Employers are ensuring staff sign useless boilerplate non-disclosure agreements by offering them trifling amounts to cover legal costs, MPs have been told.
Sarah Russell MP (pictured), a former practising employment solicitor, told a debate in Westminster Hall yesterday that victims of harassment or discrimination are unable to do anything more than sign inadequate NDAs because the odds are so stacked against them.
Russell said that employers have a duty under the Employment Rights Act to pay for staff to receive independent legal advice if they are asking them to sign a settlement agreement. As a customer, this will mean employers paying towards that advice. But for low-paid workers, she said, the standard legal advice offer is still as low as £250, and with such small sums involved, claimants quickly run out of money to get any meaningful help.
‘The reality of the legal market is that no specialist employment lawyer will explain a potentially 20-page legal document to the person, send them follow-up written advice and renegotiate the terms for £250,’ said Russell.
‘Most good solicitors will explain that they cannot do it for the money and tell them how much it will cost to have it done properly. The person will not be able to afford it and, at best, they end up with some really shoddy solicitor who is not necessarily a specialist employment lawyer and is prepared to sign off pretty much anything and, bluntly, leaves them completely stuck. This payment structure is enriching for non-compliant solicitors at best.’
The Solicitors Regulation Authority has said in its guidance that NDAs must not include or propose clauses known to be unenforceable, but Russell said such clauses are still in ‘extremely widespread circulation’.
Another key problem is that some businesses are putting forward agreements not through solicitors but through unregulated HR consultants, she said.
Russell added: ‘The reality is that at some point they will have been given a precedent settlement agreement by a solicitor - we might be talking 20 years ago - and those agreements contain NDAs, so they are still in widespread use.’
Her Labour colleague Louise Haigh had called the debate to discuss the use of NDAs in harassment, discrimination and abuse cases, and whether the law should change to prevent misuse of settlement agreements.
Haigh said that legislation prohibiting NDAs being used by universities in cases of sexual harassment, discrimination and bullying had created a two-tier system of protection. ‘We now have the absurd situation where students and workers in universities are protected, but a cleaner, who works on a university campus but for an outsourced company, would not enjoy those same protections,’ added Haigh.
Business minister Justin Madders said the government would look at further action but stressed it should not create new loopholes for ‘clever lawyers’ to exploit, and neither should it prevent people from signing an NDA if they want to.
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