Power, NDAs and Matt Hancock

Power is never balanced. We do not live in a world of perfection. One party will always have more than the other. We see this in the corporate commercial world where on a  scale of 1 to 100,  the Small Medium Business (SME) has the power of just 1 whilst and the larger corporates are on 99. There is a similar power differential between employer/employee. It is just the way things are. That is not to say that the power cannot be re-addressed and negotiated. The question of where power sits and who has knowledge is never more compelling than when dealing with Non-Disclosure Agreements known as NDAs. Is there a power in balance in respect of those instructed to carry out work for a party such as the case as Matt Hancock and Isabel Oakeshott.

NDAs have become critical in business and in fact a number of arenas including ghost writing and dispute settlements (where they have long been used) for a number of reasons. The original purpose of an NDA is and was to protect the position of (usually) one party in regard to information that could result in loss of revenue, profits, resources or reputation. For many larger businesses, NDAs, are the standard course of action when making deals with another business, and particularly in mergers and acquisitions. In some cases, NDAs are becoming commonly used for employee settlements and settlements between business for late payments. The questions then arise, “what is the true purpose of an NDA, when should it be used and why is there such a growing stigma around the use of NDAs?”

NDAs probably came to the forefront of the general public’s mind when they started being referred to in the news with reference to an employer’s allegation for misconduct, sexually harassment and assault with his employees, for example as reported in the Weinstein case. However, NDAs does not have to be all one way, but can be a two way agreement. A mutual NDA creates reciprocal obligations so each party’s information is protected whilst a one way NDA assumes that information that is sensitive is flowing only one way. This could be for instance in a purchase of a business or with employees/contractors/freelancers where they are open to sensitive information. They are often used in engineering companies, startups (particularly in technology) and those in film productions. This is all very well and good, so why the stigma surrounding it? Surely it can’t be just down to one or two parties misusing NDAs to protect their “reputation?”.  It turns out that NDAs are fast becoming the go to legal document to protect not just employers but businesses from opening their dirty laundry and behaviour to the general public and other businesses. Reputation after all, both in business and as an individual, is everything!

The misuse is twofold; the first in respect of employee/employer relationships and secondly in terms of business settlement. It would appear companies are now using NDAs to cover up allegations of discrimination and harassment. In allowing NDAs you are not going to the source of the problem and thereby the document becomes a tool to keep the status quo.  Keeping the status quo can be seen as so critical for a business that ethics are ignored. The status quo is also important for some businesses commercially and they may work to maintain it for years. For example, if they are using the supply chain as a form of credit, they would not want to change the situation and would not want their “reputation” tarnished in the media, public perception and with other businesses. What has been a document used to share ideas, knowledge, information and to develop new products is now becoming a tool to hide such things as late payments. I am distinguishing between a legitimate dispute and settlement, and simply being paid late and not wanting that information to be disclosed and exerting corporate power by saying “sign this to get paid”.  The reason is simply so they cannot be reported under the prompt payment scheme or to the Commissioner for Small Businesses.  The business’ ethics do not come into it and probably left the company a number of years ago.

The issues about the misuse of a NDA in terms of the employer/employee are being addressed as was announced by the Government on the 4 March 2019 by the Department for Business, Energy & Industrial Strategy. However, this only deals with one issue and of course does not cover contractors or freelance workers. Neither does it cover a business-to-business relationship.

So what of the Hancock revelations? The question is if there was an NDA in place and what that looked like, what did it cover and in what circumstances.  The parties differ as an NDA and just a set of terms. However, Oakeshott is placing her flag firmly in the ground and claiming overwhelming public interest. I am sure both parties have taken legal advice (if not they can always give me a call 😊) but if information is leaked as a result of a breach of an agreement the question has to be what purpose does it serve? In the Weinstein matter for instance, it was to prevent the repetition of sexual offences he had been carrying out.

Times are changing and power redistribution is being addressed. NDAs do have a place in business and can act as a wonderful document to help promote the exchange of knowledge and ideas, and if presented with one, remember it can be a two-way path. So if you feel you have been bullied into a corner, see if you can add something to your advantage. You never know what you can achieve simply by asking the question; just remember it is like any other contract which can always be broken.  

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