Non-disparagement clauses in NDAs

Unequal bargaining power

Non-disclosure agreements (NDAs) have been in the news recently. First, there were the revelations about the US film producer, Harvey Weinstein, and the suggestion that some of the women who made allegations about his conduct have broken the terms of NDAs that they have signed.

More recently, there has been political controversy in the UK about the BBC requiring NDAs when settling disputes with female staff about whether they are paid less than men for the same work.

One of the issues that has emerged is the use of so-called non-disparagement clauses in NDAs. In effect, these require a party not to bad-mouth the other party. Here is an example found quickly on the internet:

Executive will not disparage the Employer or any of its directors, officers, agents or Executives or otherwise take any action which could reasonably be expected to adversely affect the personal or professional reputation of the Employer or any of its directors, officers, agents or employees.

Whether such a clause is enforceable will, no doubt, vary between jurisdictions. There are likely to be situations where the clause is not enforceable on public policy grounds, eg if the employee is reporting illegal activity (whistle-blowing) or giving evidence in court. See, for example, this commentary (on a related point) from a leading employment law chambers in London.

IP Draughts notes in passing that the model settlement agreement recommended by ACAS in the UK doesn’t include any non-disparagement clause, but commentary on various employment law firm websites seems to be in favour of such a clause.

IP Draughts doesn’t see these clauses very often, though he is occasionally asked to review (UK) employment settlement agreements. He recalls seeing one in an agreement to settle a dispute between UK academics (not an employment dispute). You might think that there is something about academic disputes that make such a provision useful; I couldn’t possibly comment.

Clauses of this kind seem to be more popular in the USA. He has his doubts over whether, in a UK setting, they are typically anything more than something for the ex-employer to point to, when seeking to dissuade the ex-employee from making negative comments.

Postscript: Since writing this article, IP Draughts has seen a news report about an ex-employee of Redwood, a San Francisco start-up company, who complained of harassment and “declined to sign the nondisparagement agreement offered to her as a condition of severance”.

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