Non-disclosure Agreements

Sarah Russell Excerpts

Wednesday 2nd April 2025 Westminster Hall

[Mrs Sarah Russell (Congleton) (Lab)]

Members who have heard me speak on these issues before—I do so a lot—know that I am a solicitor specialising in employment law. I am not currently practising, but I spent 13 years doing employment and particularly discrimination law work. A small amount of it was for small employers, but predominantly it was for employees. I have seen a lot of settlement agreements—pretty much every client I ever had ended up with one—and it is extremely unusual for them not to contain some form of NDA. The typical wording states that the person cannot discuss the terms of the agreement, nor the circumstances surrounding the termination of their employment.

There are too many difficulties to unpack in seven minutes, but one is that some of the people who put forward the agreements are not solicitors. A lot of businesses have a human resources adviser who is not regulated by the Solicitors Regulation Authority. Many of them are good people who do a good job of providing affordable advice to businesses; I do not want to universally condemn HR consultants. The reality is that at some point they will have been given a precedent settlement agreement by a solicitor—we might be talking 20 years ago—and those agreements contain NDAs, so they are still in widespread use.

As a solicitor, I would go back and say, “But if my client can’t say anything about the circumstances concerning the termination of their employment, what are they supposed to say to their new employer when they try to get a new job?” Some employers would agree to negotiate some sort of vague wording such as “left by mutual agreement”, so the person could at least say that, but some of them would just say flat out, “There’s money on the table. Your client can take it or leave it.”

But the client faces significant legal bills, and although the employment tribunals were hypothetically designed to enable them to represent themselves, the reality is that if it is a complex discrimination claim and they have a mental health problem—either because their claim related to it in the first place or because they developed one after they were treated so badly in their employment—they may not be able to face the prospect of an unrepresented employment tribunal claim. It is all well and good that the Solicitors Regulation Authority has said that people should not put forward NDA clauses, but they are still in extremely widespread circulation.

The flipside is that in order for someone to be persuaded to sign a settlement agreement, there is a requirement that the employer pays for them to have some legal advice. The standard legal advice offer is somewhere between £250 and £500, and for low-paid people the standard is still £250. The reality of the legal market is that no specialist employment lawyer will explain a potentially 20-page legal document to the person, send them follow-up written advice and renegotiate the terms for £250.

People on low pay can go to a lawyer who for £250 will perhaps take them through the terms of the agreement and explain what they mean, but then they have run out money, so that is the end of it. The terms are not renegotiated and the person just signs what is put in front of them. Senior execs can often afford the advice, which means they get it fully explained and totally renegotiated, so it is compliant at the end. A solicitor like me working against a solicitor on the other side who has put forward something that does not meet the SRA guidelines will say, “We’re not signing that—you know it’s not compliant. You’re in breach of your professional obligations, now get this off the table.” And they do—swiftly.

If a person has £250 and earns £20,000 a year, there is no way that they will pay for that level of top-up legal advice. That is not happening for them at all. Most good solicitors will explain that they cannot do it for the money and tell them how much it will cost to have it done properly. The person will not be able to afford it and, at best, they end up with some really shoddy solicitor who is not necessarily a specialist employment lawyer and is prepared to sign off pretty much anything and, bluntly, leaves them completely stuck. This payment structure is enriching for non-compliant solicitors at best.

There is, in theory, legal aid for people who are on very low wages or in receipt of certain benefits and who have equality claims, but that has been paid at such a low rate for such a long time that there are almost no providers whatsoever. Unless we significantly increase the hourly rate that we pay to providers, they will simply continue to hand back their contracts, which is what has happened in the majority of places. It is extremely difficult to access advice unless someone is a trade union member.

There are still lots of employers who regard all this stuff as just priced in. I have had clients come to me and say, “He’s absolutely notorious—the chief exec is a complete perv.” Everyone in the organisation knows it, but the board does not care. The board can give the women 20 grand to go away, they sign an NDA and that is the end of that. We have watched the chief exec do that time after time—it is just the cost of doing business. He is regarded as the superstar who brings home the bacon, so no one cares. Those are the fundamentals for many UK employers. At UKFast, for example, the chief exec got done for raping his staff. It had been going on for years: he did not just wake up one morning and do that to one woman. He was notorious in Manchester and lots of people knew what was going on. It happens across different organisations; there is no one specific sector.

[Tonia Antoniazzi (Gower) (Lab)]

My hon. Friend is making a fantastic speech and her experience is spot on. I have seen this culture of fear at the Welsh Rugby Union, where thankfully it no longer exists. Women are so scared to speak out, yet the culture of fear is perpetuated everywhere by the use of NDAs.

[Mrs Russell]

That culture is totally everywhere—across sectors. There is no specific sector where if we just sorted it out, the others would be all right. There is also the phenomenon of organisations that say publicly that they do not use NDAs, but I have seen their settlement agreements and can tell Members that they absolutely do. That is not at all unusual.

In summary, we have a systemic problem that is being used to cover up employment rights abuses across the board. We really do need to legislate and have standard wording that people cannot derogate from, whether they are lawyers, HR consultants or business owners. There are lots of good employers out there. I do not want anyone to think that I think all employers are terrible—I really do not: a lot of people are busting a gut to do the right thing by their employees—but we have to stop the use of NDAs.

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[Martin Wrigley (Newton Abbot) (LD)]

It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate the right hon. Member for Sheffield Heeley (Louise Haigh) on securing this important debate.

We have heard from Members how widespread this issue is: we heard about the hospitality industry and the creative industries, we just heard about teachers, and the hon. Member for Congleton (Mrs Russell) told us that it occurs in every HR department. I am horrified that it also happens in the NHS. I was approached by a constituent whose employment as an NHS nurse was terminated, but I do not know many of the details, because she cannot speak to me about it. Her employment was terminated due to—how can I put it best?—a medical condition that she suffered and is now over, but she cannot talk about it, and it has given her issues ever since. I do not know how many people in my constituency fall into that category, because, as the right hon. Member for Sheffield Heeley said, they cannot talk to us about it.

[Mrs Russell]

Typically, the agreement’s wording will contain an exemption for whistleblowing—the Solicitors Regulation Authority says it must—so the chances are that the hon. Gentleman’s constituent can actually talk to him about the details, and he can refer to it under parliamentary privilege. However, most people do not fully understand the relationship between the whistleblowing exemptions—they are extremely limited and tightly drafted and say that someone can only speak to very limited people in very limited circumstances to whistleblow in line with the law—and the broader statement that I referred to: “You cannot discuss the circumstances surrounding your employment.” Unless someone has had good legal advice that makes that really clear, and they can retain that quite sophisticated combination, they do not understand. The exemptions that we have just do not work.

[Martin Wrigley]

I fully agree. Absolutely—people do not know what they can do.

Will the Minister investigate how widespread the use of NDAs is in the NHS? Given that it is probably in the Government’s power to ban it in the NHS without primary legislation, will he take steps immediately to have it stopped and seek what recompense is required for those who have suffered it?

I agree absolutely that this practice must be stopped entirely. It is just one of many poor practices that are carried out by some businesses—not all, but some—often unwittingly. That is why I introduced my Company Directors (Duties) Bill, which will have its Second Reading debate on 4 July. Right now, the company directors’ duties say that they must put shareholder interests first and might have regard to other things. My Bill—I hope the Minister will consider working with me on making it happen—would change company law so that directors have a duty to balance the interests of shareholders, employees and the environment. I seek the support of Members present to make the Bill law; I hope that we can have further discussions to see what we can do to get it into the Government’s schedule. Until we put that balance at the foundation of the company directors’ duties, it will be impossible to get rid of circumstances, such as those the hon. Member for Congleton described, where company directors behave badly.

I fully support the right hon. Member for Sheffield Heeley on all the issues that she identified and will happily engage and do whatever I can to advance work on them.

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[Josh Babarinde (Eastbourne) (LD)]

I hope not to take the full 10 minutes, but it is an honour to serve under your chairmanship, Mr Betts. I congratulate the right hon. Member for Sheffield Heeley (Louise Haigh) on securing this important debate on the use, or indeed the misuse, of non-disclosure agreements in cases of civil harassment, discrimination and abuse.

The Liberal Democrats, like all of us in the Chamber, believe in a society that upholds transparency and fairness, and protects individuals rather than shields the institutional reputations of the powerful. As we have heard, and as the #MeToo movement uncovered, when NDAs are misused they represent a systemic failure to prioritise the rights of victims and survivors over the convenience of the powerful.

We must remember that the original intent behind NDAs was to protect sensitive business information and ensure confidentiality in legitimate commercial dealings, but there has been significant creep. They were never meant to be weaponised as tools to silence victims, particularly women, as the hon. Members for Bolsover (Natalie Fleet) and for Luton North (Sarah Owen) highlighted, to suppress evidence of wrongdoing or to allow perpetrators to evade accountability, but bad-faith actors have transmogrified them, and too often now, NDAs are used in precisely that way—to bind victims of harassment, discrimination and abuse into silence and to isolate them. We hear stories of the loneliness of the many victims who speak off the record. Ultimately, they are denied justice.

This happens across many sectors, including the creative industries, as my hon. Friend the Member for Guildford (Zöe Franklin) and the hon. Member for Luton North said; the NHS, as my hon. Friend the Member for Newton Abbot (Martin Wrigley) described; and the retail and hospitality sectors, as the hon. Member for Lichfield (Dave Robertson) said. Imagine for a moment the plight of a new mum who worked in the financial sector, but who returned from maternity leave to face mistreatment and eventually her employment was terminated.

[Mrs Russell]

On that point, will the hon. Member join me in encouraging the Government to bring into force clause 24 of the new Employment Rights Bill as soon as is humanly possible? It will enable the Government to make provision in respect of dismissals relating to pregnancy other than those covered by redundancy. That was a huge element of the dismissals that I used to see wrapped up in NDAs.

[Josh Babarinde]

I would love to study that particular dimension. We must defend the rights of pregnant women and new mums, who have been so let down by our legislative framework, including the individual I am asking hon. Members to imagine. She went through mediation, where it was agreed that she would receive a severance payment in exchange for signing an agreement that included a gagging clause. She said:

“The net effect was that I was unemployed and, whilst I was financially compensated, I was unable to explain to future employers why I had left that employment and why it wasn’t my choice to do so.”

That is exactly the point that the hon. Member for Congleton (Mrs Russell) made. By the way, I really feel that her contribution to this debate has been kick-ass—I am not sure that that that is a parliamentary term, but I am sure that hon. Members agree. Further, this new mum said:

“I felt I was the party in the right and yet I was the one who had the uncertainty and stress of being unemployed and having to job hunt with a 9 month old baby.”

There is no need to imagine such a scenario because it is a true story. The only reason I cannot name the individual or the employer is that, although we might be protected by parliamentary privilege in this place, the lady whose circumstances I just described is not.

This is the reality faced by countless individuals across the country, right under our noses, and it is an injustice that cannot be tolerated. We as Members of Parliament have to act decisively to end this moral and regulatory failing. First, and no two ways about it, NDAs should be outlawed in cases of sexual misconduct, harassment and bullying, to ensure that no victim is silenced, no victim is prevented from seeking justice and no police or regulatory investigation is obstructed. We have already seen encouraging steps in the legal and academic sectors to ban the use of NDAs in such cases. We heard a bit about those from the right hon. Member for Sheffield Heeley, but these piecemeal efforts are not enough.

We need comprehensive legislation, and there is precedent for that in other jurisdictions, as has been touched on already. In Prince Edward Island in Canada, new legislation restricts the use and content of NDAs in cases of sexual harassment and discrimination in all out-of-court settlements where a survivor does not want it. In the USA, the Speak Out Act was passed in 2022 prohibiting non-disclosure and non-disparagement clauses agreed to before a dispute that involves sexual misconduct. Last month, Ireland became the first jurisdiction in the world to legislate country-wide against the misuse of NDAs. In the light of that, the efforts of the right hon. Member for Sheffield Heeley in her amendment are extremely laudable, as are the similar efforts of my hon. Friend the Member for Oxford West and Abingdon (Layla Moran). That is the first thing we must do: outlaw NDAs in such circumstances.

Secondly, we must ensure that individuals who sign NDAs outside those circumstances but under duress or intimidation have a clear and legal route to challenge them. Too often, victims sign these agreements without fully understanding their rights or the full extent of the implications. They end up, as the hon. Member for Strangford (Jim Shannon) said, tied up in knots in their endeavour. I have heard from a man in this scenario who said,

“I had no resilience left to fight an investigation nor a tribunal so I accepted.”

On the powerful point raised by my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael), we must guarantee that legal advice is readily available, independent and free from conflicts of interest for people in these scenarios, so that no one feels coerced into silence by a document they barely understand.

Thirdly, we must foster a cultural shift in public and private organisations so that they no longer view NDAs as a convenient tool to shield themselves from scrutiny, and we can move away from the culture of fear, which the hon. Member for Gower (Tonia Antoniazzi), who is no longer in her place, referred to. Employers must be held accountable not only for misconduct that occurs on their watch, but for any attempt to cover it up. Transparency should be the norm, not the exception.

Finally, we must support victims and survivors in speaking out. That means strengthening whistleblower protections, including through establishing a dedicated office of the whistleblower, which the Liberal Democrats advocated for in our manifesto, alongside organisations such as WhistleblowersUK. There is a particular whistle- blower in my constituency who I will not name, but she knows who she is. She is campaigning hard on this front as well.

Silence benefits only those who perpetrate harm. Our role must be to amplify the voices of those who have been silenced for too long. This debate, while ostensibly technical and legalistic, gets to the core of what kind of society we want to be. Do we want to be a society in which institutions prioritise their reputations over human dignity, and victims are forced into silence while abusers continue unchecked, or do we want a society in which justice prevails, transparency is valued and every individual regardless of their status or power can be held accountable for their actions? I know which society I want to live in, and I think that all of us in this Chamber today are on the same page—in fact, I am confident of that. Liberal Democrats look forward to working with the Government on a cross-party basis to stamp out this insidious practice once and for all. We look forward also to hearing what steps the Minister will take to make that a reality.

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[Greg Smith]

I can say in response to the Minister’s quip from a sedentary position that I have never spoken with a handout from the Whips.

Sometimes, we sit there in the main Chamber listening to the usual yah-boo of party politics, but every so often there is a speech—it can come from any part of the House—that makes our ears prick up a little bit and think, “They have a point.” The Member is making a genuine case about a real grievance or a real problem out there in our country that needs resolution, almost undoubtedly via primary legislation. I therefore congratulate the right hon. Lady on her passion and dedication to this cause, and on ensuring that we continue to debate it here in Westminster Hall this morning.

The right hon. Member was absolutely right to highlight the two-tier absurdity brought about under the current law. I was particularly struck by her point that 27 states in the United States of America have passed legislation on this issue. The United States is hardly a nation that is looked to for high-end employment rights. It is a country where, for example, most people get only two weeks’ holiday a year, and where maternity and paternity rights are far short of those we have here, so the fact that those 27 states have passed laws on this issue in varying respects is something that we should reflect on.

During the debate the hon. Member for Guildford (Zöe Franklin) spoke powerfully about the creative sector; the hon. Member for Congleton (Mrs Russell) clearly brought extensive experience of this matter from her time as a solicitor; my hon. Friend the Member for Strangford (Jim Shannon) brought his usual eloquence to supporting this cause; the hon. Member for Lichfield (Dave Robertson) gave powerful examples from his experience working for a trade union—the example he gave about a school setting was particularly powerful—and the hon. Member for Newton Abbot (Martin Wrigley) powerfully cited a local case. The hon. Member for Luton North (Sarah Owen), who is Chair of the Women and Equalities Committee, gave a particularly powerful speech, reminding us that of course this issue is not about banning NDAs in their entirety, but about stopping this very particular abuse.

In fact, the hon. Lady’s most powerful point—on top of the one about self-employment, which is a subject that I will always prick my ears up about, having been self-employed myself for 15 years before I entered this House in 2015—was that people are being forced into signing these agreements at the lowest ebb of their lives, at the time when they are at their most vulnerable. We should face that fact and reflect upon it.

I am grateful for this opportunity to continue the debate on non-disclosure agreements, which have become a tool that too often is used to silence victims of harassment, discrimination and abuse in the workplace. This is not just a matter of employment law; it is a fundamental issue of justice, accountability and transparency. At their worst, NDAs allow perpetrators to escape scrutiny, enabling toxic workplace cultures to persist unchecked. Undoubtedly, some victims, facing an imbalance of power, are pressured into signing away their right to speak out in exchange for a financial settlement. This not only denies individuals the justice they deserve, but prevents organisations, and indeed our society at large, from learning from past failure and making necessary change.

Of course, we are not in any way suggesting that every single NDA out there is inherently wrong. There are legitimate reasons for their use in protecting trade secrets or commercially sensitive information. However, when they are used to cover up wrongdoing, they become a shield for bad employers and an obstacle to a fair and open working environment. Like other Members, I believe that the vast majority of employers do act in good faith and are good people, but where it goes wrong and they are acting in bad faith or—let’s say it how it is—criminally, NDAs should not be a shield for that.

The Government have said they are committed to tackling workplace discrimination and harassment. There are elements of the Employment Rights Bill that the Opposition support, but we had a particular debate about the provisions on third-party harassment. I say this in a spirit of wanting to solve this problem: we all want to see harassment stamped out, but those provisions will have the unintended consequence of what we call the “banter ban”, whereby an employee can take their employer to court if they happen to overhear something that politically offends them in a hospitality setting or whatever it might be.

[Mrs Russell]

rose—

[Greg Smith]

I will just finish the point; I am pre-empting the hon. Lady. There is still time, as the Bill passes through the other place, to look again at this legislation. Instead of risking those unintended consequences in hospitality settings, for example, the Government could put provisions in the Bill to tackle the serious, life-changing problem that we are debating this morning and stop this use of NDAs to silence victims.

[Mrs Russell]

There is a defence to that form of discrimination, which is where an employer has taken all reasonable steps to prevent it—and I speak only of reasonable steps, not every single magical thing that could be thought of. In fact, there was a case just last week in the Employment Appeal Tribunal in which an employer did successfully defend a harassment claim on the basis that it had taken all reasonable steps to prevent harassment. Does the hon. Gentleman agree that the position is not as extreme as he is presenting by any stretch of the imagination, and that as long as hospitality businesses have taken all reasonable steps to prevent their employees from being harassed, they will be fine?

[Greg Smith]

I do not particularly want to relitigate our debate in the main Chamber a few weeks ago. It is the job of the Opposition to kick the tyres on legislation that the Government put forward, and that is what did in that debate. I hope the hon. Lady turns out to be right, but the Employment Rights Bill is still a Bill, and when it undoubtedly becomes an Act due to the parliamentary arithmetic at the moment, we will be able to fully test that and see who is right.

I want to focus on the importance of the issue before us today. His Majesty’s loyal Opposition echo the question that Members have asked the Minister this morning: when can we expect legislation to be brought forward to tackle this issue? Will it be stand-alone, or will the Government amend the existing vehicle available to them in the House of Lords?

We also need to ensure that the Government’s own house is in order on this front. I gently ask the Minister for transparency on the Government’s own use of NDAs. How many non-disclosure agreements have been used across the civil service since the Government took office last July? Do the Government rely on these agreements to settle disputes within their own Departments? If the Government believe, as I hope they do, that NDAs should not be misused—and misused is a light term for this—they must lead by example.

I do not believe that this is about party politics; it is about ensuring fairness and justice in our workplaces. We must end the practice of silencing victims and start fostering a culture where wrongdoing is exposed and addressed. I look forward to hearing the Minister’s response and, more importantly, seeing the meaningful action that every Member who has spoken in this debate this morning wants to see come to pass.

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[Justin Madders]

My right hon. Friend makes an important point: this is a complex area for individuals to navigate.

My hon. Friend the Member for Congleton (Mrs Russell) spoke about her experiences in the profession, with which I am familiar. Non-legally qualified consultants often simply apply boilerplate clauses to agreements, which has a practical impact on the victim’s ability to explain how their employment ended. I have seen agreements that prevent people from even confirming that they have reached a settlement, which makes it doubly difficult for them to explain that when seeking future employment prospects. My hon. Friend also talked about the financial contribution that employers provide towards that advice, which does not always cover the cost of taking proper advice, rather than going through a rubber-stamping exercise. Both those issues highlight the inequality of arms in the workplace when disputes arise.

The hon. Member for Strangford (Jim Shannon) made an excellent contribution, as always. He was absolutely right to highlight that the original intention behind NDAs has been distorted. They were about commercial confidentiality and protecting business interests, but they are being used for wider, less justifiable purposes.

My hon. Friend the Member for Lichfield (Dave Robertson) raised the terrible case of Mohammed al-Fayed. He was right to say that we do not know how many victims there are; some will not come forward because the gagging orders still prevent them from speaking out or make them feel that they cannot do so. Of course, we addressed that to some extent in the Employment Rights Bill, in which we now make it clear that a complaint of sexual harassment qualifies as a protected disclosure under the whistleblowing Act. We will never know whether that kind of protection would have prevented the atrocities committed by Mohammed al-Fayed, but it would at least have given people some reassurance that they could speak out and have additional protections.

[Mrs Russell]

As I understand it, the whistleblowing provisions in the Employment Rights Bill will let people go to the police or a regulator, but they do not automatically mean that they can go to the media, although they might be able to in some circumstances. If the Minister does not mind my saying so, what he has described is possibly not a blanket solution to the problem.

[Justin Madders]

My hon. Friend highlights some of the limitations of the whistleblowing Act, in terms of what qualifies as a protected disclosure. As I have commented previously, that legislation needs to be looked at again.

The hon. Member for Newton Abbot (Martin Wrigley) talked about the widespread use of NDAs in the NHS. That highlights that there is no sector of the economy in which such agreements are not in use.

The hon. Member for Mid Buckinghamshire (Greg Smith) talked about the use of NDAs in Government Departments. I will make inquiries about that and get back to him, and I will pass on the comments of the hon. Member for Newton Abbot to the Department of Health and Social Care.

My hon. Friend the Member for Luton North, Chair of the Women and Equalities Committee, gave an informative and well researched speech, as always. She was right that this is not just about protecting victims; there is a wider issue relating to the growth agenda. These issues are debilitating and damaging for victims and can have an impact on their ability to return to work. She made the important point that it is nearly always the victim who has to leave their employment and move on. As we have heard, they do not always have a clear explanation to give prospective employers about why they have had to leave. It is usually the man, who is often in a position of greater power, who stays in work, and sometimes advances off the back of the claim. That relates to the culture in organisations: victims are not protected and perpetrators are often supported because they are seen to be in a more powerful position in the workplace. My hon. Friend also made an important point about protecting self-employed people and contractors in particular industries. We will need to consider that further.

On the current legislation being passed, we are pressing ahead with plans to commence the provisions relevant to NDAs in the Victims and Prisoners Act 2024 and the Higher Education (Freedom of Speech) Act 2023, as a number of hon. Members, including my right hon. Friend the Member for Sheffield Heeley, mentioned. When commenced, section 17 of the Victims and Prisoners Act will ensure that clauses in NDAs cannot be legally enforced where they seek to prevent victims of crime from reporting a crime, co-operating with regulators or accessing confidential advice and support. It will provide that clauses in NDAs that seek to prevent disclosures that are necessary to access confidential advice and support needed to cope with and recover from the impact of crime are unenforceable.

The Liberal Democrat spokesperson, the hon. Member for Eastbourne, talked about a new mother’s experiences of discrimination and the consequences of that. The Employment Rights Bill will provide a new baseline of protection, enhanced dismissal protections for pregnant women and mothers, extra requirements to take all reasonable steps to prevent sexual harassment—something that has been a matter of considerable debate—and protection of workers against third-party harassment. It will also make it clear that the disclosure of information can be a protected disclosure. We think all those things will improve the workplace experience, but I hear the calls to go further.

We know that there are calls to roll out the approach in higher education to the whole economy. My right hon. Friend the Member for Sheffield Heeley provided a clear example of how the provisions in the Employment Rights Bill will not apply to an outsourced worker working in higher education. The legislation has not yet been enacted, but the Government intend to press on with it shortly. I share concerns that something needs to be done, but the changes that have been proposed through amendments to the Employment Rights Bill would need a significant amount of engagement with workers, employers and stakeholders, as well as an assessment of the impact on sectors and across the economy.

This is a complex area of policy, as we have heard today, and it is important to take a balanced approach to make sure that we reach the right end point. There are different views and opinions. There are organisations and hon. Members calling for a ban on NDAs in specific circumstances. Some advocate for a greater say for victims in when they can be legitimately used. Others warn about unintended consequences for victims who are looking to settle a claim to avoid the stress of litigation.