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NDAs still valuable despite Sir Philip Green case

Posted: 27th November 2018   In: Business Employment

The naming of Sir Philip Green as the businessman trying to prevent his identity being published over sexual and racial harassment claims has thrown the spotlight on workplace Non-Disclosure Agreements.

The issue arose after five employees at Sir Philip’s Arcadia group made allegations about his “discreditable conduct”. All the complaints were settled before any details of the claims went on public record. The employees received substantial payments and were subject to NDAs.

Subsequently, the Telegraph approached Sir Philip and his company with a view to publishing a story about the allegations.

Arcadia’s application for an injunction preventing publication was rejected by a High Court judge, but that decision was overturned by the Court of Appeal.

It said there was a real prospect that publication would cause “immediate, substantial and possibly irreversible harm” to the Sir Philip and his company. There was no evidence that the settlement agreements were procured by bullying, harassment or undue pressure. Each complainant received independent legal advice prior to entering into the agreements.

The Appeal Court added that there was a “public benefit in the enforcement of contracts, freely entered into by the parties, settling their disputes, not least in the employment field”.

That decision was then overtaken when Lord Hain named Sir Philip in the House of Lords as the businessman at the centre of the case. Lord Hain was able to disobey the injunction because Parliamentary Privilege prevents MPs and Lords being sued for statements they make during debates in Parliament.

The media then rushed to name Sir Philip as well, meaning that the court injunction was rendered ineffective.

Immediately after being named, Sir Philip issued a statement saying both he and his company Arcadia “take accusations and grievances from employees very seriously and in the event that one is raised, it is thoroughly investigated”.

"To the extent that it is suggested that I have been guilty of unlawful sexual or racist behaviour, I categorically and wholly deny these allegations.

"Arcadia employs more than 20,000 people and in common with many large businesses sometimes receives formal complaints from employees.

"In some cases, these are settled with the agreement of all parties and their legal advisers. These settlements are confidential, so I cannot comment further on them."

The case may spell the end of NDAs being used in certain circumstances.

Even before Lord Hain’s actions, Prime Minister Theresa May had promised tougher regulations for workplace non-disclosure agreements (NDA) relating to sexual harassment cases.

Mrs May’s official spokesman told the Telegraph that further regulation would be announced “imminently”.

The case may leave some people wondering whether NDAs are now worthwhile, but the question needs to be placed in context. Most workplace NDAs relate to important but uncontroversial business matters such as sensitive company information, client lists, blueprints, designs, formulas and strategies. Only a tiny proportion relate to matters like sexual harassment, and it is only those cases that are likely to be affected by future regulations.

Even where sexual harassment matters are involved, they’re unlikely to involve high profile figures like Sir Philip and so unlikely to attract the attention of the media.

We shall keep clients informed of developments.

Please contact Jacqueline Webb if you would like more information about the issues raised in this article or any aspect of employment law.