Naming and shaming – will #MeToo and Philip Green affect Non-disclosure Agreements?

Monday 29 October 2018

Labour peer and long-standing human rights campaigner Lord Hain blasted through five Non-Disclosure Agreements (NDAs) when he named retail tycoon Sir Philip Green as the latest leading businessman at the centre of allegations of workplace abuse, including sexual and racial harassment, on 26 October.

Lord Hain’s actions are all the more dramatic as just two days prior to his intervention the Court of Appeal had overturned a High Court decision and granted Sir Philip an injunction preventing The Daily Telegraph from publishing details of the allegations by five former employees. Sir Philip had entered in to NDAs with each of the employees by which he agreed to pay them cash in return for their silence.

NDAs, or Confidentiality Agreements, have been a common tool used by businesses to protect commercially sensitive information. They can be used:

• during negotiation of a merger, acquisition, or joint venture when companies necessarily need to share information;
• by a service or licence provider to ensure any intellectual property it allows customers to use is protected; and
• between companies and their employees.

But in the last year NDAs have been made famous, or infamous, by the #MeToo campaign, which followed a slew of allegations of sexual harassment and abuse against certain celebrities and individuals in high powered positions. It transpired that in many cases these individuals had entered in to NDAs with their alleged victims agreeing to pay them cash if they agreed to keep quiet about the allegations.

Critics of this use of NDAs claim that despite the cash payments, victims were forced to make a choice between signing the NDAs, or speaking up and facing the possibility that their careers could be ruined at the hands of their alleged abusers.

So has Lord Hain undermined the NDA and should businesses which rely on them be worried? In short, no; Lord Hain was only able to name Sir Philip without fear of being in contempt of court because as a Member of the House of Lords his free speech is guaranteed by the ancient right of parliamentary privilege.

Whilst the original High Court Judge, Justice Haddon-Cave, had agreed with The Daily Telegraph that publication of the allegations was in the public interest, in overturning the Judge’s decision the Court of Appeal commented that Justice Haddon-Cave had “left entirely out of account” the “important and legitimate role” played by NDAs and had failed to recognise that the information The Daily Telegraph wished to publish was “passed to it in breach of a duty of confidentiality” and further that the newspaper was aware of that breach. The Judgment made clear that:

• NDAs did not stop the complainants from reporting criminal offences, or whistleblowing;
• each complainant had been legally represented; and
• each complainant had received “substantial payments”.

The basic contractual principles of the NDA remain intact. However businesses and individuals should take appropriate legal advice before entering in to a NDA to ensure their interests are protected, and agreements are valid.