New law will ban bosses from using gagging orders to cover up bullying or groping of workers
Under sweeping changes, workers who sign confidentiality deals will still be able to blow the whistle on abusive employers.
Theresa May has ordered rules to be tightened after bombshell revelations of Sir Philip Green’s use of non-disclosure agreements to silence ex-staffers.
The PM hopes it will put an end to “unethical” use of farewell clauses to conceal allegations of sexual harassment, bullying, physical threats, racism or discrimination.
The move follows growing evidence that NDAs and confidentiality clauses are being abused by a small minority of employers to intimidate whistleblowers.
Fashion tycoon Green, 66, has been accused of paying staff members seven-figure sums to silence allegations of sexual harassment and bullying.
Business Minister Kelly Tolhurst, who is overseeing the changes, said that in future NDAs must only be used to prevent disclosure of confidential business information and not workplace abuse.
She declared: “May businesses use these for legitimate business reasons, such as to protect confidential information.
“What is completely unacceptable is their misuse to silence victims, and there is increasing evidence that this is becoming more widespread.
“Our new proposal will help to tackle this problem by making it clear in law that victims cannot be prevented from speaking to the police.”
An NDA is a legal agreement signed between two parties to share secret information or to keep trade secrets confidential.
What is completely unacceptable is their misuse to silence victims, and there is increasing evidence that this is becoming more widespread.
They are mostly used in the business world, such as in mergers, or when a senior executive leaves to work for a rival.
But more recently they have been used to hide famous people’s dirty little secrets.
The growing use of NDAs first emerged after Harvey Weinstein’s former assistant broke one to speak about alleged sexual harassment by the disgraced Hollywood movie mogul.
The Green affair lifted the lid on how they could be used to prevent revelations of his behaviour at work.
Ministers have obtained evidence of misuse by other firms to cover up harassment, discrimination or unlawful activity.
The changes are part of the government’s drive to create a fairer workplace – including encouraging more women into top jobs and forcing companies to publish gender pay data.
Ms Tolhurst added: “Our proposals are just one step of many we are taking to kick start cultural change in the workplace. We are determined to create fairer workplaces and we recently announced the biggest upgrade to workers’ rights in a generation.
“Alongside this, companies and business leaders must set an example and ensure a culture of sexual harassment and discrimination in the workplace comes to an end.”
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