The news coverage has been widespread following Sir Phillip Green being named by Lord Hain in Parliament as the “leading businessman” who obtained a privacy injunction to prevent media publication of allegations of sexual harassment and racism made against him by former employees.
The Telegraph reported that they had been “gagged” from naming a “leading British businessman” after he took out an injunction to prevent them reporting on allegations of sexual harassment and racial abuse raised by employees.
In all five cases in question, the complaints raised by former employees had been "compromised by settlement agreements" under which "substantial payments" were made.
Lord Hain, using parliamentary privilege, circumvented the interim injunction imposed by the Court of Appeal and named Phillip Green as the subject of the injunction. Lord Hain said:
“I have been contacted by someone intimately involved in the case of a powerful businessman using non-disclosure agreements and substantial payments to conceal [allegations] about serious and repeated sexual harassment, racist abuse and bullying... I feel it’s my duty under parliamentary privilege to name Philip Green as the individual in question, given that the media have been subjected to an injunction preventing publication of the full details of a story which is clearly in the public interest.”
He went on to say the case involved 'substantial payments to conceal the truth about serious and repeated sexual harassment, racist abuse and bullying which is compulsively continuing'.
Non-Disclosure Agreements (NDAs), confidentiality agreements or gagging-orders as they are often interchangeably referred to, seek to restrict individuals with regard to what information they can disclose and to whom. Clauses to this effect are often included in settlement agreements, and can be tailored to cover a particular set of circumstances or allegations of misconduct that have been made. For the avoidance of doubt though, settlement agreements are very common and are used in a range of circumstances often leading to an amicable parting of ways between the employee and employer.
Due to public interest considerations, under UK law it is not acceptable, be it in settlement agreements or contracts of employment, to seek to prevent employees from making whistleblowing allegations or allegations of a criminal nature (protected disclosures). Clauses to this effect will be void, however the employees who do not obtain legal advice when signing such agreements may not be aware of this fact. A settlement agreement is only binding if the employee has taken independent legal advice on the terms and effect of the agreement.
Along this vain, Theresa May has pledged to bring in measures to improve the regulations regarding “gagging clauses” in order to make it "absolutely explicit" when such contracts cannot be enforced, adding that such agreements “should never be used to cover up criminal activity”.
If you wish to discuss settlement agreements in more detail, please contact our Employment Team who will be able to advise.