When should Non-Disclosure Agreements be used?

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A Non-Disclosure Agreement (NDA) is a legal contract used to prevent people from discussing confidential information. In employment law they are often parts of a contract, or sometimes a standalone contract between employees and their employer. 

Typically NDAs prevent employees and former employees from making information public, they can sometimes be referred to as ‘gagging orders’ or ‘confidentiality agreements’ or may be included within a settlement agreement when leaving employment.

Why use a Non-Disclosure Agreement?

NDAs have a valid use to protect commercially sensitive information such as inventions, ideas or anything that may damage a company’s reputation. They may be signed for instance by parties contemplating the sale and purchase of a business. 

The Women and Equalities Select Committee (WESC) has recently published a report addressing the issues and is specifically concerned by the use of gagging clauses to settle discrimination and harassment claims, arguing that it means that these cases are not being properly investigated and that they cause an imbalance of power between employer and employee to the detriment of the employee.

What does a Non-Disclosure Agreement cover?

NDAs cannot stop an employee’s reported alleged illegal acts. If a manager or colleague faced allegations of or fraud, for instance, reporting these to the police would not be prevented.

Allegations of an employer making inappropriate comments, or bullying could be covered. However bullying may be illegal if it relates to certain protected characteristics such as race, religion, age, disability or sexual orientation. 

The length of time for which an NDA applies will vary for each agreement. 

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Are Non-Disclosure Agreements legally binding?

The contracts are legally binding so that if you are a victim and you sign one, receiving a financial pay-out, you are prevented from talking to anyone about the allegations.

Can a Non-Disclosure Agreement be broken?

If you breach a valid, legally compliant NDA, then it is classed as breaching a contract, leaving you liable to legal action.

If a company thinks it is likely the NDA is going to be breached, then they can apply for an injunction. If you then breach an injunction, this is a criminal offence, and can lead to a fine or jail for those found guilty.

What if an employer wants to settle a discrimination case?

It is common to settle disputes, including for discrimination by settlement agreements. These can include confidentiality provisions but must not prevent whistleblowing or reports on criminal offences.

Do whistleblowers have legal protection? 

NDAs cannot be used to prevent workers from whistleblowing. Any clause aiming to prevent you from making a valid public interest disclosure will be void. 

References

These can be included in the settlement agreement and will not be contrary to an NDA or confidentiality terms.

Enforceability

Confidentiality and non-derogatory comments provisions can form valid, important parts of the deal for all parties in a transaction or settlement but must be drafted with care and in measured terms that are legally enforceable and compliant. We can assist you in advising and drafting on these.

At Tees we have a team of employment law specialists who can help you with any of the issues discussed here and provide support whether you choose to sign an NDA or contest it.

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