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New guidance on confidentiality clauses in settlement agreements from the Equality and Human Rights Commission

04 November 2019

The Equality and Human Rights Commission has this month issued guidance on the use of confidentiality clauses in settlement agreements.

The guidance has come about due to concern that discrimination and harassment in the workplace is being concealed due to clauses in settlement agreements preventing a victim from revealing the treatment they have been subjected to. There is also concern, in addition to the failure to investigate allegations, that this could lead to repeat allegations against a particular individual or a culture of harassment in an organisation or department not being identified.

The recommendations include:

  • Settlement agreements should not prevent an employee speaking out about discrimination or harassment unless it is necessary to protect a victim of discrimination or if the victim has requested it.

  • There may be very rare situations where a comprehensive investigation has found the allegation to be unfounded where confidentiality is necessary to protect the person who was accused of discrimination.

  • Careful consideration should be given to precisely which elements of the agreement are required to be confidential. For example, the employee could be prevented from discussing the level of settlement received but may still be free to discuss the discrimination they have suffered.

  • Any confidentiality provisions should be mirrored: if the employee is required to keep a certain issue confidential then the employer should also be required to keep that issue confidential.

  • Employers should keep a record of any allegations of discrimination to ensure that patterns are not missed.

  • Entering into a settlement agreement should not be used as an alternative to fully investigating allegations of discrimination; an investigation should be carried out in all cases.

  • Confidentiality provisions may be required where there is an investigation or disciplinary or tribunal proceedings in order to prevent the investigation or proceedings being prejudiced.

  • It should be clear from the confidentiality clause that the employee is entitled to discuss the discrimination with:
    • any relevant regulator
    • the police
    • a medical professional or counsellor who is bound by an obligation of confidentiality
    • a legal or tax adviser who is bound by an obligation of confidentiality
    • HMRC
    • the employee’s spouse, partner or other immediate family members (who have agreed to keep the matter confidential)
    • the employee’s trade union
    • a potential employer where necessary to discuss the circumstances in which the employment ended.

Reasonable steps defence:

Where a claim is made against an employer due to discrimination by one employee against another, there is a defence available if the employer has taken all reasonable steps to prevent discrimination happening.

In order to benefit from this defence, the employer must:

  • investigate allegations of discrimination;
  • take actions to address discrimination; and
  • take any reasonable steps to prevent discrimination occurring in the future.

Therefore if an employer simply enters into a settlement agreement, with no investigation, this defence may not be available to the employer in the event of a further allegation of discrimination.

Conclusions

It is important to note that this guidance is not binding on employers. It raises some important points to consider for employers but not every aspect of the guidance will be relevant to all employers. When considering entering into a settlement agreement with an employee who has made an allegation of discrimination, it is good practice to consider all the circumstances and to consider if confidentiality is required. The aim of this guidance is to prevent the systematic suppression of allegations of discrimination thereby ensuring that problems within an organisation do not continue due to employees being prevented from speaking out. If you are unsure of how to proceed following an allegation of discrimination, please contact a member of the Employment team for further advice.

By Esmat Faiz

For further advice on Employment Issues or Employment Law services, please call us on 01483 543210 or alternatively email enquiries@barlowrobbins.com

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