Background to the restriction
Employers entering into settlement agreements with employees often seek to include confidentiality or non-disclosure agreements in relation to the nature of the allegations or the settlement award. Employers have genuine commercial reasons for seeking to keep certain information confidential. For many employers, the inclusion of non-disclosure agreements is a determining factor in the settlement of claims or the compensation amount offered to the employee. However, in recent years, mainly as a result of the '#MeToo movement' and health-care controversies involving the Irish State, the use of non-disclosure agreements has been critiscised as effectively being used to 'muzzle' people from speaking out about harassment and/or abuse.
Significance of the prohibition introduced by the Act
The Act (which primarily deals with maternity leave matters) introduces a new section 14B into the Employment Equality Acts which prohibits the use of non-disclosure agreements in discrimination, harassment and victimisation cases except if certain criteria are met.
Secton 14B defines a 'non-disclosure agreement' as an agreement, or provision thereof, whether in writing or not, between an employer and an employee that intends to preclude the making of a 'relevant disclosure' by the employer or the employee or both. Relevant disclosure is defined to include 'allegations' or 'any action taken' by an employee relating to discrimination, harassment, sexual harassment or victimisation claims. This is a very important change to the law in Ireland which now means that employers can no longer prevent employees from discussing their claim or the settlement of their claim in discrimination, harassment or victimisation cases unless specific criteria are met.
Exceptions to the Prohibition
There are exceptions to the prohibition provided specific criteria are met but these criteria are onerous on employers. Such criteria include:
- a requirement that the entering into the non-disclosure agreement is at the request of the employee,
- the employee receives independent legal advice on the inclusion of the non-disclosure agreement/clause and
- the employer pays for such legal advice.
Furthermore, for the exceptions to apply, the non-disclosure agreement must:
- be in writing,
- be clear and easy to understand,
- be of unlimited duration,
- provide that the employee is entitled to withdraw from the agreement within 14 days without any penalty,
- include a provision stating that the employee is not prohibited from making a relevant disclosure to certain individuals such as the Gardai, a solicitor, medical practitioner, the Revenue Commissioners, Ombudsman or trade union official.
Non-disclosure agreements/clauses can also be included in settlement agreements for discrimination, harassment, victimisation claims which are settled through the Workplace Relations Commission's mediation service.
Next Steps
These changes in relation to non-disclosure agreements have significant implications for employers in Ireland when dealing with allegations or claims by employees of discrimination, harassment or victimisation. Any settlement agreement dealing with such claims in Ireland or involving Irish employees will need to be carefully considered by advisors and by employers. Employers will need to fully understand the implications of the restriction and the limitations on the exceptions as set out in the new legislation.
As the prohibition only came into force in November, this is definitely an area which we will be keeping an eye on over the course of the year and we will continue to keep employers informed and up to date.
