We explain the legal position behind so-called ‘gagging’ clauses which are now a common feature of settlement agreements in the NHS.

After a disagreement or problem in the workplace, one solution available to NHS employers wishing to end an employment relationship is to propose a settlement agreement. In return for signing a settlement agreement and waiving some of their statutory legal rights, the employee receives a compensatory lump sum payment which will usually be higher than what they would get if they went to court.

There is nothing illegal or inherently unreasonable about including confidentiality clauses (commonly called ‘gagging clauses’) within such agreements, especially in circumstances where both the employer and employee want to keep matters between themselves.

On the face of it, a confidentiality clause would prevent the employee from talking about any wrongdoing by the employer – such as discrimination or harassment – and more generally about anything relating to the circumstances in which their employment came to an end.

These agreements can benefit both parties, by preventing unwanted media intrusion into the employee’s private life, for example, or protecting an organisation from negative publicity and reputational damage.

Typically, confidentiality clauses include the following terms:

• That the employee must not disclose to any third party any legitimate trade secrets or any sensitive information they have knowledge of as a result of working for the employer.
• That the employee must not make derogatory remarks about the employer, its employees or agents. There should be a reciprocal clause requiring the employer to do their best to ensure its employees and agents do not make derogatory remarks about the employee.
• A specific restriction on the employee from blogging or commenting in relation to the above on social media or blogging platforms.
• That the employee must not disclose either the existence of, or the terms of, the settlement agreement to any third party.

The purpose of this last restriction is to keep the terms of the settlement agreement – such as compensation payments or the reasons for entering the agreement – private between the parties. The clause should, however, allow for certain people to have knowledge of the agreement – such as an employee’s lawyers or trade union representatives, their spouse, partner or immediate family, and bodies with a legal right to know, such as HMRC. The clause should also allow an employee to discuss their general employment history with any prospective employers or recruitment consultants. Where the employee discloses details to a member of their family, that family member cannot disclose details to any third parties.

There is an argument that confidentiality clauses should not be used in the public sector, except for matters of national security. However, if appropriately drafted, and provided an employee has taken legal advice on the agreement, there is nothing illegal – or indeed uncommon – about the inclusion of a confidentiality clause within an NHS settlement agreement.

Problems can arise if the employer tries to overly restrict the employee. For example, a clause preventing an employee from making a protected disclosure (i.e. whistleblowing) may be deemed void and unenforceable by a court. This is because Part lVA of the Employment Rights Act 1996 provides that an employee can make a protected disclosure against their employer, provided it is a qualifying disclosure and they have a reasonable belief that disclosure is in the public interest (see box for a list of of qualifying disclosures). To avoid ambiguity, the clause should explicitly state that the settlement agreement does not prevent the employee from making a protected disclosure.

Qualifying Disclosures

Any disclosure of information which, in the reasonable belief of the worker, is made in the public interest, and tends to show one or more of the following, may be exempt from the confidentiality clause of a settlement agreement:

• That a criminal offence has been committed, is being committed or is likely to be committed
• That a person has failed, is failing or has failed to comply with a legal obligation
• That a miscarriage of justice is occurring or is likely to occur
• That the health and safety of an individual has been, is being or is likely to be endangered
• That the environment is being or is likely to be damaged
• That information tending to show any matter falling within any one of the preceding paragraphs has been or is likely to be deliberately concealed.

Natalie Hunt is an specialist employment lawyer for Thompsons Solicitors. Visit the Thompsons website for more information about settlement agreements. Legal Eye does not offer legal advice on individual cases. MiP members in need of personal advice should immediately contact their MiP rep.