The use of Confidentiality Clauses and Derogatory Statement Clauses within Settlement Agreements: The rights and responsibilities of NHSScotland employees and employers

Section 6. What do I need to do when entering into a settlement agreement?

As an employee?

• Seek advice from an appropriate independent advisor as early as possible about the proposed terms and conditions of your settlement;
• make sure, with the assistance of your independent advisor, that you fully understand the effect of all of the terms before agreeing and entering into a settlement agreement;
• make sure, in discussion with your independent advisor, that the statutory requirements for settlement agreements to be legally binding are met (see Section 1);
• be clear whether or not you wish to have a confidentiality clause and/or derogatory statement clause inserted into your settlement agreement, and, if so, be clear of your reasons for this;
• if you decide that a confidentiality clause and/or derogatory statement clause is to be included in your settlement agreement, ask your independent advisor to ask your employer to record the reasons for the inclusion of the clause(s) and copy this to you;
• make sure that you know your rights under PIDA (see Section 5); and,
• be aware that regardless of whether or not a confidentiality clause is included in your settlement agreement, you have a responsibility to comply with the Data Protection Act 1998, any professional obligations, and confidentiality within your terms and conditions of employment.

COT3

• Whilst the principles outlined above also apply to a COT3, it should be noted that independent advice is not required, but employees should consider obtaining legal advice from a trade union representative, solicitor or other legal advisor (see Section 2).

As an employer?

• Consult the Scottish Government prior to offering or entering into any settlement agreement and set out your intended approach to confidentiality (in line with the Strengthened process for Settlement Agreements highlighted in the introduction to this Guidance);
• make sure that the employee knows that they must seek advice from an appropriate independent advisor as early as possible about the effect of a settlement agreement;
• not include a confidentiality clause and/or derogatory statement clause within any settlement agreement unless it is explicitly agreed with the employee that such a clause should be included, and, if this is agreed, be clear of the reasons for this;
• if the employee decides that a confidentiality clause and/or derogatory statement clause is to be included in their settlement agreement ensure that the reason for this is recorded in a clear and transparent manner and copied to the employee;
• where it is agreed that a confidentiality clause and/or derogatory statement clause is appropriate, use as a start point the draft style of wording in the confidentiality clause and derogatory statement clause contained within this Guidance (Annex A), and ensure insertion of sub-clauses 1.5 and 1.6, unchanged, which makes clear the employees' rights under PIDA;
• make sure that the employee has access to information on protections afforded to whistleblowers and that they know their rights under PIDA;
• ensure that the employee has been given a reasonable amount of time to consider the proposed conditions of the settlement agreement (including any confidentiality clause and/or derogatory statement clause) - the ACAS Code of Practice on settlement agreements specifies a minimum of 10 calendar days unless both employer and employee agrees otherwise;
• make clear to staff that regardless of whether or not a confidentiality clause is included in their settlement agreement, they have a responsibility to comply with the Data Protection Act 1998, any professional obligations, and with confidentiality provisions within their terms and conditions of employment;
• make sure that before agreeing a settlement agreement with an employee, legal advice has been sought on behalf of your Health Board and that the statutory requirements for settlement agreements to be legally binding are met (see Section 1); and,
• if a confidentiality clause and/or derogatory statement clause has been included in the finalised settlement agreement, you must confirm to the Scottish Government (in line with the guidance on the Strengthened process for Settlement Agreements), that wording has been discussed and agreed with the employee.

COT3

• Whilst the principles outlined above also apply to a COT3, it should be noted that independent advice is not required (see Section 2).

A letter template for employers to send to employees considering entering into a settlement agreement is provided at Annex B.