Tread warily when considering a gagging clause - Donna Reynolds

Industry, the new BBC drama set in the banking sector, is my latest binge-watch of choice. I wouldn’t recommend it to anyone who is easily offended and it’s not one you would probably wish to watch with your parents – partying, drugs, nudity and, ahem, dalliances feature heavily – but many City insiders have said elements of it are accurate. Former JPMorgan and Deutsche Bank analyst Bilal Hafeez wrote on a LinkedIn post: “It is perhaps one of the most accurate depictions of the trading floor/M&A I’ve seen on a TV show (I’m not sure about the social scene stuff though!)”.

The cast of Industry, with Myha'la Herrold as Harper Stern
The cast of Industry, with Myha'la Herrold as Harper Stern

The story centres around a group of graduate interns who are competing for coveted permanent positions at Pierpoint & Co, a prestigious investment bank in London. You don’t want to like the characters but it’s hard not to root for the underdog; they are thrown in at the deep end of a competitive workplace without one good boss between them and an HR department that cares more about covering up workplace issues than creating a culture that prevents them from arising in the first place.

Spoiler alert…

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Harper, one of the interns, messes up badly and loses Pierpoint £140,000. She then tries to put things right to avoid having to tell her boss, Eric, about her mistake. However, she comes clean to Eric and it sets off a chain of events that sees her pulled into the boardroom for a dressing down (figuratively; the boardroom isn’t the setting for a nudity scene until a later episode) where he locks her in. Harper, understandably, reacts badly. HR subsequently learns of this and Harper is asked to confirm that she was locked in. HR’s response? “We’ve already spoken to Eric. We just needed to hear it from you”. Cue the lawyer, who walks in and presents Harper with a Non-Disclosure Agreement (NDA). Eric has already received his settlement, never to be seen again.

Donna Reynolds is an Employment Partner with Blackadders.

An NDA is an agreement requiring one party to keep certain information (which has been disclosed) confidential – in this case during a period of employment. Despite being (or perhaps because they are) often standard practice in both employment contracts and settlement agreements, NDAs are coming under increasing scrutiny. In 2019 the Women and Equalities Select Committee published a report addressing the “widespread and commonplace” use of non-disclosure agreements in the settlement of discrimination cases which it says are being used to cover up allegations of unlawful discrimination or harassment rather than investigate them. So, are ‘gagging clauses’ allowed?

Confidentiality clauses are important in protecting the confidential information of a business and preventing employees and departing employees from disclosing details of a workplace incident or dismissal as well as information about the settlement itself. However, to prevent an Employment Tribunal claim it must satisfy the statutory requirement governing settlement agreement. Even then, any agreement that purports to prevent an individual from ‘blowing the whistle’, or making a protected disclosure, under the whistleblowing legislation, is void. In addition, an employer will generally not be permitted to enforce an NDA where an individual has disclosed information because he or she is required by law to do so.

Their use is not inappropriate, but must be one that is right for both the employer and the individual. Trying to prevent the individual from sharing information they are lawfully entitled to share could prove to be a costly and public mistake whereas the individual agreeing to keep the details of the situation confidential, for an agreed sum, may be a better option than the uncertainty and expense of Employment Tribunal proceedings.

However, the heavy-handed approach taken with Harper in Industry is not the way to approach an NDA. That is entirely inappropriate and is only inviting, at the very least, a constructive dismissal claim. Employment Lawyers never tire of advising employers to make good use of their grievance and whistleblowing procedures. That’s not to say that you can’t present an NDA as an option but it can’t be forced upon an employee.

As for Harper, I won’t spoil what happens next but employers beware; there may be no bonus cheque big enough, even in banking, to buy someone’s silence.

Donna Reynolds is an Employment Partner with Blackadders.

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