Non-Disclosure Agreements (NDAs) are legal contracts designed to protect sensitive or confidential information from being shared or misused. In the UK, NDAs are commonly used by employers when disclosing proprietary business information to employees, contractors, or third parties. These agreements set out the terms under which information can be shared and the restrictions on its disclosure to others. NDAs are particularly useful during business discussions, employment relationships, mergers, or when working with external consultants. Employers must ensure their NDAs are clear and proportionate to be enforceable under UK law, as overly broad or unreasonable clauses could render the agreement invalid or unenforceable in court.
Legal framework and recent developments
Current legal position
Under current UK law, NDAs cannot prevent individuals from making protected disclosures (whistleblowing) under the Public Interest Disclosure Act 1998. They also cannot prevent employees from reporting a suspected crime to the police or seeking professional support, such as from regulated legal or healthcare professionals. Employers should ensure NDAs are used appropriately, clearly drafted in plain English, and do not infringe on employees’ legal rights.
Recent legislative changes
The Labour Government has recently announced its intention to press ahead with a proposed ban on the use of NDAs by Higher Education bodies, as contained in the Higher Education (Freedom of Speech) Act 2023. This ban concerns victims of bullying, harassment, and sexual misconduct, and means that any agreements entered into by Higher Education bodies seeking to restrict individuals from publishing details of such complaints will be banned. This development impacts Higher Education bodies only but could potentially extend to all employers if the Employment Rights Bill is amended to include a general ban on NDAs.
Implications of a general ban
A general ban on NDAs could have significant implications for employers. While it would not prevent the use of settlement agreements, it could mean that any provisions in such an agreement seeking to prevent the employee from disclosing the allegations or the existence of the agreement could be invalid. This could lead to a greater risk of allegations making their way into the press and causing reputational issues. Employers may be more likely to defend claims in an Employment Tribunal to have their version of events on the record, potentially creating more litigation for an already overwhelmed Tribunal system.
Practical considerations for employers
Drafting and enforceability
For an NDA to be enforceable in the UK, it must be clear, fair, and reasonable while complying with established legal principles. The agreement must clearly define the confidential information it seeks to protect and specify the purpose for which the information is shared. It must also set a reasonable duration for confidentiality, as indefinite restrictions may be seen as excessive unless justified, such as in cases involving trade secrets. An enforceable NDA must be entered into voluntarily by all parties, and the agreement must comply with existing legal protections.
Best practices
Employers should carefully consider each situation on an individual basis to determine whether an NDA is genuinely necessary. NDAs should not be used as a default solution and should only address the specific risks they aim to mitigate. Employers should ensure NDAs are written in clear, plain English to avoid any ambiguity and should seek legal advice to ensure the agreement is robust, legally compliant, and tailored to their specific needs. By doing so, NDAs can be an effective and lawful tool for protecting commercial interests and trade secrets.
Ethical considerations
The use of NDAs has come under scrutiny in cases where they have been used to ‘silence’ employees from raising concerns about unlawful behaviour, such as harassment, discrimination, or whistleblowing. Misusing NDAs to silence employees can lead to public scrutiny, legal challenges, and employment law claims. Employers must consider reputational risks and ensure NDAs are used appropriately and ethically to avoid legal and reputational risks.
Future outlook
Potential legislative changes
The UK government is progressing with changes to the law on NDAs in the employment context, aimed at preventing their misuse to silence victims of workplace misconduct. The Employment Rights Bill, currently under parliamentary consideration, may be amended to prevent employers from using NDAs to suppress complaints of harassment, discrimination, or abuse. Under the proposed changes, confidentiality clauses would only be enforceable if the employee has specifically requested them.
Learning from Other Jurisdictions
The UK is not the first to consider a ban on NDAs. Similar changes to the law have already been made in Ireland, Canada, and the US, where NDAs cannot prohibit disclosure of sexual harassment, discrimination, or bullying without it being the expressed wish of the employee. In Ireland, the Maternity Protection, Employment Equality, and Preservation of Certain Records Act 2024 introduced significant changes to the Employment Equality Act 1998, particularly regarding NDAs. The Act now restricts the use of non-disclosure provisions in cases involving allegations of discrimination, victimization, harassment, or sexual harassment.
This article was created with insights from Lex HR - your always-on HR legal assistant. Lex HR helps HR professionals navigate complex employment law with confidence, providing real-time, reliable advice tailored to your needs. Try it free today and see how much easier compliance can be.
