NDA's bowled out? When should you not use a non-disclosure agreement

Article 16 November 2021 Experience: Employment
Sport

Azeem Rafiq’s employment tribunal claim against Yorkshire County Cricket was settled within 72 hours of new chair, Lord Patel being appointed. Lord Patel praised Rafiq’s bravery for raising claims of institutional racism. He also expressed dismay that an investigation had described racial slurs as friendly and good-natured banter. One particularly striking aspect of the settlement is the club has not imposed any confidentiality restrictions on Rafiq.

Non-disclosure agreements (NDAs) have been under the spotlight following revelations that Harvey Weinstein imposed stringent confidentiality obligations on Zelda Perkins when he settled claims against her. Since then, the Solicitors Regulation Authority (SRA) has issued a warning notice to solicitors about NDAs, and in particular that NDA’s must not be used to prevent whistleblowing.

Rafiq’s case had dragged on since September 2020 causing the club loss of sponsorship and ticket sales. The club’s insistence on an NDA in its settlement with Rafiq had become a sticking point. Given that details of the allegations were already in the public domain, any attempt to put the cat back in the bag was futile. Lord Patel has now made a virtue out of the lack on NDA, indicating it is the beginning of a new era at the club.

Despite the SRA warning notice, NDAs still have their uses. Sometimes it is appropriate for the settlement sum to be kept secret. At other times the issues at the heart of the dispute may be hotly disputed and so the only way to settle is if the parties to agree not to discuss the case any further. NDAs may also protect third parties from being unfairly exposed.

However, the blanket application of NDAs is a thing of the past. In any settlement the parties need to weigh the pros and cons carefully and tailor any NDA precisely. By contrast, declaring that there is no NDA sends a strong message of transparency and a promise of change.

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