Ireland’s Push for Transparency With New Restrictions on NDAs

The restrictions will bite where the agreements relate to allegations of discrimination, harassment, sexual harassment or victimisation. But where does this leave the use of NDAs in the workplace, and what do employers need to be aware of moving forward. We explore the new rules, together with the key takeaways for employers.

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NDAs have long been used by employers as a legitimate tool to protect its business interests, usually during workplace disputes involving employees. They enable employers to restrict the disclosure of specific sensitive, commercial or confidential information. However, they have also proved controversial in recent years due to their use in situations where an employee has been on the receiving end of inappropriate or unlawful behaviour. Sometimes known colloquially as ‘gagging clauses’, there has been growing concern and recognition of this fact, with some countries taking action.

In Ireland, proposals to introduce restrictions on the use of NDAs have been on the table for some time. The Irish Government published a report on the prevalence and use of NDAs in discrimination and sexual harassment disputes in 2022, and plans for legislation to be introduced have been announced on different occasions and in different forms since then. The Maternity Protection, Employment Equality and Preservation of Certain Records Act 2024 (the ‘Act’) was finally passed at the end of October 2024 and came into operation on 20 November following a commencement order. It introduces a general ban on the use of workplace NDAs in certain situations.

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The Act amends the Employment Equality Acts in Ireland by introducing a general ban on the use of NDAs by employers with prospective, current or former employees where there have been allegations of discrimination, harassment or sexual harassment either at the workplace or during the course of their employment. If an employer does enter into such an NDA with an employee, it will be deemed null and void.

Separately, the Act also amends existing maternity leave rights by providing for the postponement of maternity leave for a period of between five and 52 weeks for those who require treatment for a serious medical reason which requires necessary medical intervention.

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This leads to the question, are there any situations where an NDA can still be used in an employment context?

There are two limited exceptions where an employer may still be permitted to enter into such NDAs with employees as follows:

• Mediated Agreements – The new restrictions do not apply where the NDA is a term of a settlement arising from a Workplace Relations Commission (‘WRC’) mediation. Where a complaint is resolved through mediation in the WRC, the agreement may include such an NDA provided it complies with relevant provisions of the Workplace Relations Act 2015 or the Equal Status Act 2000. This requires that the terms of the agreement be documented in writing and signed by both parties, with copies retained by each party for record-keeping.

• Excepted NDA – The concept of an ‘excepted NDA’ has been introduced by the Act and provides that employers can enter into such NDAs provided it is at the request of the employee and, prior to entering into the agreement, the employee has received independent legal advice in writing which is provided for at the reasonable expense of the employer.

When drafting the NDA employers are required, insofar as possible, to use clear language that is easily understood and to ensure that the NDA is in an accessible format, particularly where an employee has a disability. To qualify as an ‘excepted NDA’, it must:

• be in written form;

• be of an unlimited duration (unless the employee specifies otherwise);

• provide that the employee can withdraw from the NDA without penalty within 14 days after the NDA is signed; and

• provide that the agreement does not prohibit the making of relevant disclosures to one or more listed persons, where at the time of the making of the disclosure, the person concerned is acting in the course of their office, employment, business, trade or profession. Listed persons include Garda, lawyer, medical practitioner, mental health professional, Revenue, Ombudsman, trade union official or such individual as may be specified in the agreement.

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The new restrictions do not apply to the settlement of disputes which are unrelated to allegations of discrimination, harassment or sexual harassment or victimisation, or to NDAs used pre-emptively in employment agreements such as those protecting trade secrets, intellectual property or other confidential business information.

However, in all cases where an employer is entering into a settlement agreement with an employee containing any confidentiality, non-disclosure and/or non-disparagement clauses, the employee should be advised to seek independent legal advice and given the opportunity to obtain such advice. The employer should ensure that the employee understands the implications and effect of entering into the agreement and of any confidentiality, non-disclosure and/or non-disparagement clauses. The employee also should not be placed under any duress or coercion to sign the agreement and should be free to choose whether to sign the agreement or not.

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The new NDA restrictions represent a significant shift toward greater employee protection and transparency in situations relating to allegations of discrimination, harassment, sexual harassment or victimisation which is to be welcomed. However, they also potentially add a further level of complexity to settlement negotiations with employees, particularly if the employee is unrepresented and does not suggest signing an NDA themselves.

Given the public nature of the WRC, we expect to see the continued use of NDAs so employers will need to bear these developments in mind when contemplating the use of settlement agreements going forward.

Employers will also need to consider how they will address the 14-day cooling off period that now applies to any such NDA and should review their template settlement agreements to ensure that the confidentiality, non-disclosure and/or non-disparagement clauses are not in breach of the new restrictions.

*Lewis Silkin Ireland