Too many employers use gagging clauses to stop whistleblowers speaking out about poor practice, say MPs

The use of confidentiality clauses to stop public sector employees from voicing concerns about patient or child safety is “simply outrageous” and must be stopped, the Committee of Public Accounts said today.

In its report on the use of compromise agreements in the public sector, the committee said it had heard “shocking examples of using taxpayers’ money to pay off individuals who have flagged up concerns”.

Margaret Hodge MP, who chairs the committee, said: “We are deeply concerned about the use of compromise agreements and special severance payments to terminate employment in the public sector.

“It is clear that confidentiality clauses may have been used in compromise agreements to cover up failure, and this is simply outrageous.

“It is vital that people feel free to speak out to help prevent terrible tragedies or even deaths, and protecting the reputation of an organisation, such as the NHS, at the expense of public safety is unacceptable.”

The report looks at some high-profile cases where compromise agreements have been used to try to cover up wrongdoing or poor management – and to discourage whistleblowing.

In the Peter Connelly (Baby P) case, for example, a consultant working for Haringey Primary Care Trust (PCT) had flagged up concerns to senior management about understaffing and poor record keeping at St Ann’s clinic, part of Great Ormond Street Hospital.

Baby P died in 2007, just three days after being seen by a locum doctor at the same clinic.

It later emerged that, after the consultant raised her concerns, the PCT offered her £80,000 to leave. When this was refused, the offer was increased to £120,000 and the trust advised her to sign a draft compromise agreement and take the money, or face dismissal.

The consultant refused and was eventually reinstated.

It is not uncommon for public and private sector bodies to use compromise (or settlement) agreements to terminate an employment contract and there is usually an associated special severance payment.

Public sector employers can decide whether to include confidentiality clauses, whereby the employee agrees to keep the facts surrounding their termination confidential. Around 88% of compromise agreements are thought to include a confidentiality clause, according to research by the National Audit Office.

A confidentially clause cannot legally be used to prevent someone from raising issues under the Public Interest Disclosure Act – otherwise known as whistleblowing.

“But people who have been offered, or accepted compromise agreements have clearly felt gagged,” said Hodge.

She added: “There is simply no way of knowing how many of these special severance payments have been made across the public sector – or whether the compromise agreements have been used to ‘gag’ employees. To date neither the Treasury nor individual departments have monitored this adequately.

“The end result here is the risk that public bodies reward failure just to avoid attracting unwelcome publicity. No one has taken responsibility for identifying early warnings of service failure.”

Bridget Robb, chief executive of the British Association of Social Workers, said: “Social workers have an ethical duty to advocate on behalf of service users, even if doing so puts them at odds with their employers.

“However, we need to acknowledge the risks whistleblowers face. In some cases it can mean the end of their careers.

“The current debate in the health service about developing the concept of a duty of candour and about how whistleblowers are treated across organisations needs to be extended to social work and social care, with employers held to public account for the way in which they put good practice and accountability at the core of their work.”

Government departments and their arm’s-length bodies must seek the Treasury’s approval in advance of making a special severance payment, but the Treasury does not approve payments by, for example, local government, the police, the BBC, and private sector providers of public services.

The committee said the Treasury must now take a more robust approach to the use of compromise agreements by the wider public sector and its private contractors.

The report’s recommendations include:

• The Cabinet Office should issue guidance on the appropriate use of compromise agreements and special severance payments.
• This guidance should explicitly require public sector organisations to secure approval from the Cabinet Office for all special severance payments and associated compromise agreements where they relate to cases of whistleblowing.
• Setting out standard terms and conditions to be used in compromise agreements, including a provision stating that nothing within the agreement shall prejudice employees’ rights under the Public Interest Disclosure Act.
• The Treasury should make clear what it expects from private sector employers when they enter into contracts to deliver publically funded services. This should include the expectation that staff working for private sector contractors are encouraged to raise matters of public interest.