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Growth in ‘gagging clauses’ to keep secrets of the rich and famous

Growth in ‘gagging clauses’ to keep secrets of the rich and famous

Published: 30 January 2018

Employers are increasingly turning to ‘gagging clauses’ to ensure staff protect the secrets of the rich and famous.

Legal experts say exclusive hotels, spas, bars and restaurants are increasingly adding additional clauses or ‘side agreements’ for staff that go above and beyond those found in any standard employment contract.

Non-disclosure agreements (NDAs) or confidentiality (‘gagging’) clauses are often found in executive-level employment contracts and commercial contracts to protect legitimate business interests.

They are now increasingly being used as standard business practice to protect, primarily, the privacy of customers and clients, to ensure they continue to use the business in question.

Andrea London, head of employment at Fletcher Day, said:

“Businesses which service the needs and wants of the rich and famous, are often required by those clients to ensure any staff with whom they have contact have signed specific confidentiality or non-disclosure agreements (NDAs).

“Employers are becoming increasingly aware of the need to protect the privacy of their wealthy or celebrity clientele; not least from staff members who could be tempted to seize financial advantage of their position and the lucrative market in selling gossip, information or covertly obtained images.

“It is almost standard practice now, for example, for employer businesses such as luxury hotels, transport or spas to insist on additional levels of protection, above and beyond the ‘usual’ confidentiality clause found in a standard employment contract, to assure their wealthy clients of a better chance of privacy.  

“As a result, we are seeing more NDAs and confidentiality agreements being used, not least to highlight the extent and importance of such obligations, more and more often.  There has apparently been a significant increase in demand for NDAs and predictions of yet further growth in their use.”

NDAs are in the spotlight following an investigation by the Financial Times which revealed allegations of sexual harassment by hostesses at an annual charity black-tie dinner popular with the rich and famous at the Dorchester Hotel.

A detailed account of the Presidents Club Dinner by an undercover FT reporter alleged groping, harassment and lewd behaviour by guests. Female staff working at the event were allegedly told to wear sexy shoes and black underwear, and sign a NDA before starting their shift. The Charity Commission has since opened an urgent probe.

“Non-disclosure agreements would not necessarily prevent a harassment claim being made and we would expect the courts to take a dim view of employers attempting to use these to cover up serious allegations such as these,” added Andrea London.

 

For more information or advice on NDAs or any other employment issue, please contact Andrea London or one of our Employment Team.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.