In this article one of our specialist employment solicitors, Chris Hadrill, provides a brief introduction on what an NDA (“non-disclosure agreement”) is, what they are used for, when they should not be used, and why organisations use them.
What is an NDA?
An ‘NDA’ is short for ‘non-disclosure agreement’. A non-disclosure agreement can be either 1) a contract used to ensure particular information is kept confidential; or 2) a confidentiality clause used in a contract in order, again, to ensure that certain information is kept confidential. NDAs are therefore commonly equated to confidentiality clauses.
NDAs are, in an employment context, used in the following types of documents:
- In a contract of employment or service agreement;
- In an ACAS-conciliated ‘COT3’ settlement agreement;
- In a statutory settlement agreement; or
- In another form of contract (such as a consultancy agreement or agency agreement)
What are NDAs used for?
NDAs are generally used in order to maintain confidentiality regarding particular information – this could be, for example:
- To ensure that ‘confidential information’ (which would be defined by the contract) is kept confidential – this is, essentially, in order to protect ‘business secrets’;
- To ensure that the facts of a particular dispute between an employer and an employee is not disclosed to third parties;
- To keep the terms of a settlement agreement (whether a COT3 agreement or a statutory settlement agreement) confidential
NDAs are generally entered in to when the employment relationship commences, when it changes (for example, if the employee is promoted), and/or when the employment ends.
When should NDAs not be used?
An NDA should not be used to prevent ‘whistleblowing’, with examples of this detailed below:
- The reporting of a criminal offence;
- Disclosing breaches of health and safety or environmental protection to appropriate third parties;
- Disclosing a breach of a civil legal obligation where it is in the public interest to do so; or
- Where an employer has tried to cover up a criminal offence, breach of health and safety or environment legislation, or the breach of a civil legal obligation
An employee complains of a breach of GDPR legislation to their employer, and their employer tries to persuade the employee to sign an NDA to prevent them from reporting the breach (for example, to the ICO).
Even if the employee signs the NDA the employer, by law, cannot prevent them from ‘whistleblowing’.
Employers should not use settlement agreements to try and ‘cover up’ discrimination, harassment or sexual harassment in the workplace (as defined by the Equality Act 2010).
Why might organisations want to use NDAs?
Organisations may wish to use NDAs in certain circumstances:
- To keep its ‘business secrets’ confidential (such as, for example, client details, financial information etc.);
- To protect its intellectual property;
- To maintain confidentiality regarding things the employee knows about the workplace, clients or colleagues;
- To stop an employee from making adverse or derogatory comments about the organisation, colleagues, clients or suppliers; or
- To try and prevent the identity of an employee from being known if the details of a dispute are publicised
An employer becomes aware that an employee might make defamatory comments about it, or about other employees. The employer may request that the employee agrees to a confidentiality clause preventing the employee from making the derogatory comments
If you have concerns about the use by an employer of NDAs in the workplace then you may wish to get some legal advice.