Company Directors (Duties) Bill

Debate between Martin Wrigley and Justin Madders

2nd reading
Friday 4th July 2025 Commons Chamber

[The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)]

I congratulate the hon. Member for Newton Abbot (Martin Wrigley) on introducing the Bill and on squeezing in his remarks under the wire. He made some important observations. Clearly, we do not have the time we would like to explore the provisions in more detail, but I understand that I will be engaging with him—

[Martin Wrigley]

rose—

[Justin Madders]

I may have anticipated the hon. Member’s intervention; I will be engaging with him shortly on the Bill’s provisions. It is not a Bill that the Government will be able to support, but I do want to have further conversations with him about it. It is important that we recognise directors’ duties for what they are: a cornerstone of UK company law. They help to ensure that companies are run responsibly and, importantly, that directors act with integrity at all times.

We are really talking about section 172 of the Companies Act 2006, which the Bill seeks to amend. That is a key part of the directors’ duties framework, which was developed in the light of the major company law review commissioned by the previous Labour Government. I want to be clear that section 172 as it stands already places a legal duty on directors to have regard in their decision making to the interests of employees and the impact of the company’s operations on the community and the environment. It also requires directors to consider a range of other factors, including the impact of any decision on the long-term success of the company.

Non-disclosure Agreements

Debate between Martin Wrigley and Justin Madders

Wednesday 2nd April 2025 Westminster Hall

[Justin Madders]

I shall come on to the action that we are taking a bit later. None the less, that is an important point: there are legitimate uses for NDAs and it is important that we get that balance right, making sure that those commercial and legitimate business interests are protected while, at the same time, not deliberately silencing victims. NDAs should never be used to silence victims of harassment or any other misconduct in the workplace.

There are important legal limits to the use of NDAs in the employment context. Any clauses of an NDA that were to stop a worker from blowing the whistle, for example by making a protected disclosure to a lawyer or a prescribed person, are not enforceable. The use of an NDA by an employer could also amount to a criminal offence if it is an attempt to pervert the course of justice or conceal a criminal offence. A settlement agreement under the Employment Rights Act 1996 and any confidentiality clauses it contains would be void if the worker did not receive independent advice on the terms and effects of that agreement.

The Equality and Human Rights Commission and the Advisory, Conciliation and Arbitration Service have both published guidance on NDAs to ensure that workers and employers understand those limitations, but we have heard from many hon. Members that the guidance is not being observed in practice as much as we would expect. My right hon. Friend the Member for Sheffield Heeley mentioned the guidance from the Solicitors Regulation Authority, which has issued an updated warning notice to remind the legal profession that NDAs should never be used to try to prevent the lawful disclosure of serious misconduct or potential crime. The SRA is also clear that evidence of the use of inappropriate clauses in such agreements may lead to disciplinary action.

Nevertheless, we hear the calls to go further, and the issues raised today highlight some of the key areas that we want to further investigate. It is clear that there are still serious concerns about how employers are using NDAs to silence employees. We have heard today that victims often feel that they are left with little choice but to leave their employer, without any assurance that their employer is addressing the misconduct and dealing with the perpetrator.

[Martin Wrigley]

Does the Minister agree that we need to change the social contract for companies such that they no longer take all the benefits of limited liability and simply focus on shareholder value? Will he support my better business Bill—the Company Directors (Duties) Bill—which will have its Second Reading on 4 July, and meet me to discuss it? The Bill is backed by some 3,000 businesses, the Institute of Directors and others. As I mentioned, it would balance the responsibility of company directors with the interests of shareholders, employees and the environment; fundamentally change their basic responsibilities in how they run their companies; and therefore turn the purpose of the company to good, including that of the employees. It would prevent many of the circumstances that we are describing today.

[Justin Madders]

I have not seen the hon. Member’s Bill, and I suspect that its application is rather broader than just to the topic we are debating. We are looking at corporate governance, and in due course we intend to introduce legislation that may pick up on a number of the issues addressed by his Bill.

As we have touched on, a number of recent reports, such as the Women and Equalities Committee’s “Misogyny in music” and the Treasury Committee’s “Sexism in the City”, highlight that NDAs do not stand up in a court of law and are often used to chill victims.

The hon. Member for Guildford (Zöe Franklin) spoke about the good work of the Creative Industries Independent Standards Authority. I understand that the Culture Secretary recently met the authority to discuss how they can work together to improve workplace standards and behaviour in the creative industries. We want to support the authority moving forward; that is a matter for the Culture Secretary, and I am sure that she continues to engage with it.