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New guidance on non-disclosure agreements

Non-disclosure agreements have received quite a bit of negative media attention in recent months, largely thanks to examples of their use in cases of sexual misconduct, most famously in relation to Harvey Weinstein.  Non-disclosure agreements are otherwise known as NDAs, confidentiality clauses, or more informally ‘gagging clauses’, and feature in documents such as employment contracts, and settlement agreements which can be used to reach a legal agreement when an employee leaves an organisation.  They may also be a stand-alone document.

In response to this, ACAS (the Advisory, Conciliation and Arbitration Service) have recently released guidance on their use.  In this blog, the View HR team consider the key messages from this.

Why use an NDA? 

NDAs may be appropriate when used to protect company secrets, such as intellectual property, and many organisations in industries such as technology or entertainment may ask employees to sign one at the start of their employment for that purpose.  NDAs may also be used in certain dispute situations to keep details confidential.  For example, an employer may not want a former employee who has signed a settlement agreement to disclose the sum of money agreed to other parties, such as remaining employees.

When would an NDA be inappropriate?

NDAs cannot stop anybody from reporting a crime to the police, or whistleblowing, which is the making of a disclosure in the public interest.  They should also not be used to stop anybody reporting discrimination or harassment (including sexual harassment), or as an alternative to addressing an underlying problem, for example, a manager who persistently bullies different members of their team until they leave and then seek compensation.  It is also not appropriate to rush a person into signing an NDA if they have not had time to read and consider it, even if you consider the wording to be fairly standard.

What are the alternatives?

As in the example of the bullying manager above, NDAs can sometimes be used to create a culture of fear and/or silence.  In such a case, an investigation, potentially followed by disciplinary action if appropriate, may be able to address the underlying cause, and reduce the chances of an NDA (or settlement agreement) being required.  Clear and accessible grievance and whistleblowing policies and procedures are also important, within an open and inclusive culture which encourages employees to share concerns.  Appropriate management training may be necessary to achieve this, and can help improve productivity, reduce staff turnover, address problems at an early stage, and ultimately reduce the risk of legal action.

If you are an employer and have any questions about NDAs or settlement agreements, or the alternative approaches described above, the View HR team can help. Contact us today.