Can an employer include a clause in the contract stipulating that employees can’t disclose their salary details to other colleagues? Esther Smith, partner at Thomas Eggar, and Martin Brewer, partner at Mills & Reeve, advise.

The question:

We currently have the following clause in our terms and conditions of employment:

“You shall not, during or (without limitation of time) at any time after the termination of your employment, disclose details of your remuneration to any fellow worker or colleague in this employment. Any breach of confidence in this manner will be deemed a breach of contract.”

I seem to recall that there has been a change in employment legislation that now outlaws this clause. Am I correct, and if so, what is the legislation that covers it?

Legal advice:

Esther Smith, partner, Thomas Eggar

There is nothing to prevent you putting such a clause in an employee’s contract, although in reality the consequences of an employee acting in breach of this may be limited.

You could instigate disciplinary proceedings against an employee for breaching this clause, and the more ‘damage’ done by their breach the easier to justify taking disciplinary action. Even if you did go down this route, the employee may say that the reason they breached the provision was because they had real concern that there was a potential equal pay claim, or some form of discrimination happening.

Both these issues would be covered under the Public Interest Disclosure Act 1998 as protected disclosures (as the definition is widely construed) so if an employee suffers any detriment or dismissal as a result of raising these concerns they may look to bring a claim.

It is understandable that an employer would want employees to keep details of their salaries etc. confidential but they should be aware that in reality all employees will talk and such information will leak out. In an ideal world an employer should not be afraid of this, so long as their pay structure is fair and non-discriminatory.

Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information, please visit Thomas Eggar.

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Martin Brewer, partner, Mills & Reeve

No, there is no law against such a clause but you have to ask, particularly after the employment has terminated, what is the point of such a restriction? During employment a breach of this clause will obviously be a breach of contract (breach of this express term) and might, at a pinch, also be a breach of the implied term of mutual trust and confidence and, if so, might allow a dismissal. But what happens if after the employment has terminated the ex-employee breaches the clause? Are you going to sue? What would your loss be? So by all means keep the clause but don’t take it too seriously.

Martin Brewer can be contacted at [email protected]. For further information, please visit Mills & Reeve

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