The decision of the English Court of Appeal to grant an interim injunction preventing the publication of details of the senior executive involved in alleged misconduct was circumvented by Lord Hain’s use of parliamentary privilege to disclose the identity in the House of Lords.
These raise important questions about the use of NDAs; the powers of the courts, and the model for governance of separate powers of the judiciary, legislative and the executive; and the role of parliamentary privilege in modern society. NDAs are commonly used in commercial agreements, not just cases of misconduct. They are commonly used in business to protect sensitive commercial interests and are often reciprocal.
We have seen a plethora of news coverage on workplace and other misconduct cases that have been censored by the use of NDAs. Last week, for example, Google also hit the headlines for reported use of NDAs in the payment of former senior executive who was accused of sexual misconduct. He reportedly left the business as part of a settlement arrangement worth around $90 million.
If allegations of sexual harassment are not part of a criminal prosecution, the only other recourse for a complainer is to go through civil means with a claim for damages or compensation. These are often seen in the Employment Tribunals as claims under the non-discrimination provisions in the Equality Act 2010.
Normally, resolution of a such a claim for damages will include both parties agreeing to a reciprocal NDA. It is also important to note that NDAs are not only used in matters of harassment or sexual misconduct.
Public opinion on NDAs is unfavourable to say the least, but there is another important question from last week’s events:
What is the role of parliamentary privilege in matters of the courts?
The doctrine of parliamentary privilege was codified in 1689 during a time when law was subject to the will of the King. Parliament required protection from the courts to express the views of their constituents “without fear or favour”. It is a fundamental principle in most democratic countries. Has the exercise of this power more recently departed from its original purpose?
Other than last week’s invocation of parliamentary privilege, recent examples include:
- In 2008, there was an attempt by 3 MPs to use parliamentary privilege to avoid criminal charges in relation to false accounting on their expenses claims. This attempt ultimately failed.
- In 2011, it was used to name footballer Ryan Giggs as the subject of a so-called “super-injunction” which prevented the reporting of not only the parties, but the existence of the injunction itself.
Many commentators have questioned whether Lord Hain’s intervention was proper use of this power in modern society. Was his original intention of free speech without fear or favour? Or was it, as is being argued by some, an exploitation of power which frustrated the independence of the judiciary in an ongoing case, undermining the court?
The UK judiciary, parliament and the courts work closely in partnership. However, the principle of parliamentary privilege is at odds with the “sub judice” rule. This rule is meant to balance freedom of speech with freedom or responsibility, and to prevent MPs or Members of the House of Lords from referring to current or impending court cases in parliament. According to a Commons Library briefing, this rule is subject to the discretion of the Speaker, and is balanced against the right of parliament to discuss any matter it sees fit. In this case, Lord Hain said the matter was in the public interest and he “felt it was his duty” to identify the party involved. Ultimately this will be a matter hotly in debate over the next few weeks.
What’s next for NDAs?
It is clear that there will likely be changes to the way NDAs are used in business. However, beyond this it is unclear what the changes will be and how they will impact employers. It is unlawful for NDAs to prevent whistleblowing, however, whether a disclosure will qualify for this type of protection depends on complex legal tests.
Last week, the Prime Minister also announced that the government would consult on possible reform to improve the regulation of NDAs. The word “reform” is key. There has been no announcement that the government plans to ban the use of NDAs.
Last summer, the Women and Equalities Committee issued recommendations to tackle sexual harassment in the workplace. Some recommendations included introducing a duty on employers to protect employees from harassment in the workplace, and making it an offence to use NDAs to prevent the disclosure of sexual harassment. If implemented, these recommendations could have wide implications for employers.
We will provide further updates on this as they are announced, so please watch this space.
Also featured on insider.co.uk.