Gagging clauses

News  |   15 March 2013

It is not uncommon when an employer and an employee settle an employment dispute for the employee to sign what is known as a ‘compromise agreement’.

It is not uncommon when an employer and an employee settle an employment dispute for the employee to sign what is known as a ‘compromise agreement’. Such agreements provide, in the main, for a payment to be made to the employee in exchange for the employee agreeing not to bring any claims against the employer in respect of their employment.

It is common also for other clauses to be inserted in such agreements such as a provision that neither party will ‘bad mouth’ the other and for there to be confidentiality in relation to the existence and/or terms of the compromise agreement.

The existence of such provisions has been brought into focus recently with the case of Gary Walker who was dismissed as chief executive of United Lincolnshire Hospitals Trust in February 2010. Mr Walker signed a compromise agreement and this contained a provision preventing him from disclosing the existence of the compromise agreement and the circumstances leading up to the termination of his employment.

During a BBC interview in February 2013 Mr Walker said that he had been forced out of his job because of a conflict over Whitehall targets for patient numbers and Mr Walker’s concerns over patient safety.

The compromise agreement contained the following provisions:

  • You [Mr Walker] undertake to take all reasonable steps to ensure that your partner and immediate family and/or the witnesses who were to give evidence on your behalf in your tribunal claim do not disclose to anyone the terms of this agreement.
  • Should you [Mr Walker] breach the term relating to confidentiality, you will immediately repay to the Trust on demand all sums paid under this agreement in full and you agree that we may recover the compensation sum from you as a debt together with our reasonable costs including our reasonable legal fees in doing so and you hereby indemnify the Trust for any losses suffered as a result thereof.
  • You [Mr Walker] will not make any detrimental or derogatory statements about your employment, its termination, the Trust or any of its associated persons as defined and shall take reasonable steps to ensure that the witnesses who were to give evidence in the above proceedings do not make such statements.

Following the BBC Interview, the Trust wrote to Mr Walker reminding him of the obligations in relation to confidentiality. This led to further media interest over a purported attempt to ‘gag’ Mr Walker from raising his concerns about the way in which the Trust had been operating.

The Health Secretary Jeremy Hunt became involved and has now announced (14 March 2013) that confidentiality clauses in NHS compromise agreements will be banned with immediate effect where they prevent former NHS employees from raising concerns about patient safety or care.

It should be mentioned however that under section 43J of the Employment Rights Act 1996 such a confidentiality clause cannot prevent an employee from making a ‘protected disclosure’ under the Whistleblowing legislation. Such ‘protected disclosures’ relate to health and safety concerns or breach of legal obligations generally.

This ban will only apply to NHS employees at present and therefore employees generally who sign such compromise agreements still need to be wary about the obligations they are under. A breach of a compromise agreement can lead to the employee being forced to repay the monies paid under it!

For more information contact David Hacker.