We should now stand back from the moral panic about non-disclosure agreements and dispassionately review their effects. That panic has been generated by wide clauses in the cases of in particular Harvey Weinstein and Sir Philip Green and they have generated moral revulsion and press interest and then the inevitable Parliamentary Select Committees have got involved. Even the Prime Minister took time off from Brexit to enter the debate. The professional bodies have become exercised, especially the SRA. They suffer from the inappropriate and pejorative common nomenclature of “gagging clauses”.
Let us try first to identify the scope of the problem. Clearly any clause which seeks to ban legitimate whistleblowing is already invalid under the Employment Rights Act 1996. Further it is inappropriate to prevent disclosure of a crime and serious sexual harassment will often come under the rubrics of sexual assault, indecent exposure or stalking. They should not be used to inhibit reports of misconduct to an appropriate regulator.
Let us next consider why NDAs are adopted at all. This is to identify those parts of the employee’s knowledge gained in the service of the company which cannot be disclosed or alternatively because well drawn clauses in the contracts of employment have fallen away. Often, they are inserted to prevent discussion of the details of the circumstances of termination.
The SRA warning notice on NDAs makes the important point that unenforceable NDAs should not be included in agreements for their deterrent effect which is obviously correct.
We should not however throw the baby out with the bathwater. The reality is that many cases would not be settled at all if there could not be some veil of confidentiality drawn over the underlying events which led to the termination which are often alleged but not fully investigated by the time of the settlement. Given the explosion of cases since fees were removed and the delays which are now building up in the employment tribunal system, there is a clear public interest in encouraging settlements. They may also serve to protect those who are wrongly accused and those who would rather move on from the workplace with a settlement even if this means that their allegations go unheard.
Employees on boards
It is intriguing to see the renaissance of an idea that we oldies associate with the Bullock Report on the 1970s under the Callaghan government, which is workers on the company board. It did have a brief reflowering in Teresa May’s first days as PM in 2016 but was quickly dropped after opposition from the business community. It was instead made one of three options for companies, along with a boardroom non-executive with specific responsibilities for employee engagement and a worker’s advisory panel.
Capita have announced the appointment of two worker directors. The company invited all of its workforce numbering about 70000 to apply for the well paid non-executive positions. Perhaps surprisingly, one of the other two companies to take up the Prime Minister’s suggestion is Sports Direct. First Group has had a worker director for over thirty years whilst John Lewis is owned by its staff. Inevitably there will be conflicts of interest which have to be managed in this scenario but this should be possible with common sense and goodwill.
Dress codes in the USA
The New Jersey Appeal Court had occasion to consider the matter of dress codes in the unusual fact situation in Schiavo v Marina District Development Company LLC d/b/a Borgata Casino Hotel & Spa which addressed the dress code of a casino industry. The New Jersey Law Against Discrimination provides that an employer may establish reasonable employee appearance standards.
This case concerned the first Las Vegas style resort in Atlantic City. The Borgata Babes were “a specialised group of costumed beverage servers” reflecting “the fun, upscale, sensual international image that is consistent with the Borgata Brand”. All Babes were expected to comply with “the Five Fs: Fun Friendly Focused Fresh Fast”. The recruitment brochure described a babe as “part fashion model, part beverage server part charming host and hostess. All impossibly lovely…On a scale of 1 to 10, elevens all”. Quite a high bar! Female babes were “to have a natural hourglass shape”. There were also many weight standards. The claimants objected to the weight standard as gender stereotyping and gender role discrimination. Several of the claimants were indeed suspended for breaching these weight rules.
The test applied was whether there is an allegation of “conduct that occurred because of her sex and that a reasonable woman would consider sufficiently severe or pervasive to alter the conditions of employment and create an intimidating, hostile or offensive working environment”. The court applied the general principle that “the appearance of a company’s employees may contribute greatly to the company’s image and success with the public and thus that a reasonable dress or grooming code is a proper managerial prerogative”. There was, the court held, no protected class based solely on a person’s weight. The court did not find the use of differentiated costumes for male and female Babes itself actionable since all associated whether male or female were required to wear costumes as a condition of employment; women were not singled out.
The court followed the precedent of Page Airways v NY State Div. of Human Rights 352 NE 2d 140yhat “we do not believe that an employer unlawfully discriminates when he establishes a reasonable grooming policy which may be said to differentiate between male and females. Employers, particularly those whose business involves contact with the public should be free to express and act upon a concern with the image which their employees communicate by their appearance and demeanour”. The court added (perhaps unnecessarily) that “from its inception an element of performance and a public appearance component was part of the described BorgataBabe position” and “the costume may lend authenticity to the intended entertainment atmosphere”
The court did not find the discriminatory impact was obvious and self-evident. There was no evidence that the use of the weight standard or differentiated costumes deprived women of employment opportunities or privileges of employment. The requirements did not impose a designated weight for associates of a certain height or use differing standards to determine whether weight of males and females met defined limits (p37).
The plaintiffs also claimed that “the Borgata Babes are used as nothing more than sex objects by the casino, required to adhere to a stereotype of overt and aggressive feminine sexuality”. The court directed itself that it need not “pretend that there are no physiological differences between men and women”.
Some plaintiffs had alleged facts sufficient to demonstrate that the weight standards were enforced in a harassing manner against women because of their gender creating a hostile work environment and some of these succeeded especially in that women were targeted on return from maternity and medical leave.
This case overall provides a contrast to the UK where a tougher approach to discriminatory dress codes has been taken. The issue is still acute in certain industries. For example Norwegian Airways recently published a controversial 22 pages long policy requiring female staff to wear high heels and make up. There are likely to be more such claims such as the Borgata Babes but probably not with such extreme facts.
Written by John Bowers QC.