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NDAs rendered ‘void’ under act’s restrictions

Lawyers at McCann FitzGerald have highlighted what they describe as “very significant” new restrictions on non-disclosure agreements (NDAs) under new legislation.

The changes follow the recent enactment of the Maternity Protection, Employment Equality and Preservation of Certain Records Act 2024.

NDAs between employers and workers typically involve contractual commitments that preclude a person from disclosing specified information.

A party who breaches an NDA may be sued for damages arising from their breach of contract.

In a note on the firm’s website, the McCann FitzGerald lawyers note that such provisions came under intense scrutiny during the #MeToo movement, prompted by a concern that such NDAs were being deployed unethically – including in an effort to ‘gag ’ or suppress disclosure of harmful behaviour.

Discrimination and harassment

The firm notes that the act will place new restrictions on entering into NDAs where any such agreements relates to information concerning an “allegation” or any “action taken” by an employee relating to discrimination, harassment, sexual harassment, or victimisation.

“The effect is that such an NDA is void, whether applicable to current, former, or prospective future employees,” the lawyers state.

They highlight two exceptions under the legislation – including one in cases where an NDA is part of a settlement after a Workplace Relations Commission mediation.

‘Demanding’ criteria

They describe the second exception as “more intricate”.

“While it permits an employer to agree an NDA in writing with an employee, a long list of demanding and, arguably, uncertain criteria, must be met to ensure that the employee has provided informed consent,” McCann FitzGerald says.

The criteria are:

• The employee requests the NDA,
• The employee takes independent legal advice in writing from a legal practitioner before entering the NDA,
• The provision is in clear and easily understood language and in a format that is easily accessible,
• The NDA is of unlimited duration (unless where an employee elects otherwise), and
• A provision is included stating that the NDA does not prohibit the employee making a relevant disclosure to certain individuals (including, for instance, the gardaí).

“While the restrictions in the act are limited to specific allegations and claims in the context of employment, this represents a significant change to the current practice whereby, in many cases of termination of employment, such clauses are standard or 'boilerplate',” the lawyers state.

They conclude that employers should now give more careful consideration as to whether an NDA is “necessary or desirable at all”.