Settlement agreements are a pragmatic and effective tool in resolving workplace disputes. The employee benefits from financial support and a dignified exit, and the employer achieves a clean break. However, when used improperly, employers can end up in hot water with HMRC, the Employment Tribunal, or even the press.
Our September client alert looks at the common areas employers trip up on when it comes to parting ways with employees via settlement agreements.
MISUSE OF “GAGGING” CLAUSES – BE MINDFUL OF THE LIMITATIONS ON CONFIDENTIALITY CLAUSES
The #MeToo movement shone a spotlight on the misuse of non-disclosure agreements (NDAs) to “gag” and intimidate victims of sexual harassment. There is no legal definition of a “gagging clause”, but it often refers to confidentiality obligations (normally in a settlement agreement) that prevent an employee from discussing the circumstances leading up to the settlement to conceal a crime or unlawful treatment.
Confidentiality undertakings are a common feature of settlement agreements and there are currently mixed views about how far they can go. In some cases, there may be a legitimate need to protect commercial interests, mitigate reputational risk or it might benefit the employee for a sensitive matter to be kept private. So how can an employer tell whether a confidentiality clause is fairly drafted or not?
First and foremast, a confidentiality clause can never prevent anybody from ‘blowing the whistle’ or reporting a crime to the...
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