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Misuse of NDAs: Call for evidence launched by regulator

The Legal Services Board (LSB), a governmental regulator for the legal profession, has launched a call for evidence to understand concerns that non-disclosure agreements (NDAs) are being used by employers to silence victims of workplace misconduct.

NDAs are legally enforceable agreements between parties used to ensure information remains confidential.  

There are many reasonable use cases for NDAs, such as to protect commercially sensitive information.  

However, Matthew Hill, chief executive of the LSB, said the #MeToo movement has raised public awareness of the misuse of NDAs to silence victims of harassment and abuse. He said media coverage has also highlighted patterns of misuse in sectors including the arts, further education, policing and advertising. 

Speaking to HR magazine, he said: “We have heard some very powerful testimony from victims of the misuse of NDAs and it really got us thinking about the role of NDAs in modern business and how they may be used to bully, harass, intimidate, or silence people who have been victims.” 

More on NDAs:

NDAs should not be used to silence workplace harassment

HR must find its backbone and stop using NDAs

An employer's guide to non-disclosure agreements

Hill said the LSB wants to understand how to ensure lawyers always adhere to professional ethics obligations when consulting on NDAs. 

He said: “If a lawyer is advising a company and they become aware that there is a power balance in the situation - for example where there’s somebody who has been a victim of sexually or racially motivated harassment - we want the lawyer to be focussed on a fair outcome.  

“What we don’t want is a focus on hiding or covering up the truth.” 

The LSB is specifically looking at lawyers’ role in the use of NDAs but Hill said he hopes the enquiry will provide some useful lessons for employers from all industries. 

He said: “Much of the anecdotal evidence we have collected suggests reaching for an NDA has almost become the ‘done thing’. 

“We've talked to disabled lawyers groups, and many of them have said their experience as employees has been that the company they worked for has failed to make reasonable adjustments.” 

“And instead of engaging with the disabled worker to work out what those reasonable adjustments should be, the company has reached for the settlement agreement and the NDA.” 

Responses to call for evidence, which is open until 14 July, will be used to help the LSB come up with potential regulatory solutions. 

Those who have been victims to NDA misuse, legal practitioners and regulators are all able to contribute. 

Hill said that an important part of any regulatory solution in this area would be providing meaningful reporting routes for employees and legal professionals. 

“The shorthand for that is some sort of confidential reporting mechanism that would be run by the regulators,” he said.  

“The LSB does not have the power to ban NDAs completely, but if it was easy to report the misuse of them, I think we could see some real progress.” 

Hill also said it was important to raise awareness around NDA misuse. 

He said: “Part of the issue here is those people who are most at risk of being on the wrong end of an NDA may well be the people who are least well equipped to understand what they're signing and what their rights are. 

“So I do think part of the collection of solutions in this area will be making as many people - employers and employees included - aware of what NDAs should and should not be used for.” 

Interested parties can submit evidence to the LSB here.