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Farrer & Co | “Gagging” an ex-employee – Part 1: Can you do it?

Not a day seems to pass without yet another story about Donald Trump hitting the news. In addition to him bragging this week about the size of his nuclear button, we have had a row explode very publicly between him and his former strategist, Steve Bannon. Bannon is alleged to have violated a non-disclosure agreement by disclosing confidential information and making disparaging (and in some instances apparently defamatory) statements about Trump and his family. Explosive claims, allegedly made by Bannon, include that Trump's own team was shocked and horrified by his election win; his wife, Melania, was in tears on election night; and that, his daughter, Ivanka often mocks her father's "comb-over" hairstyle to friends.

What can an employer do to protect itself from a rogue ex-employee?

This latest new story has got me thinking about how an employer can protect itself from an ex-employee breaching confidentiality or making derogatory comments about it. So, here is a reminder of the things an employer can do to protect itself:

1. Confidentiality clause in the employment contract – without something expressly set out in the employee's employment contract, the law will only go as far as to prevent an ex-employee from exploiting the employer's trade secrets. It will not protect an employer's broader confidential information once the employee has left. It is therefore very important to set out in clear terms in the contract the extent of the employee's obligations, listing the specific type of information that is covered. If possible it is also helpful to describe the damage that would be suffered as a result of misuse of the information.

2. Confidentiality clause in a settlement agreement – a confidentiality or "gagging" clause in a settlement agreement may repeat or enhance the existing obligations set out in the employment contract. However, it may also extend to keeping confidential the terms of the agreement, or even the fact it exists at all (to avoid any suggestion that the employer is admitting any fault on its part). In some circumstances, the employer may want to prevent the employee from discussing the circumstances surrounding their termination or any grievance they had raised. The settlement agreement may also require the employee to withdraw any grievance or data subject access request made.

3. Non-derogatory comments clause – it is common for settlement agreements to include a clause requiring the parties to refrain from making derogatory comments about each other. In the case of the employer, it usually limits its obligation to taking reasonable endeavours to prevent staff from making derogatory comments about the employee (as there is a limit to how far an employer can control its staff).

4. Agreed announcement – if the parties are allowed to comment on the employee's termination of employment, it may be helpful to have an announcement agreed between them explaining the departure. The parties may also agree on who will make the announcement, how and when it will take place. The terms of a reference can also be agreed.

Whistleblowing legislation voids any provision in an agreement preventing an employee from making a protected disclosure in the public interest. However, it may be that in some instances the way a settlement agreement has been presented, particularly where there is an explicit threat of litigation in the event of breach of confidentiality, has persuaded an employee not to complain about matters of public interest. This is perhaps partly why we have seen a lot of negative publicity in recent years about confidentiality clauses in employees' settlement agreements. So, even if you are acting within what's allowed in law, it is worth making sure that in offering settlement terms with a "gagging" clause you are not seen to be trying to prevent disclosure of matters of public interest.

Trump responded to Bannon's comments by saying he had "lost his mind". I am sure many employers will have felt the same about certain members of staff, but sadly taking the Trump approach is unlikely to be advisable or indeed terribly effective in most normal situations, so in my second blog piece on "gagging" ex-employees – here – I look further at more constructive ways of responding to a breach.

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