What’s a Non-Disclosure Agreement (NDA)?
If your employer has offered you a settlement agreement (or compromise agreement in Northern Ireland), it may well include a Non-Disclosure Agreement or NDA for short. There might also be an NDA in your employment contract. It’s also known as a confidentiality clause or gagging clause, and they are commonly used throughout the UK.
It’s important for you to understand all the terms of your contract, settlement or compromise agreement, including the NDA element. It’s enforceable by law, so you will be breaking the law if you break the agreement.
This article explains what you need to know, starting with typical scenarios when an NDA might be relevant…
Dispute with your employer
Your employer won’t want to risk you sharing sensitive company information, at any time during your employment. In particular, if you’re in dispute with them, you might be tempted to share inside information that would:
- Be useful to competitors
- Be interesting to the media
- Affect your employer’s reputation with shareholders, customers and suppliers
- Even cause legal proceedings
The NDA clause means you commit to keeping all that information to yourself.
Note that this doesn’t apply to whistleblowing – there is no law to stop you reporting your employer for breaching health and safety rules, for example. Also, if your employer is doing something illegal, you can (and should) report it to the Police. The NDA doesn’t stop you.
Taking redundancy
Employers don’t usually want employees to compare notes about the amount of redundancy pay they each receive. That’s why settlement agreements will usually include an NDA.
It means a portion of the money you get is in return for your promise to keep quiet about the amount, always and forever.
By the way, you can still discuss your salary with your colleagues or anyone else. The NDA doesn’t cover that.
Other situations
You might be offered a settlement agreement when you’ve been mistreated at work. Maybe you were discriminated against, for example. In some cases, you might want an NDA yourself, so nobody ever knows what happened to you.
Your employer should have zero tolerance policies for bullying and harassment, and provide training so all staff know what behaviours are unacceptable. If, despite that, you still suffer mistreatment, they should investigate your complaint in an open, fair and transparent way. If they fail to do so, you have the right to make a claim to the employment tribunal.
Your employer may then offer you a settlement in return for you agreeing not to take the claim further, or the tribunal may award you a settlement for winning your case.
What might be included in the NDA?
The agreement will list the information that you mustn’t disclose. This may include:
- The settlement amount
- The fact that a settlement agreement exists
- To protect your employer’s intellectual property (IP)
- To protect the identity of their staff, customers and suppliers
- To protect their financial or other confidential information
Common-sense tells you that many of these requirements are reasonable from the employer’s point of view. But you don’t have to be forced to accept any or all of their requests. In legal matters, everything is up for negotiation!
There’s also a Non-Disparagement Agreement, which means you mustn’t say anything disparaging about the company or anyone who works there that might affect their reputation among customers, staff and others.
Note that NDAs should be written in plain English, and you should not be put under pressure or given an unrealistic time limit to sign it.
If your employer is insisting you accept their NDA and you’re not 100% comfortable about it, talk to us and we’ll help.
When an NDA can’t be used
Even if an NDA is in place, it can’t be used to stop you from:
- Making a protected disclosure or any disclosure required by law
- Reporting criminal offences to a law enforcement agency
- Becoming involved and co-operating with a criminal investigation or prosecution
- Reporting to a regulator
- ‘Blowing the whistle’ on unsafe or illegal practices at work
- Speaking to professional advisers, such as legal and medical advisors
Equally, an NDA can’t prevent your employer from making necessary legal and regulatory disclosures.
Disadvantage of NDAs
Acas guidelines state that employers should not use NDAs on a routine basis, but only when appropriate. This varies according to each individual situation.
Some NDAs are used inappropriately. For example:
- In cases of discrimination and sexual harassment, NDAs can protect the perpetrator
- Preventing victims from speaking about their experience means other victims are less likely to come forward
- NDAs can also prevent Board members and shareholders from truly understanding (and improving) the company culture
The UK’s Supreme Court said that breaching NDAs may be lawful if doing so in the public interest. For example, NDAs were used to cover up the actions of Mohammed el Fayed at Harrods, so it’s been a hot topic since the rise of the #MeToo campaign.
It’s possible that the law relating to NDAs will change in future – the Government said it would look at misuse of NDAs back in 2019, but no timescale has been announced.
Since 2015, the Department for Work and Pensions has not used NDAs in its settlement agreements.
When the Higher Education (Freedom of Speech) Act 2023 comes into force, it will prevent English higher education providers from entering into NDAs with staff, students, visiting speakers and so on in relation to sexual abuse, harassment, misconduct and bullying. The review of the Act began in July 2024 but changes won’t happen until a future date, still to be specified.
In 2019, city worker Nathalie Abildgaard made a claim of sexual harassment and victimisation against IFM which was settled for around £270,000 – and she didn’t have to sign an NDA as part of the deal.
However, without including an NDA in a settlement agreement, employers might be more likely to wait to see if a case really is going as far as the tribunal, before they agree to settle.
What this means to you
Paul Doran – Director
As you can tell, NDAs are a key part of settlement negotiations.
We are UK employment lawyers who only act for employees, not employers. If an NDA is appropriate for your settlement agreement, we’ll tell you. If not, we’ll negotiate it out.
Either way, we’ll help you understand the implications so do please give us a call on 0808 168 7288.
Related reading
We’ve written articles about settlement agreements before. Here’s just a small selection:
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