On 6 August 2024, the Solicitors Regulation Authority issued an updated Warning Notice: Use of non-disclosure agreements (NDAs) (SRA News Story). The Warning Notice sets out guidance for law firms and practitioners on the key principles and risks they should consider when dealing with NDAs, to which the SRA will have regard when exercising its regulatory functions. It was first published in March 2018 and last updated in November 2020.
The revised Notice addresses common shortcomings identified in the SRA's Thematic Review into the use of NDAs published last year (see FC Feature 14 August 2023). These include:
- a lack of specific training on NDAs;
- over-reliance on precedents and templates;
- failures in challenging unreasonable time limits, which may affect an employee's ability to obtain advice and make informed decisions; and
- the general imbalance of power between employer and employee inherent in the settlement process.
The Notice emphasises that NDAs should not be used to prevent reporting to regulators or law enforcement agencies, to prevent disclosures protected by law (including under the Public Interest Disclosure Act 1998: see Whistleblowing) or to prevent proper disclosures to professional advisers bound by a duty of confidentiality.
In February 2024, the Legal Services Board published a report summarising information gathered following a call for evidence on the role of legal professionals in the use of NDAs (see FC Feature 29 February 2024). The LSB concluded that there was sufficient evidence to consider whether further regulatory intervention is required and that it would consult on any proposals in Summer 2025.
The updated Notice also follows legislation to address the misuse of NDAs included in the Victims and Prisoners Act 2024, which received Royal Assent in May 2024 (see FC Feature 4 June 2024). Once commenced, provisions in the Act will render void confidentiality and non-disclosure clauses in agreements that seek to prevent or deter a person from reporting criminal conduct to law enforcement agencies, qualified lawyers or other regulated professionals, victim support organisations and close family.
First published on the Employment News Service on 8 August 2024.
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