Over the past few months, Wurkplace have been talking about the best HR approved ways to safeguard the interests of your business. This month, we’re going to go into detail on one specific way you can keep your corporate information safe: The Non-Disclosure Agreement.
It’s fair to say that some people are better at keeping secrets than others. These secrets could range from something small, like whether or not you were at the pub last night, to something large like whether or not your company director has just been sacked for misconduct.
In terms of sensitive information, personal data, or trade secrets, you should not rely on others to maintain confidentiality when they don’t need to. This is where a Non-Disclosure Agreement comes in.
What is an NDA?
A Non-Disclosure Agreement is a legally binding contract. This contract stipulates that parties may not repeat certain information. These contracts can be one-way, meaning only one party is sharing information, or mutual, meaning two or more parties are disclosing information.
NDA Vs Confidentiality Clause
In our previous blog, we talked about Restrictive Covenants, and while the Non-Disclosure Agreement sounds like it fits the bill, it’s a bit tricky. This is because you can have a standalone Non-Disclosure Agreement, or you can embed what is known as a Confidentiality Clause. This clause forms a restrictive covenant within a contract of employment or service.
When to use an NDA
These agreements can prevent the release of sensitive business information by implementing them before commencement of a job or supplier relationship. Or, as stated earlier, you may embed a Confidentiality Agreement into your contract of employment. You may prevent information about Settlement Agreements from surfacing by using an NDA.
Is it legally binding?
There are a number of factors to consider regarding the legality of a Non-Disclosure Agreement.
- Legal Contract:
An NDA is, ostensibly, a legal contract; Therefore, once signed, the contract is legally binding and both parties must adhere to the conditions set out in the contract.
- Which Country are they enforceable in?
Again, to state the obvious: Different countries have different laws in place. Some countries may be more relaxed regarding certain types of information, whereas others may be much more strict.
- Is it realistic?
Are the conditions reasonable? Is it reasonable for a person to adhere to the contract? This plays an important part in whether the agreement is legally binding.
- How long will it last?
Have you clearly defined the duration of the contract? Is the duration reasonable? For example, the duration of employment may be reasonable, whereas One Billion Years is not.
- Are you a public organisation?
The disclosure of some information is required under the Freedom of Information Act. This is applicable to public authorities.
What Can They Protect?
This depends on the type of information shared, the quality of that information, and the way in which that information is recorded or disseminated. For example, an NDA could cover emails and written messages, voicemails, or even casual discussions in an office. Here are just some reasons to use an NDA:
- Protect sensitive business information
- Shield customer lists and client information
- Monitor and protect the release of intellectual property details
- Ensure that shared information serves its intended purpose
- Manage reputation by concealing settlement details or partnerships
What Information is Exempt?
Thanks to the Public Interest Disclosure Act, there are a number of information types except within an NDA. These include information regarding:
- A crime which has occurred, is in process, or will occur
- An legal obligation whish has been breached, is being breached, or will be breached
- There has been or will be a miscarriage of justice, or that one is currently taking place
- There has been, is, or will be a danger to someone’s health & safety
- Environmental damage has occurred, is occurring, or will occur
- Concealment of information related to the previous subject has occurred, is occurring, or will occur.
If the information is given in good faith, it qualifies for exemption. They also qualify if the person disclosing the information has reason to believe that the information is true.
Can an employer request one?
The short answer is Yes; However, there are some things to consider from an HR perspective.
Firstly, do you need one? Is it worth protecting the information held within your NDA or Confidentiality Clause? If you’re an employer, it is important to be reasonable with your requests for confidentiality; Do you want to facilitate an open and high-trust work environment?
Secondly, comprehensive and ironclad workplace NDAs can limit the effectiveness of your HR. Will your employees feel confident that they can talk with you about matters within the workplace? For example, according to the Equality and Human Rights Commission (EHRC), NDAs have served to deter employees from discussing sexual harassment and bullying in the workplace for years.
What is the punishment for breaking one?
As with any legal contract the punishment for breaking one can vary. Breaking a contract can leave someone vulnerable to lawsuits. Someone breaching the contract may be sued for damages. Someone suspected of being in breach may be subject to an injunction.
If you need help with your employment contracts, Non-Disclosure Agreements, Whistleblowing Policy or any other, don’t hesitate to get in touch. You can contact us here, or call us on: 0330 400 5490.
Digital marketer and content writer.