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Confidentiality in Employment Law


If you've been through a personal grievance process, you'll be aware of the strict confidentiality requirements contained throughout the process. This starts in "without prejudice" conversations, progresses to a confidential mediation, and then concludes with a Record of Settlement which includes strict confidential non-disclosure arrangements.


However, these confidentiality requirements can often be detrimental to employees; and it is my view that we should reconsider the inherent power imbalance throughout this process.


Who are we protecting?

Whose interests are we preserving?

Do we care about justice?


#PowertothePeople


Without Prejudice


If you have been asked to have a "without prejudice" conversation, it's important that you completely understand the nature and repercussions of this conversation before providing agreement.


Pursuant to section 57 of the Evidence Act 2006, a without prejudice discussion is made in an attempt to settle or mediate a dispute between the parties. If you've raised a personal grievance, a without prejudice discussion will be used to try to negotiate a financial settlement in exchange for agreement to cease all current and future claims against the employer.


A without prejudice discussion can limit your legal rights. If you agree to a without prejudice discussion, that conversation cannot be used to support your legal claim moving forward. As far as the law is concerned, that conversation did not exist.


There are employers who abuse the protections associated with a without prejudice discussion. These conversations can be used to cloak unlawful behaviour. It is not uncommon to receive a without prejudice letter which contains a threat: accept this offer, or we will pursue disciplinary action, or we will make a complaint to the Police.


In these circumstances, it is important to know that, in accordance with section 160 of the Employment Relations Act 2000, the Employment Relations Authority "may take into account such evidence and information as in equity and good conscious it thinks fit." Some situations where the Employment Relations Authority will admit without prejudice evidence include:

  • Where the employee did not agree to a without prejudice discussion.

  • Where the employee was not in a position to agree to a without prejudice discussion, as they were unaware of the meaning and impact of "without prejudice."

  • Where there is no dispute between the parties. This is especially important when an employee has received a without prejudice offer in response to performance concerns raised by the employer.

  • Where the without prejudice discussion was not made in an attempt to settle or mediate a dispute between the parties.

  • Where the without prejudice discussion has been used to cloak unlawful behaviour.

  • Where it would be prejudicial to the employee not to admit the evidence.

I have raised a number of claims on the basis of challenged without prejudice communication made directly to an employee; both from an employer and from their representatives. The employee was not legally represented, and therefore not in a position to agree to such a conversation. Further, there was no dispute and it was important to admit this evidence as it showed that the employer was acting with the intention of dismissing the employee.


Mediation Services


Mediation services is offered by the Ministry of Business, Innovation and Employment. It is touted as being a voluntary process; however, in practice, this is simply not true.


The purpose of mediation is to discuss the issues between the parties, in a confidential and without prejudice setting, in an attempt to resolve the matters. In most cases, this can be a great forum, and approximately 80% of cases will settle here.


However, this process can be abused, and can be seen as unsafe for victims of sexual harassment, racial harassment and bullying. I have attended countless mediations, where the employer and their representatives have further belittled and bullied the employee under the shield of a 'confidential' process. I have heard of employees and their representatives experiencing discrimination under this protective cloak.


The problem is that an employee cannot opt out of this process. They do not get a choice. They must limit their legal rights, and they must open themselves to such vulnerability. I am not aware of a situation where the Employment Relations Authority has conducted an Investigation Meeting without first having directed the matter to mediation services. It certainly isn't commonplace.


I must ask: How does this process benefit the employee?


They don't have a choice. If the employee does not attend mediation, it is difficult to progress their claim to the Employment Relations Authority. If someone is to attend a meeting which has the effect of limiting their legal rights, they ought to provide agreement. However, there is no agreement; and any agreement made cannot conscionably be said to be made without influence. There is no real choice.


Record of Settlement


If the claim resolves either through a without prejudice conversation, or through a mediation process, the parties will be required to sign a "Record of Settlement." This is a document which outlines the agreement that the parties reach.


This document will usually include a confidentiality clause:


The terms set out in this Record of Settlement, and the fact settlement has been reached, are strictly confidential to the parties and their representatives, except as required by law.


This is a lifelong confidential non-disclosure agreement. From that point onwards, you cannot talk about the details of your claim. You cannot tell anyone that you "won" or that they "lost." You are strictly required to keep this information confidential; and the repercussions are significant. If you breach the Record of Settlement, you may be liable to a $10,000 fine.


This alone can be significant, especially if you have resigned as a result of a negotiated settlement. What do you tell future employers about your previous employment? What do you tell your previous colleagues about your sudden departure?


Firstly: It is my view that there is not enough 'consideration' to justify a lifelong limitation. "Consideration of Contract" is a common-law principle, which simply means one consideration is exchanged for another consideration. While it is argued that the Applicant receives a financial settlement in consideration for their confidentiality; the reality is that if an employee receives a settlement of $10,000 and they live for another 50 years, they are only paid $200.00 per year for their confidence.


This is unconscionable.


Secondly: Not only can this significantly impact a person's mental health, but I raise questions whether this is appropriate in an employment setting. Employment is a significant part of our society, and it is a subject that is spoken about regularly.


Adhering to these strict requirements can be more difficult when you have a disability which affects your executive functions. For example, people with ADHD are often said to speak impulsively and without a filter. While a person with ADHD will be able to refrain from posting about the confidential material online, they may find it difficult to keep this information strictly confidential in a social setting. The significant weight of a non-disclosure agreement in these circumstances can be crippling, and can add to further mental distress.


I'm not saying we should disregard all confidentiality provisions, but that it should not be seen as an automatic presumption of settlement. This is an onerous expectation to place on an individual, and it is important that an employee understands the significance associated with a confidentiality non-disclosure agreement. It is important that an employee receive fair consideration for this confidentiality; especially where it is not for their benefit.


Conclusion


We need to change how we do things.


It is an employee's right to raise a claim with respect to their employment; however, what comes next is a system which inherently favors the employer and protects their legal rights. The employer is not a person. It does not have feelings. It is not vulnerable.


If an employer is concerned about reputational damage, the message should not be "Don't worry, you can sweep this under the rug in a confidential agreement."


The message should be: "Don't be a dick."


Get it right the first time. Learn from your mistakes. Be a good employer.


It's not hard.


The current process only encourages poor behaviour; especially for large employers with deep pockets.


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