Legal: When are non-disclosure agreements appropriate?

Employment law partner, David Ward sets out the practical and ethical considerations for school and trust leaders in the use of NDAs

Employment law partner, David Ward sets out the practical and ethical considerations for school and trust leaders in the use of NDAs

22 Jul 2023, 5:00

The public perception of non-disclosure agreements (NDAs) is that they are used to ‘hide wrong-doing and avoid accountability – that the only purpose they serve is to mask sinister behaviour and corruption. This isn’t the case. Of course, there are circumstances where NDAs are used inappropriately, and the chances are that in those situations, further wrong-doing may occur. Certainly, there is an increased risk. 

In schools, allegations can arise against staff, including teachers. The standard of proof for employment tribunal proceedings is “on the balance of probabilities” not “beyond all reasonable doubt”.  An employer doesn’t have to carry out a criminal trial standard of investigation in order to fairly dismiss an employee. The test applicable to an employer is the “bands of reasonable responses” test, which requires considering the spectrum of actions a reasonable employer may take, accounting for all the circumstances of the case.

Therefore, if a school receives an allegation against an employee and acts reasonably in the circumstances, following an objectively fair, formal process and reaching a reasonable conclusion based on the evidence, then it can proceed with the decision it makes and an employee on the receiving end has little in the way of options to challenge this.  

Ethical considerations

Allegations are not always clear cut or true, and they can often arise out of specific or unusual circumstances. Even if an allegation is raised and an employer chooses to uphold it and dismiss the employee, this does not necessarily mean that the employee in question should no longer have a career in the sector, for instance. In such cases, but for an NDA they would probably struggle. 

While investigations should be reasonable, the evidential standard is not particularly high. For example, allegations of a safeguarding nature could fall anywhere within a scale of seriousness, but unless the police are involved a detailed investigation may never be carried out to ascertain beyond doubt whether the incident occurred or whether the subject of the allegation poses a future risk.

Very serious allegations can arise which are subjected to criminal investigations. Other allegations can be serious but not be referred to the police. In some such cases, confidentiality would be objectively inappropriate. Indeed, making an example of these to discourage other wrong-doing would be a more appropriate approach than entering into an NDA, even if that causes reputational damage or career loss. 

When NDAs are appropriate 

There are certainly times when the use of NDAs is appropriate for an educational institution. Primarily, this is when the parties cannot necessarily find the truth, the evidence is inconclusive or the allegations are relatively mild but the employer has lost confidence in the employee. An NDA may allow a professional to move on and have a fresh start elsewhere, without any considerable risk.

NDAs can be a very effective tool to resolve disputes efficiently and benefit more than the subject of the allegation. For example, where there is risk of reputational damage, cost savings to be made in resolving matters promptly and learning points to be actioned on behalf of the employer. 

In considering whether or not to enter into an NDA, a senior leadership team’s primary consideration ought to be whether, as a result of entering into the agreement, a third party could be at risk due to the individual being permitted to move on, retain an untarnished career and potentially commit further wrongdoing. If the answer to this is yes, then it is likely to be inappropriate for an NDA to be used.

However, where the allegations are of a serious but low-risk nature, the subject acknowledges their wrong-doing, is remorseful, or the evidence is just not available to reach a definitive conclusion meaning the parties are in limbo or stalemate, an NDA may well be appropriate and ought to remain an option to proceed with where appropriate.

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