The government has refused a recommendation from an influential group of MPs to ban the use of non-disclosure agreements (NDAs) in all harassment cases, after its probe into sexism in the financial services sector.
In a response to the Treasury Committee’s Sexism in the City inquiry, the Treasury said it shared MPs concerns that NDAs are being used to intimidate and silence victims of harassment and discrimination.
However, it said there are already “legal limits” to how employers can use NDAs with workers.
“An NDA will most likely be unenforceable to the extent that it seeks to prevent workers from reporting a crime to the police or cooperating in a criminal investigation, as this could be an attempt by the employer to pervert the court of justice or conceal a criminal offence,” the Treasury said.
It added that an NDA would also be unenforceable if it sought to prevent a worker making a protected disclosure about wrongdoing to a prescribed person for whistleblowing purposes.
In March, the Treasury Committee called for urgent government action to root out sexual harassment, misogyny and gender imbalance across financial services, criticising slow industry-led efforts.
It recommended legislation on NDAs, more protection for whistleblowers and greater reporting on the gender pay gap.
The Treasury said the government had taken action to prevent NDAs being used in certain sectors, highlighting higher education, and had “committed to bringing forward legislation to clarify that NDAs cannot be legally enforced if they prevent victims from reporting a crime”.
It added, however, that there was “a legitimate place for clauses that protect commercially sensitive
information, ideas or intellectual property in business transactions and disputes involving
negligence claims”.
The committee also recommended the government ban employers from asking for salary history and mandate they include salary bands on job advertisements.
The Treasury said that immediately moving to legislate on this issue would not give firms enough time to “work through historic pay arrangements in a way that is fair for all staff, and increases the risk of a backlash to what should be a positive measure”.
“Pay transparency is still an emerging area, and we do not yet know whether there could be unintended negative impacts; we are aware that several countries are exploring legislative options, and therefore believe it makes sense to first learn from their experience,” it added.
The Treasury said the government is continuing to review its whistleblowing framework to make it more robust and increase support for whistleblowers.
Harriett Baldwin, a Conservative MP and the Treasury Committee’s chair, commented: “Steps like banning NDAs in all harassment cases and removing biases which benefit men in salary negotiations are straightforward, logical measures which would have a huge impact on people’s lives.
“I would continue to urge the government to increase the pace of progress and competitiveness in this important sector.”