What is a Non-Disclosure Agreement (NDA) and when is it used?

Year Published: 2019

Non-Disclosure Agreements (NDA) are frequently used to protect confidential information being revealed either publically or, in the commercial sense, to a competitor. These agreements, between employer and employee, will stipulate what information must remain confidential and under what, if any, circumstances the information can be used or disclosed.

Are Non-Disclosure Agreements a new phenomenon?

Charlie Wood, Employment Law & HR Solicitor at SAS Daniels

Charlie Wood, Employment Law & HR Solicitor

Although NDAs have been in the press a lot due to the allegations against Sir Phillip Green, this is not to say they are a new creation. For example, a properly drafted employment contract should contain a clause that deals with confidentiality, this in effect is a form of an NDA. For employers, it is essential that any contract of employment makes provisions for confidentiality – otherwise they may have to rely on an individual willingly entering into an NDA further down the line when the relationship may have already soured.

Is a Non-Disclosure Agreement the ‘weapon of choice’ to silence claims of sexual harassment?

It appears that there has been a blurring of lines in the media when it comes to reporting on NDAs. It is important to realise that NDAs only protect against the disclosure of confidential information. However, an NDA would not prevent an employee from bringing a claim against their current, or former, employer in an Employment Tribunal or making a protected disclosure (blowing the whistle).

In order to be properly protected, an employer should use a Settlement Agreement as this will offer them protections against employment claims whilst also making provisions for confidentiality.

What does this mean for employees?

It is therefore understandable that, without proper advice, Settlement Agreements and Non Disclosure Agreements can give the illusion of gagging an individual, when in fact this is not strictly true. The key question here is whether SAs/NDAs can stop someone raising allegations of sexual misconduct. If there is an employment relationship, then the short answer is NO.

This is because any agreement in this situation would be void in so far as it purported to preclude a worker from making a protected disclosure (i.e. whistle blowing) to either their employer or to a ‘Prescribed Person’. A Prescribed Person being a regulatory body set up to deal with issues raised in a particular industry (a list of these can be found on the UK Government website).

Crime and whistleblowing

Where there is an allegation that a crime has been committed, such as a serious sexual assault, there are certain exceptions in addition to whistleblowing protections that would allow an individual to contact the police in order to report the incident, regardless of whether or not they have signed an SA/NDA. So the concept that people who may have committed a serious act of sexual misconduct can simply pay to silence individuals, and avoid any criminal repercussions, is not true.

What support or advice is available to employees?

It is also important to note that during the process of being offered a SA, an employee must obtain advice from a relevant independent legal adviser on the terms and effect of the proposed Agreement before signing it. This is a legal requirement and without this advice the Agreement will not be legally binding. You should always be advised, be it company or individual, that any provision in an agreement which aims to prevent someone from “blowing the whistle” will not be legally enforceable. Therefore it may be poor advice, not necessarily the agreements themselves, that leads to individuals believing they have been ‘gagged’.

What does this mean?

It is unlikely that there will be any significant changes relating to NDAs/SAs in the near future as the relevant protections and loopholes are already in place.

If you have received a Settlement Agreement/NDA or if you wish to issue one to an employee, please contact Charlie Wood in our Employment Law and HR team on 0161 475 7673.

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