Al-Fayed and the Cloak of Secrecy

Partner, Kevin McKenna.

This month we have heard the harrowing details of the sexual abuse committed by Mohamed Al Fayed. Lawyers for the victims described the case as one which “combines some of the most horrific elements of the cases involving Jimmy Savile, Jeffrey Epstein and Harvey Weinstein”. Harrods, under new management, has set up a compensation scheme and say that they condemn the actions of an individual who was intent on abusing his power. Some former victims were paid compensation under settlement agreements where one condition of the payment was confidentiality. The EHRC has already recognised that confidentiality agreements are part of the problem. Silencing those who have felt able to raise their concerns will deter others from coming forward.

On 26th September 2024 the EHRC published its new guidance in response to the change in law made by the Worker Protection (Amendment of Equality Act 2010) Act which will have effect from 26th October 2024.  Employers will be under a new duty to take reasonable steps to prevent sexual harassment.  The focus will move from being reactive and demand that employers are proactive in identifying the risks of harassment and put in place measures to stop it from occurring.  Paragraph 4.48 of that guidance reminds us that employers must only use confidentiality agreements where it is lawful and not to prevent workers from whistleblowing, reporting criminal offences or doing anything required by law such as complying with a regulatory duty.

In theory then, confidentiality agreements used inappropriately should not give cover to the perpetrator, but they do. Sometimes, perhaps because the agreement is only one means of silencing the victim. Fayed’s victims were told they would “never work in London again” and “we know where your family live”. But the report of the House of Commons Women and Equalities Select Committee into Sexual sexual harassment in the workplace also recognised the legitimate use of confidentiality or non-disclosure agreements (NDAs) from the perspective of the victim, saying,

“Again we acknowledge that there is a place for NDAs in settlement agreements; there may be times when a victim makes the judgement that signing an NDA is genuinely in their own best interests, perhaps because it provides a route to resolution that they feel would entail less trauma than going to court, or perhaps because they value the guarantee of privacy.”

Employers, and those advising them will need to think ever more carefully about when it is appropriate to use NDAs and employees, and those advising them, will also need to think about whether they agree to confidentiality and if so, on what precise terms (for which read, their own terms). Future claimants may now be in a stronger position to ask for disclosure of all relevant previous NDAs that a company has entered into.

In the words of former White House Press Secretary, Bill Moyers, “secrecy is the freedom tyrants dream of”. We shall see if this change in law means that now secrecy can neither be expected nor bought.