Non-Disclosure Agreements (NDAs) – a blessing in disguise? 

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Non-Disclosure Agreements (NDAs) – a blessing in disguise? 

NDAs (confidentiality clauses) are popular in the business world. However, there is a suggestion that NDAs can help employers to cover up any illegal behaviour by paying employees or workers off and then binding them to silence with an NDA. Our Employment solicitor Clare Thomas explains what you can do to protect yourself from unfair NDA terms in settlement agreements. 

What is an NDA?  

Often found in settlement agreements – but can also be required before starting a project – NDAs stop business secrets and sensitive information becoming public.  

Settlement agreements are a common solution to employment disputes. They save time, money, and an appearance at an employment tribunal.  Typically, the employer agrees to pay the employee a lump sum and usually an agreed reference. 

The settlement agreement is private, resulting in the reputations of both employer and employee being undamaged. Under the Employment Rights Act the employee will receive independent legal advice before signing the agreement. But settlement agreements often contain NDAs. This is to ensure the agreement stays private, therefore continuing to protect the reputations of those involved. 

But why should you be wary of the terms in an NDA? 

The House of Commons Women and Equalities Committee reported in June on the use of NDAs in discrimination cases. It heard that employees and workers often get paid more under the terms of an agreement than they would receive in the tribunal, not to mention it takes a lot of time to get through a tribunal case. 

However, in the same report the committee found an unprecedented number of allegations of unlawful discrimination and harassment that are routinely covered up by employers with NDAs. Furthermore, it was reported that some allegations of unlawful discrimination were not actually investigated properly before being silenced by an NDA.  

Criminal investigations are avoided and in some cases employees and workers can’t give evidence in Court. Victims often suffer emotional and psychological damage and don’t receive support due to the inappropriate use of NDAs in settlement agreements. 

The committee believes that Government should place a duty on employers to protect employees and workers, and should: 

•  Ensure NDAs don’t prevent discussion of allegations of unlawful discrimination or harassment
• Require plain English confidentiality clauses
• Strengthen requirements that employers protect employees and workers from discrimination and harassment
• Require employers at board level (or similar) to oversee anti-discrimination and harassment policies and the use of NDAs in these cases. 

The Law Society has produced a downloadable leaflet, “Non-Disclosure agreements – what you need to know as a worker”.  

This document urges employees and workers to take legal advice before signing an NDA because there are certain rights employees and workers can’t be asked to opt out of. These include whistleblowing in the public interest and the ability to talk to the police or a regulator.  

What should you be looking for in an NDA? 

The NDA should be clear, time limited, and work for both parties, not just the employer. Employees and workers should always get a copy of the agreement. 

NDAs are not a common place legal document for many people. Therefore, it can be hard to know what to look for and to tell if you’re being treated fairly. At Bowcock and Pursaill we have a team of employment law specialists that can help to support both parties in drafting a resolution for their settlement agreement and reviewing the terms of the agreement for employees. 

Drafting agreements is a service which is also covered under the fixed fee Bowcock & Pursaill Employer Protection Scheme. Interested in finding out more? Contact Tim Wolley or Clare Thomas by calling 01782 200000 or email ct@bowcockpursaill.co.uk or tw@bowcockpursaill.co.uk