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The use of non-disclosure agreements in an employment context

Buffy Meyrick comments on the latest conversation on the use of non-disclosure agreements following the Philip Green Injunction.

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Published 31 October 2018

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Last week’s successful appeal in ABC & Others v Telegraph Media Group Limited sparked the latest conversation on the use of non-disclosure agreements (“NDAs”) in an employment context. The case saw the claimants challenge the Telegraph on its attempted publication of confidential information disclosed in breach of an NDA. Philip Green has since been named under parliamentary privilege as the senior executive embroiled in this latest #MeToo scandal.

Background
Allegations of discreditable conduct by Philip Green were made by five former employees. Each of the employees subsequently entered into settlement agreements with non-disclosure clauses. Despite this, the terms of the agreements were leaked to the Telegraph, who approached Philip Green and two group companies (together, the claimants) for comment. The claimants applied to Court for an interim injunction preventing the publication. The application was denied at first instance; however on appeal they were granted an interim injunction pending a full, expedited trial.

Why?
The Court of Appeal had to consider the balance between freedom of expression and the right to privacy, and whether the public interest in publication outweighed any confidentiality attaching to the information. In allowing the appeal, the Court made the following findings:

  • It is likely that substantial and important parts of the information which the Telegraph wishes to publish were passed to it in breach of a duty of confidence, and that the Telegraph was aware of this breach or the likelihood of it.
  • It is unlikely that the Telegraph will be able to show that it is in the public interest for the duty of confidentiality to be breached. There is no evidence that any of the settlement agreements were procured by bullying, harassment or undue pressure; each employee received independent legal advice before entering into them; and each of the agreements contained provisions authorising disclosure to regulatory and statutory bodies.
  • There is an important and legitimate role played by NDAs in the consensual settlement of disputes, particularly in the employment field. The effect of each of the settlement agreements was to put an end to existing or potential litigation and enabled the employees to receive substantial payments; NDAs made as part of the settlement of an employment dispute will often benefit all of the parties.
  • There is a real prospect that publication by the Telegraph will cause immediate, substantial and possibly irreversible harm to all of the claimants. Ultimately, the Court felt that it was better for the important policy considerations raised in this case to be considered in full at trial.

Implications
It will be a relief to employers that the Court has recognised the public benefit in the enforcement of contracts freely entered into by parties with legal advice as a means of settling their disputes. This case does, however, bring the use of NDAs further into the spotlight and public feeling is that they should not be used as oppressive tools. There is often an imbalance of power between an employer and employee entering into an NDA, which is something that the employer should be alert and alive to, and there is now talk of the government bringing forward its consultation to improve regulation around NDAs. Employers should ensure that any employees entering into NDAs with them have received independent legal advice and know their rights in relation to the enforceability of NDAs, the reporting of criminal offences and to whistleblowing.

As we know, Philip Green has been named in parliament in conjunction with this case. However, for now the information which was the subject of the injunction and the settlement amounts involved will remain restrained. It remains to be seen whether this will be upheld at trial.

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Longer Reads

The use of non-disclosure agreements in an employment context

Buffy Meyrick comments on the latest conversation on the use of non-disclosure agreements following the Philip Green Injunction.

Published 31 October 2018

Associated sectors / services

Authors

Last week’s successful appeal in ABC & Others v Telegraph Media Group Limited sparked the latest conversation on the use of non-disclosure agreements (“NDAs”) in an employment context. The case saw the claimants challenge the Telegraph on its attempted publication of confidential information disclosed in breach of an NDA. Philip Green has since been named under parliamentary privilege as the senior executive embroiled in this latest #MeToo scandal.

Background
Allegations of discreditable conduct by Philip Green were made by five former employees. Each of the employees subsequently entered into settlement agreements with non-disclosure clauses. Despite this, the terms of the agreements were leaked to the Telegraph, who approached Philip Green and two group companies (together, the claimants) for comment. The claimants applied to Court for an interim injunction preventing the publication. The application was denied at first instance; however on appeal they were granted an interim injunction pending a full, expedited trial.

Why?
The Court of Appeal had to consider the balance between freedom of expression and the right to privacy, and whether the public interest in publication outweighed any confidentiality attaching to the information. In allowing the appeal, the Court made the following findings:

  • It is likely that substantial and important parts of the information which the Telegraph wishes to publish were passed to it in breach of a duty of confidence, and that the Telegraph was aware of this breach or the likelihood of it.
  • It is unlikely that the Telegraph will be able to show that it is in the public interest for the duty of confidentiality to be breached. There is no evidence that any of the settlement agreements were procured by bullying, harassment or undue pressure; each employee received independent legal advice before entering into them; and each of the agreements contained provisions authorising disclosure to regulatory and statutory bodies.
  • There is an important and legitimate role played by NDAs in the consensual settlement of disputes, particularly in the employment field. The effect of each of the settlement agreements was to put an end to existing or potential litigation and enabled the employees to receive substantial payments; NDAs made as part of the settlement of an employment dispute will often benefit all of the parties.
  • There is a real prospect that publication by the Telegraph will cause immediate, substantial and possibly irreversible harm to all of the claimants. Ultimately, the Court felt that it was better for the important policy considerations raised in this case to be considered in full at trial.

Implications
It will be a relief to employers that the Court has recognised the public benefit in the enforcement of contracts freely entered into by parties with legal advice as a means of settling their disputes. This case does, however, bring the use of NDAs further into the spotlight and public feeling is that they should not be used as oppressive tools. There is often an imbalance of power between an employer and employee entering into an NDA, which is something that the employer should be alert and alive to, and there is now talk of the government bringing forward its consultation to improve regulation around NDAs. Employers should ensure that any employees entering into NDAs with them have received independent legal advice and know their rights in relation to the enforceability of NDAs, the reporting of criminal offences and to whistleblowing.

As we know, Philip Green has been named in parliament in conjunction with this case. However, for now the information which was the subject of the injunction and the settlement amounts involved will remain restrained. It remains to be seen whether this will be upheld at trial.

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