever they want as long as they can pay to keep it quiet’.
The Prime Minister has backed a consultation of the use and regulations of non-disclosure agreements in employment matters with the aim of making it clear when these agreements do not apply and cannot be enforced. A consultation like this is probably needed given the negative views which are emerging that settlement/non-disclosure agreements may be ‘unethical’ and to find a balance so that, in the right circumstances, individuals retain their right to speak up without fear of being in breach of contract as well as to clarify when it is permissible for a solicitor to act on a client’s instructions.
If you would like to talk through any concerns you may have in relation to discrimination or would like some assistance with settlement agreements, you can contact Solicitor, Heena Kapadi on T: 0161 358 0540 or E: firstname.lastname@example.org or Associate, Siobhan Howard-Palmer on T:0161 358 0537 or E: email@example.com.
This contains a general overview of information only. It does not constitute, and should not be relied upon, as legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter.