Committee calls for ban on NDAs in sexual harassment cases

A Treasury Committee report into sexism in the City calls for a ban on NDAs being used in sexual harassment cases, compulsory publication of salary ranges and an end to employers asking for salary history in the hiring process.

sexual harassment at work by male employer on female employee

 

A Parliamentary committee has called for a legislative ban on the use of Non Disclosure Agreements (NDAs) in harassment cases.

The Treasury Committee’s new report on sexism in the City also calls for an end to the ‘era of impunity’ in response to a ‘shocking’ prevalence of sexual harassment and bullying, and a culture which it says is ‘holding back women’ in the City.  

The Committee notes there have been incremental improvements since 2018, for example, a marginal increase in the representation of women in senior positions and a small reduction in the sector’s average gender pay gap, but says progress is still far too slow. 

The Committee’s recommendations include stronger protections for whistleblowers in sexual harassment cases, a ban on prospective employers asking for salary history, a legal requirement to include salary bands on job adverts, a reduction in the size threshold for gender pay gap reporting from 250+ to 50+ employees for firms in the financial services sector, a mandatory gender pay gap action plan and explanation of gaps; the dropping of extensive diversity data reporting and target setting and changes to the Women in Finance Charter, including strengthening the link between executive pay and performance on improving diversity. 

During the inquiry, MPs heard how NDAs are being misused in the sector to ‘cover up’ abuse, sexual harassment and discrimination – leaving victims silenced while perpetrators go unpunished.

The Committee also heard that firms’ internal whistleblowing procedures were inadequate, with HR teams prioritising the reputation of the business over the wellbeing of employees. This was backed up by evidence showing that 70% of whistleblowers within financial services were victimised, dismissed or felt resignation was the only option open to them. 

While MPs welcomed proposals by the Financial Conduct Authority and by the Prudential Regulation Authority to strengthen their regimes for tackling non-financial misconduct, including sexual harassment, members of the Committee recommend that the regulators drop costly proposals for businesses to report data and set targets on diversity. They say these proposals would not capture the many smaller firms that have some of the worst cultures and levels of diversity and could be treated by firms as another ‘tick-box’ exercise. The Committee thinks that boards and senior leadership of firms should take greater responsibility for improving diversity and inclusion because of the business benefits of doing so. 

Chair of the Treasury Committee, Harriett Baldwin said: “The UK’s financial services sector is the crown jewel of this country’s economy – admired by the international community and always takes pride in being ahead of the curve. 

“This well-paid sector will only be able to maintain its competitive advantage if it is able to draw on the widest possible pool of talent. 

“That’s why it’s so frustrating that efforts to tackle sexism in the city are moving at a snail’s pace.  

 “Firms must take responsibility for improving their culture. There have been several high-profile cases which show the existential risk to firms who don’t tackle sexual misconduct. We also know that more diverse organisations perform better, so inaction is not only immoral but bad for growth and business. 

“Regulators and the Government also have a role to play, but they need to think carefully about what will deliver the best outcomes and avoid introducing tick-box exercises.”



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