Confidentiality clauses in severance agreements have “chilling effect” as concern expressed about their use by free schools

Janet Downs's picture
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“There are a considerable number of confidentiality clauses on people employed in that trust, which is totally against our view. Also, some – the head of one of the schools – left within six or nine months, subject to a confidentiality clause. We take a strong view on that.”

Margaret Hodge, Chair of Public Accounts Committee (PAC), 13 January 2014*

The head “who only survived a few months” was Annaliese Briggs who left a free school run by Future Academies, the academy trust set up by Lord Nash** before he became schools minister, shortly after the start of the school's first term. A second head in a Future Academies primary school resigned shortly afterwards. Hodge believed there was widespread use of confidentiality clauses, so-called "gagging" agreements, at this trust.

Hodge repeated that PAC took a “strong view” on the use of confidentiality clauses. She asked Peter Lauener, Chief Executive of the Education Funding Agency (EFA), if the EFA had a policy on the appropriateness of such clauses for employees in free schools financed with public money.

Lauener replied there was no particular requirement in the Academies Financial Handbook about severance arrangements and confidentiality. But the issue was very important, said Hodge, especially when there was “fragmentation and independence”: people should feel able to discuss anything that is in the public interest.

Whistleblowing legislation covers academy employees, said Chris Wormald, Permanent Secretary for the Department for Education (DfE). But Richard Bacon MP wasn’t convinced: he asked Wormald if he agreed confidentiality clauses in severance agreements have a “chilling effect”.

Academies are “autonomous institutions”, said Wormald. But they receive public money which is used to make severance payments, replied Bacon. The issue, then, said Hodge, was “whether or not confidentiality clauses inhibit people from talking about issues when they part company with a particular academy trust.”

Hodge summed by saying:

“It is going to be a growing issue in the education service, as it is in health. It has had a very bad effect in health on our ability to find out what has been happening in particular hospital trusts.”

It isn’t the first time the issue of confidentiality clauses has been aired in the context of free schools. The head of Barnfield Moorlands Free School was prohibited from discussing his departure by a confidentiality clause. In October, it was announced Barnfield Federation, which runs the free school, would be investigated by the EFA and the Skills Funding Agency (SFA) for possible “grade massaging” and the Federation’s “operational finances”. Five days ago, Skills Minister Matthew Hancock announced the Further Education Commissioner would be investigating the Federation over its "adequacy of financial controls".

*Uncorrected evidence downloadable here. The transcript has not yet been approved as a formal record of the oral evidence taken before PAC on 13 January. Neither witnesses nor MPs have had the opportunity to correct the record. I will amend this thread if the corrected evidence differs from anything discussed here.

**Lord Nash was named in the uncorrected evidence. Wormald said he would check the “particular accusations about Lord Nash” because he didn’t want them left on the record without checking first.
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Comments

Andy V's picture
Sat, 25/01/2014 - 12:35

Janet, the issue of confidentiality clauses sits outside the financial policy and handbooks. It is part of the legal process in drawing up either a compromise agreement or an out of court settlement to avoid a (public) hearing at an Employment Tribunal. Classically, these situations cover (a) confidentiality about both the reasons and any settlement figure and (b) the content of the agreed reference drawn up between employer and employee.

You are obviously aware of the media coverage the NHS received on this issue and thus it is not simply education.

It seems to me then that this is an intractable issue in that the 'confidentiality' works both ways: protecting both employer and more importantly the employee. That is to say, without the confidentiality agreement the majority of employees involved would find it nigh on impossible to move on and get another position.

agov's picture
Sun, 26/01/2014 - 08:10

If the PAC is concerned about confidentiality clauses it should have a look at local authorities where there use has been going on for decades and is as widespread as it is notorious.

But school governors with a business background have been known to point out that it is standard practice and very useful. In legitimate cases. Of which quite a lot seem to crop up in local authorities.

Brian's picture
Sun, 26/01/2014 - 08:53

Once again I'm amazed at your widespread knowledge of Local Authorities. Could you, just once, post your source and / or evidence?


Janet Downs's picture
Sun, 26/01/2014 - 08:56

Agov - Margaret Hodge is on to that. See here.


Brian's picture
Sun, 26/01/2014 - 09:19

I'll take that as evidence, thanks Janet.


Andy V's picture
Sun, 26/01/2014 - 10:41

The use of confidentiality clauses in settlements has been going on for decades across the entire spectrum of employment: private, public, SME and Corporate. Margaret Hodge and the PAC only latched onto this after a series of media reports involving the NHS and as I recall cases involving medical negligence cases in particularly followed by whistle blowers.

What is extremely difficult to do is filter the genuine cases from the excesses. That is to say, I feel it would unfair on the employee if were forced in every case to go through the full public and personal process of a court hearing rather than negotiate a settlement and agree to prescribed elements of confidentiality.

Janet Downs's picture
Sun, 26/01/2014 - 11:06

Andy - PAC has issued recommendations re the use of confidentiality clauses in severance agreements with the hope that such clauses are not misused to prevent disclosure of things which should be disclosed.


Andy V's picture
Sun, 26/01/2014 - 11:19

Thanks Janet. It's reassuring to know that our august politicians can think passed the end of their noses when scenting blood on a high profile issue.


agov's picture
Mon, 27/01/2014 - 12:18

Thank you Janet.

Good for her.

agov's picture
Mon, 27/01/2014 - 12:23

See Brian - it's quite easy.

Does this count? -

http://www.bbc.co.uk/news/uk-24723404


I would offer to post lots of off-topic links in future LSN postings as things pop up in order to assist you with all this general knowledge you demand but LSN might see that as too much. I'll look out more any especially juicy examples and try to slip things in surreptitiously without enraging Janet.

Andy V's picture
Mon, 27/01/2014 - 12:31

agov, do you really think this counts? Are you seriously suggesting that this high profile and media exhausted case is in anyway comparable to the context of confidentiality clauses? The Shoesmith issue arose because of alleged unfair dismissal, and I quote:

The Court of Appeal concluded Ms Shoesmith had been "unfairly scapegoated" and her removal from office in December 2008 by the then Children's Secretary Ed Balls had been "intrinsically unfair and unlawful".

Whereas the real issue Margaret Hodge and the PAC were highlighting were the implied numerous cases whereby both the reasons and amount agreed are kept confidential.

Apologies if I cause any offence, it is not my intention to, rather I offer this as a factual observation: in citing this case you are clutching at straws.

Brian's picture
Mon, 27/01/2014 - 12:53

Sorry agov but Janet providing some evidence doesn't mean your usual generalised statements about schools, LAs and education consultants and advisers have any validity whatsoever. I am not opposed to any evidence which goes against what I believe to be the case, but when generalised statements are presented as fact I'll continue to ask for evidence.


agov's picture
Tue, 28/01/2014 - 09:15

Yes Andy, I do. It is of course just the tip of an iceberg as LAs making large payoffs to senior staff, with confidentiality clauses, has been a public concern for years.

As you indicate the Shoesmith case was exceptional in that much information was already known (though obviously not all as a confidentiality clause was still utilised). It is more usual for the public (the people who provide the money for LAs to throw around) are normally given no information at all.

At last MPs have decided to investigate. Long overdue.

Andy V's picture
Tue, 28/01/2014 - 17:13

Because of the preceding court case and media coverage the only thing that the confidentiality clause put a lid on was the exact figure paid out.


agov's picture
Wed, 29/01/2014 - 11:18

Others have a rather different perception of the matter -

http://www.telegraph.co.uk/news/uknews/baby-p/10417353/Nick-Clegg-hits-o...

Andy V's picture
Wed, 29/01/2014 - 11:32

Quite so and only to be expected.

However, the thrust of Clegg's position was that the amount was too high and rewarded failure. This formed basis of his ire at that confidentiality clause. That said, the issue here was not the 'failure' but the manner of the dismissal which was abrupt and summarily executed in a high profile manner in the public domain. In terms of employment law there are procedures and process to follow and our 'Ed' well and truly ballsed them all up. This then was the foundation of the case not 'sweeping things under the carpet'. Shoesmith may well have been in charge but that didn't automatically mean she should be summarily and publically sacked. When was the last time a Cabinet or Prime Minister was publically sacked (e.g. Blair and Iraq).

agov's picture
Thu, 30/01/2014 - 13:18

The fact that Balls was legally in the wrong was obvious, ridiculed, and discussed on select websites as soon as he did it.

Clegg was reflecting public concern that a confidentiality clause was used even in so public a case.

Doesn't alter the fact most usage occurs without the public knowing any details of even why someone is leaving their post at all, nor how much the payoff is, nor why they then get to walk into another senior LA job, sometimes for them to then get another leaving payoff with another confidentiality clause.

Andy V's picture
Fri, 31/01/2014 - 08:16

Agov, I get the impression that you (a) think that compromise agreements and associated confidentiality clauses are common place and (b) that there should be not circumstances where confidentiality should apply. The first issue should be resolvable by dint of you sending a FOI request to each LA seeking basic details (e.g. simply how many were transacted in a given period). If I have accurately understood your position the second issue demonstrates a lack of mindful sensitivity to those involved in genuine cases that if forcibly made public has the very real potential to wreck their employment prospects and life.


agov's picture
Sat, 01/02/2014 - 13:43

Not quite.

I don't know how commonplace they are. Possibly I could contact every LA but neither I nor any other member of the public should have to do that (and am currently far too busy helping school clear up the mess after another dump of 'help' from the LA).

I have already made clear in another post that confidentiality clauses may indeed be entirely legitimate and justified. Certainly schools make use of them from time to time but not necessarily with loadsadosh attached. Businesses also make use of them but they are spending their own money. I'm always concerned with the future job prospects of staff even if their departure is appropriate and entirely justified.

You appear to be moving close to saying the PAC has no reason to take a look at what LAs have been getting up to.

Andy V's picture
Sat, 01/02/2014 - 16:15

Agov, exactly, neither do I know how commonplace they are and on that basis alone I suggest it is unwise and unfair the promote views that indicate they are rife across LAs.

The core focus of the PAC seems, and rightly so, to have been the NHS. This was rooted in the fact that the media and FOI requests had uncovered a culture of confidentiality agreements attached to payout for clinical negligence. I have no issue whatsoever with PAC scrutinising any area. Indeed, I would welcome investigations into private companies to see the extent of public interest cover-up that may be taking place.

See my interactions on this on 26 Jan 14 (e.g. 10.41 and 11.06 and 11.19), which are wholly consistent with my last comment to on protecting the rights of those involved in genuine cases.

I would also venture that the amount of money involved in a settlement is (a) governed my employment law (b) a reflection of the strength of an appellants case and (c) a reflection of the impact that would arise from a hearing in a public court. So your comment on "loadasdosh" is perhaps a tad trite and throw away.

PS The last I research this type of thing the average pay out was £3-10,000 dependent on the nature of the case

agov's picture
Sun, 02/02/2014 - 12:31

They have been rife enough -

http://www.telegraph.co.uk/news/politics/council-spending/9514334/Counci...

from which, "Ministers raised concerns over the scale of the payments, and warned councils against their “casual attitude to spending.” "

Seems the PAC still thought it worth having a look at payments and the continued use of confidentiality agreements.

But no real surprise that MPs prefer not to dwell too long on the antics of their own councillors.

A thorough investigation into public interest cover-up in all areas would be fine with me.

Andy V's picture
Sun, 02/02/2014 - 13:17

Agov, you are trying to compare apples and pears.

Gold goodbye redundancy payments in excess of the legal requirement are in no way the same as confidentiality clauses linked to payouts in either the NHS negligence cases or those involving employment law (e.g. unfair dismissal)

agov's picture
Mon, 03/02/2014 - 09:27

The link was about payments but it is likely that many of them would have had confidentiality clauses. Feel free to FoI them individually to check if you wish.

It is not me who is trying to define the problem away by excluding anything too inconvenient.

Andy V's picture
Mon, 03/02/2014 - 09:58

Agov, the link is about confidentiality clauses and how they are used in relation to severance agreements. This is both distinctly and discretely different from redundancy payments. There have been high profile cases of the latter in the media recently involving the BBC and the perennial culprit in financial circles is rarely out of the news.

What the PAC were driving at was not so much the amounts involved - these should be arrived at using the appropriate legal framework - rather the central concern was what was being covered up by the confidentiality clause? What the reason for the severance of employment? What was the nature of medical negligence? These are the potentially chilling effects of confidentiality orders.

In relation to redundancy payments that exceed the statutory guidelines the question that must be asked is why? The BBC case exemplified this and in the pursuit of answers neither the media nor the select committee encountered obstruction in the form of confidentiality clauses.

Your parting snide snipe "It is not me who is trying to define the problem away by excluding anything too inconvenient" is highly revealing about your lack of grasp of the situation and inability to accept that you strayed from one issue into another.

agov's picture
Tue, 04/02/2014 - 06:52

Actually, 'the link' I referred to at 9.27 am 3/02/14 was the one most recently under discussion i.e. the one I referred to at 12.31 pm 2/02/14 and discussed by you at 1.17 pm 2/02/14.

What I said was that use of confidentiality clauses by LAs should be scrutinised in more detail. At no point did I say they should be examined in isolation.

You told us that your own unrevealed research into a 'type of thing' you didn't define showed a minimal problem; then you dismissed figures from a public source regarding 'golden goodbyes' of hundreds of thousands of pounds.

You dismissed Clegg's concerns by claiming that the "thrust of Clegg’s position was that the amount was too high and rewarded failure" when actually it was clear that his remarks primarily related to secrecy.

On the basis of nothing you chose to share, you claimed the Shoesmith agreement kept secret nothing but the exact figure.

Apparently you now want to claim that LA largesse in other areas could not possibly apply to payments involving secrecy.

Andy V's picture
Tue, 04/02/2014 - 14:50

I will address the issues in the order you raise them:

“What I said was that use of confidentiality clauses by LAs should be scrutinised in more detail. At no point did I say they should be examined in isolation.” Where did I say you said they should?

“You told us that your own unrevealed research into a ‘type of thing’ you didn’t define showed a minimal problem; then you dismissed figures from a public source regarding ‘golden goodbyes’ of hundreds of thousands of pounds.” Show me where I said the incidence was “minimal” or where I “dismissed figures from a public body”. Indeed my opening comments made at 01/02/14, 4.14 pm are wholly contrary to the disingenuous assertions you make against me. My unrevealed source, okay, you clearly can’t surf the net for yourself so here is the 2013 UK document for you to review. I’ll even give you a helping hand try Table 4.3 on page 23 https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...

"You dismissed Clegg’s concerns by claiming that the “thrust of Clegg’s position was that the amount was too high and rewarded failure” when actually it was clear that his remarks primarily related to secrecy." You display such a high-handed tone when putting words/spin onto my lips. I most plainly and clearly "dismissed" nothing. I did say that "the thrust of Clegg’s position was that the amount was too high and rewarded failure." Permit me to quote from the article that you produced as evidence "Speaking to LBC Radio 97.3 Mr Clegg said: “The fact that this is happening behind this cloak of secrecy does worry me. I’m just really uncomfortable about the whole thing, seriously uncomfortable. I doubt what I say is going to be listened to by Sharon Shoesmith, but I just don’t think we should be in a culture where apparent failure can be rewarded on this scale or made up for on payouts of this scale and that that should all happen in secret. It’s got to happen in the open.” If you can be bothered to read this you will see explicit reference to rewarding failure and the scale of the [reported] award.

"On the basis of nothing you chose to share, you claimed the Shoesmith agreement kept secret nothing but the exact figure." Oh, dear you clear have either a short or highly selective memory on the tragic Baby P case. This as plastered wall to wall over every form of media at the time and as such the nature of Ed Balls' case against Ms Shoesmith was common knowledge to all. Thanks to our Ed there was no way Shoesmith could have had a balanced let alone impartial hearing with regard to any part she may have directly or indirectly played in the tragedy. Indeed, it was this that elevated the case out of straightforward unfair dismissal - usually limited to a maximum 12-months’ salary (Google this is doubt it) - and placed in a different bracket 'discrimination' which if found has no upper limit and rests with the strength of the evidence and discretion of the tribunal Judge(s).

"Apparently you now want to claim that LA largesse in other areas could not possibly apply to payments involving secrecy." Just where did I say this? I did say that redundancy payments are wholly different to severance payments made as part of an unfair dismissal case. So, yes, these two issues are apples and pears and cannot simply be conflated to suit your argument.

Get a grip! The issue is about confidentiality clauses in severance agreements relating to Free Schools. It follows that this is about termination of employment contracts and falls to employment law. It is a classic that MPs – the PAC and DPM – bemoan the use of confidentiality clauses that form an integral part of the legally binding framework in employment law pertaining to unfair dismissal when it is they as the executive that have the sole power to make, amend and withdraw legislation.

One final request, please refrain from misrepresenting what I say and stop putting words onto my lips that I never used.

agov's picture
Wed, 05/02/2014 - 11:17

I will address the issues in the order you raise them: “What I said was that use of confidentiality clauses by LAs should be scrutinised in more detail. At no point did I say they should be examined in isolation.” Where did I say you said they should?

I was responding to you declaring what is or isn’t relevant. Something you again seek to adjudicate in this latest posting of yours.

“You told us that your own unrevealed research into a ‘type of thing’ you didn’t define showed a minimal problem; then you dismissed figures from a public source regarding ‘golden goodbyes’ of hundreds of thousands of pounds.” Show me where I said the incidence was “minimal” or where I “dismissed figures from a public body”.

You were obviously suggesting the sums involved are small. When I linked to a report stating larger amounts you brushed it aside. As the words you quote clearly show, I referred to a public source i.e. the Telegraph report I linked to; not a ‘public body’ as that might be to overestimate the worth of the Telegraph.

Indeed my opening comments made at 01/02/14, 4.14 pm are wholly contrary to the disingenuous assertions you make against me. My unrevealed source, okay, you clearly can’t surf the net for yourself so here is the 2013 UK document for you to review. I’ll even give you a helping hand try Table 4.3 on page 23 https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...

The clue is in the name of the document. Let me help: “This report summarises the findings of a study of claimants who had been successful at Employment Tribunal and were awarded sum of money by the Tribunal. The survey covered award payment and reasons for non-payment, as well as the use of different enforcement routes available in England/Wales and Scotland.” So that would be not just the ones relating to LAs, not just the ones involving confidentiality, and not the ones made by agreement. Which is to say, irrelevant. The table you specify is only about the amounts awarded by employment tribunals. Your figure of £3000 - £10000 doesn’t appear to feature in the table.


“You dismissed Clegg’s concerns by claiming that the “thrust of Clegg’s position was that the amount was too high and rewarded failure” when actually it was clear that his remarks primarily related to secrecy.” You display such a high-handed tone when putting words/spin onto my lips. I most plainly and clearly “dismissed” nothing. I did say that “the thrust of Clegg’s position was that the amount was too high and rewarded failure.” Permit me to quote from the article that you produced as evidence “Speaking to LBC Radio 97.3 Mr Clegg said: “The fact that this is happening behind this cloak of secrecy does worry me. I’m just really uncomfortable about the whole thing, seriously uncomfortable. I doubt what I say is going to be listened to by Sharon Shoesmith, but I just don’t think we should be in a culture where apparent failure can be rewarded on this scale or made up for on payouts of this scale and that that should all happen in secret. It’s got to happen in the open.” If you can be bothered to read this you will see explicit reference to rewarding failure and the scale of the [reported] award.

Indeed so: it referred to the amount as well as the secrecy. You didn’t quote the other relevant bits –
“We shouldn’t have reward for failure and whilst this is a matter legally of course between Haringey Council and Sharon Shoesmith, the fact that this settlement appears to be done in secret so that we don’t really know very much about it, I think only compounds people’s bewilderment about this.
“The Coalition Government doesn’t think we should be having secret, confidential payouts like this. It should be out in the open. This is taxpayers’ money after all.”

So that would be mostly about secrecy.



“On the basis of nothing you chose to share, you claimed the Shoesmith agreement kept secret nothing but the exact figure.” Oh, dear you clear have either a short or highly selective memory on the tragic Baby P case. This as plastered wall to wall over every form of media at the time and as such the nature of Ed Balls’ case against Ms Shoesmith was common knowledge to all.

What I remember is that there were plenty of comments on some websites claiming that the confidentiality clause was covering up other facts. Obviously I don’t know whether there was any merit in such claims but neither do you. It’s a secret.

Thanks to our Ed there was no way Shoesmith could have had a balanced let alone impartial hearing with regard to any part she may have directly or indirectly played in the tragedy. Indeed, it was this that elevated the case out of straightforward unfair dismissal – usually limited to a maximum 12-months’ salary (Google this is doubt it) – and placed in a different bracket ‘discrimination’ which if found has no upper limit and rests with the strength of the evidence and discretion of the tribunal Judge(s).

I have already commented on the mistake (assuming it was really an unintentional breach of proper procedure) by Balls.

“Apparently you now want to claim that LA largesse in other areas could not possibly apply to payments involving secrecy.” Just where did I say this? I did say that redundancy payments are wholly different to severance payments made as part of an unfair dismissal case. So, yes, these two issues are apples and pears and cannot simply be conflated to suit your argument.


Get a grip! The issue is about confidentiality clauses in severance agreements relating to Free Schools.

No, the issue is extravagant LA spending especially on senior staff (though that could be widened to some of their other spending). It is not merely about the subset involving confidentiality clauses. I was only trying to make sense of your postings.


It follows that this is about termination of employment contracts and falls to employment law. It is a classic that MPs – the PAC and DPM – bemoan the use of confidentiality clauses that form an integral part of the legally binding framework in employment law pertaining to unfair dismissal when it is they as the executive that have the sole power to make, amend and withdraw legislation.

Not necessarily just about legislation. Nor have they (or I) said confidentiality clauses are in principle illegitimate. It’s the use that LAs may be making of them, as part of their gleeful spending of other people’s money, especially on themselves and their more highly paid staff, which concerns some people.

One final request, please refrain from misrepresenting what I say and stop putting words onto my lips that I never used.

That’s your interpretation, not my intention.

Andy V's picture
Wed, 05/02/2014 - 11:35

Agov, I wish you every happiness is your own little world filled with unsubstantiated and unevidenced fantasies and paranoias may they help you feel fulfilled and relevant.


agov's picture
Sun, 09/02/2014 - 09:07

Sorry I've been neglecting you Andy. Duty called.

Thanks for your kind wishes.

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