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What Is a Non-Disclosure Agreement?

A non-disclosure agreement (NDA) – sometimes called a “gagging clause” – is a contract to stop people discussing certain information, usually of a private, sensitive or confidential nature, and usually for an indefinite period of time.

A common example is a confidentiality clause in a settlement agreement between an employer and an employee. Confidentiality clauses often cover sensitive commercial information, preventing staff using trade secrets after they leave an employer, but also can cover the circumstances leading up to a termination, including details of any compensation payment and the terms of the settlement agreement reached.

NDAs have come under particular scrutiny recently in the context of sexual harassment allegations where they have been used to prevent victims of sexual harassment from speaking about their experience to protect the employer or the perpetrator’s reputation. In some circumstances NDAs and an unwillingness on the part of employers to properly investigate allegations of harassment have led to sexual harassment continuing. Recent high-profile examples include Harvey Weinstein and the Presidents Club.

Should NDAs be allowed?

Whilst employers should not be able to force people to sign NDAs, it is the case that many employees and victims of sexual harassment want an NDA to protect their sensitive personal information and reputation. As such, there is an ongoing need for NDAs because they assist parties in a dispute to reach a confidential and binding resolution without the delay, expense and risk of going to court or tribunal.

Both the Equality and Human Rights Commission and the Parliamentary Women’s Select Committee have recently reported on how these agreements should be monitored to prevent the abuse of NDAs. NDAs should never prevent or suggest that they prevent anyone from reporting relevant conduct to the police or an industry regulator, whether it is in relation to themselves or someone else, or from blowing the whistle. The government is also considering banning NDAs where the allegations amount to a crime, such as rape or sexual assault.

Responsible employers should lead by example and implement a system whereby all such allegations are routinely investigated and anonymously recorded so there is less risk of harassment of all kinds being swept under the carpet.

I Have Signed or Have Been Asked to Sign an NDA. What Should I do?

NDAs are fairly common at the outset of the employment relationship when you may be asked to agree to contractual clauses relating to confidential information and use of intellectual property. We advise clients to take legal advice before entering into a new employment contract to make sure the terms go no further than reasonably necessary and to make sure you are protecting yourself as the employee.

If an NDA is provided to you at the end of employment, this will typically be in the form of a settlement agreement and the law requires that you take legal advice if you are contracting out of your employment rights. If you have already signed an NDA and are not clear on what it means, a specialist in this area can also advise exactly where you stand.

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