Concern over use of ‘gagging clauses’ by local authorities
CONCERNS have been raised about the use of controversial “gagging clauses” by local authorities in Wales.
“Non-disclosure agreements” (NDAs) are signed by departing staff members in return for severance payments.
They oblige both the employer and the former worker to stay silent about anything that may reveal details about why the employment came to an end.
Such agreements haven’t been used by the Welsh Government for at least a decade, but most Welsh councils continue to use them.
Caerphilly Independent councillor Nigel Dix, whose authority uses NDAs more frequently than any other in Wales, said he was extremely concerned by what he had learned.
A series of Freedom of Information requests had shown that a total of 597 “settlement agreements” were signed by councils in Wales between 2016 and 2019.
Most of the settlement agreements contained non-disclosure clauses.
The total paid out to leaving employees amounted to £9,576,274 – an average severance payment of £16,041.
In Caerphilly, of the 199 settlement agreements, 124 contained confidentiality clauses.
Cllr Dix said: “I am extremely concerned about the high incidence of NDAs, especially in Caerphilly, where we have had a major pay scandal that has cost the council millions of pounds.
“The problem with NDAs is that they can be used to cover up misconduct by the employee or by the local authority. They are wholly out of order and should not be happening.
“As things stand they are not reported to elected councillors and we have no opportunity to ask questions about them.
“Having officers making decisions about other officers and their payoffs is not a healthy situation in my view. I think it should end. There needs to be much more openness.
“I think that NDAs should only be entered into in exceptional circumstances. They should be overseen by councillors, who should make the decisions.”
The existence of NDAs has long been a bone of contention in the Welsh public sector.
In 2003 Sir John Bourn, then the Auditor General for Wales, reported on a scandal involving irregular expenditure by the short-lived education quango ELWa.
In his report, Sir John expressed concern that confidentiality clauses had been imposed on 104 employers made redundant, contrary to the then Assembly Government’s policy.
Responding to the figures referred to by Cllr Dix, a Welsh Government spokeswoman said: “The use of NDAs by local authorities is a matter for those authorities.
“No NDAs have been used by the Welsh Government in relation to departing staff over the last 10 years.”
A Caerphilly council spokesman said: “These types of settlement agreements are common practice and are used by many employers to facilitate a mutual termination between an employer and employee.
“Latest figures show that the number of settlement agreements issued by the council have reduced significantly over the last three years when compared with the historic data provided by Cllr Dix.
“It is also important to note that they are only used when a robust business case has been completed to demonstrate their requirement and are, by their nature, designed to minimise the financial impact on the council. We will continue to carefully monitor the use of such agreements going forward.”
A spokeswoman for the Welsh Local Government Association said: “Individual councils will take their own decision to introduce NDAs where there is a clear business case to do so and in line with relevant employment law.
“The WLGA doesn’t provide guidance to council on these types of agreements as it is a matter for individual councils to decide and we do not collate the data.
“Such agreements are often used by employers to facilitate a mutual termination between an employer and employee.”