In 2013, the NHS came under fire for including a gagging order in a settlement agreement with Gary Walker, the ex-chief executive of United Lincolnshire Hospital trust, which prevented him from speaking out about his concerns regarding patient safety. Gagging orders hit the headlines again in 2019 when MPs called for them to be banned in cases where the aim was to silence victims of sexual harassment or discrimination.
In the UK, gagging orders will typically form part of a settlement agreement that both parties sign to bring the employment agreement to an end. A settlement agreement sees the employee waive their rights to bring legal proceedings against the employer in exchange for a financial payment. The settlement agreement is really designed to ensure that the employer does not find themselves in an Employment Tribunal but some organisations use them to address other matters that have arisen during the employment relationship that they would prefer other people not to find out about. So, what can you do when it comes to gagging orders in a settlement agreement?
1. What Issues Can Arise with Gagging Orders in Settlement Agreements?
The Walker case is that he was allegedly forced from his position in 2010 after he raised concerns that patient safety was being compromised because of the drive to hit government set targets. On departure he reportedly received a termination payment of £500,000 in return for signing a settlement agreement (known as a compromise agreement at that time) which contained a gagging order which prevented him from discussing the circumstances around his departure.
In 2013, he broke this clause by speaking out on BBC radio, and received a letter from the NHS trust’s legal team stating that he needed to withdraw his statements and that a breach of the agreement could result in him being asked to repayment the settlement amount.
MP and health committee chairman Stephen Dorrell waded into the argument urging health secretary Jeremy Hunt to ensure that the trust was prevented from taking any action which may prevent Mr Walker giving evidence to the committee that was investigating the standards at 14 trusts.
In 2019, a number of allegations of sexual harassment were made against Sir Philip Green and it emerged that five employees who made the allegations all had gagging orders included in their settlement agreements which prevented them from speaking out about their experiences. This bought the topic of gagging orders back into the press again as MPs and women’s groups spoke out about the dangers of this practice and petitioned for the banning of gagging orders that prevented victims of sexual harassment speaking out.
The main issue around gagging orders is where they are used, not only to silence the employee, but as a way to avoid dealing with the problem. The House of Commons Women and Equalities Committee said in 2019 that gagging orders were being abused by some companies and leading to complaints of sexual harassment not even being investigated. The approach that companies were taking were to ignore the problem, pay off the victim and allow the perpetrator to remain employed and continue to harass employees in the work place.
2. What Can be Achieved through a Settlement Agreement?
Many of our clients use settlement agreements as a way to deal with employee terminations that run a high risk of ending up in an employment tribunal.
They are used when it becomes apparent that a particular employee no longer has a future with the business for a variety of reasons but dismissing them through the normal process is not achievable. They can also be used when an employer acknowledges that they have made a mistake and are unlikely to be successful in an employment tribunal setting.
Rather than dragging both parties through the tribunal process and incurring large legal fees, the employer enters into a settlement agreement with the employee. In return for signing the settlement agreement, an employee receives a financial settlement and agrees not to bring a tribunal claim, therefore in effect waiving their rights under key pieces of employment legislation.
Most settlement agreements do contain a clause requiring that both employee and employer do not disclose the terms of the agreement or the reasons behind its existence.
The difference with the Walker case, and where gagging orders are used to prevent the reporting of sexual harassment is that one outcome of the agreement is that it prevents the employee from raising issues of genuine public interest. In the Walker case, he would be offered protection under the Public Interest Disclosure Act 1999 and this is not a right that you can sign away in a settlement agreement.
3. Limitations of Settlement Agreements
It’s important that businesses realise that settlement agreements cannot be used as a way to buy the silence of employees who have discovered illegal activity or information which is of genuine public interest.
We work a lot with care homes and this is another sector which has come under fire regarding standards of care (to clarify none of our clients provide anything other than exceptional levels of care). If a care home was to try to enter into an agreement with an employee who threatened to take evidence of poor care to the press, then it is unlikely that they would be able to enforce a gagging clause regardless of how much they had paid to the ex-employee.
Settlement agreements also can’t be used to deal with personal injury claims that haven’t yet arisen. What this means in practice is that you cannot put a waiver in a settlement agreement that prevents an employee bringing a personal injury claim against you if, at some point in the future, they become aware that something that happened whilst they were employed by you has had a serious impact on their health.
You also cannot use a settlement agreement to get employees to waive their right to be consulted in a TUPE situation or collective redundancy situation or their right to statutory maternity, paternity of shared parental leave pay.
When it comes to gagging orders in settlement agreements, it’s important to use them appropriately. If you do find yourself facing allegations of serious misconduct in your business, be that behaviour by employees that is of a sexual or discriminatory nature or allegations of poor business practices that may be of genuine public interest, you need to focus on dealing with the problem, not on buying the silence of the employee who has bought the matter to your attention. We’d always suggest that you seek professional help if you find yourself considering the use of a settlement agreement and we’d be more than happy to speak with you regarding the situation that you’re trying to manage and discuss your options with you.
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