The Women and Equalities Committee (the “Committee”) have proposed some major changes to the use of non-disclosure agreements and tribunal procedure in certain discrimination cases (namely in relation to sexual harassment, pregnancy and maternity). The Committee, which comprises of MPs from the House of Commons, consider that the key problems in this area are: the difficulty in pursuing a claim to the employment tribunal, the pressure that employers can apply during settlement negotiations and the risk that an organisation fails to fully investigate the matter.
Difficulty in pursuing a claim in the employment tribunal
The Committee have suggested a range of changes to litigation in these types of claims, including:
Increasing the amount of compensation that can be awarded to make it more punitive against the employer as opposed to focusing on whether the damages are sufficient to compensate the employee for the ‘loss’ suffered.
Introducing mandatory costs awards against the employer if the employee is successful in proving these types of discrimination have occurred. This would not apply against the employee if they lost their claim other than under the normal costs’ rules, for example, for unreasonable conduct in the litigation.
Increasing the time limit to bring these types of claims to six months rather than its current limit of three months from the discriminatory act(s) plus any time spent in Acas Early Conciliation.
The pressure that employers can apply during settlement negotiations
However, in reality many of these cases do not reach an employment tribunal and are settled beforehand. The Committee have suggested a greater exploration of what is agreed and recommend that:
The government provide standard acceptable terms for confidentiality in these cases. The Committee suggests that this should be drafted in plain English and they should have explanatory carve outs to set out what can and cannot be said and to whom.
A cap is introduced on the compensation that an employer can claim back against an employee who later breaches the confidentiality clause or non-disclosure agreement.
The employer should be required to pay the legal costs of the employee to review the settlement agreement and discuss their potential claims even if the employee does not sign up to the agreement. The Committee suggest that the employer should also uplift their allowance if the employee enters into negotiations on the terms.
Clauses that deviate from these standard terms would be unenforceable.
The risk that an organisation fails to fully investigate the matter
Finally, the Committee have reiterated their desire for a mandatory duty to be imposed on employers to protect workers from harassment and victimisation. The Committee also suggests that all public and private organisations should select board members to review and consider anti-discrimination and harassment policies and procedures and how non-disclosure agreements are being used in practice to check that the standards have been met. This should not be someone in the Human Resources team but someone from another department, which would increase the business wide involvement in improving this area.
Some of these recommendations could prove unworkable in practice.
Some commentators might argue that if the time limits and compensation increased for sexual harassment, pregnancy and maternity discrimination, then, surely, they should also change for discrimination based on race, sexual orientation or disability.
The standard terms in non-disclosure agreements or settlement agreements may be virtually impossible to agree on given the complex fact patterns involved. The current government agenda is already very full in selecting a new prime minister and sorting out Brexit.
Moreover, employers could be severely hamstrung if they are, first, required to pay the legal fees for the employee to review a settlement agreement and negotiate its terms when the employee may have no intention of signing it; second, not be able to reclaim the money paid to the employee in exchange for their confidentiality; and, third, pay the claimant’s costs at tribunal. This may make it very difficult for the employer to engage in the process at all.
It remains to be seen what the outcome will be here but it is, perhaps, likely to be some form of negotiated middle ground. Either way, reform appears to be on the horizon, so employers should be looking to update their policies on anti-harassment and bullying, equal opportunities and manager training.
If you would like to discuss any issues relating to sexual harassment or discrimination generally, please contact Tom Pimenta on 0118 952 7284 or email [email protected]