Non-Disclosure Agreements (NDAs) have received significant media attention in recent years, leading many employers to question whether they can still be used.
The answer is yes—but only in the right circumstances.
According to Advisory, Conciliation and Arbitration Service, NDAs remain an important legal tool for protecting legitimate business interests. However, they cannot be used to prevent employees from reporting unlawful behaviour or exercising their legal rights.
Understanding where NDAs are appropriate—and where they are not—is essential for every employer.
What Is a Non-Disclosure Agreement?
A Non-Disclosure Agreement is a legally binding contract that requires one or more parties to keep certain information confidential.
For employers, NDAs are commonly used to protect:
- Commercially sensitive information
- Trade secrets
- Business strategies
- Customer information
- Confidential financial data
- Intellectual property
If an NDA is breached, the affected party may be able to pursue legal action for breach of contract and seek compensation.
When Are NDAs Commonly Used?
There are several situations where employers may legitimately ask an employee to sign an NDA.
During Employment
Many employment contracts include confidentiality clauses or NDAs to protect business information throughout an employee’s employment and after they leave.
When Employment Ends
NDAs are often included as part of exit arrangements, particularly where confidential business information remains relevant.
Settlement Agreements
Settlement agreements frequently contain confidentiality provisions.
These may require both employer and employee to keep details such as:
- Financial settlement amounts
- The terms of the agreement
- The circumstances surrounding a workplace dispute
confidential.
When Can’t an NDA Be Used?
There are clear legal limits on what an NDA can prevent someone from doing.
An NDA cannot stop an individual from:
Reporting Criminal Activity
Employees remain free to report suspected criminal offences to the police or other relevant authorities.
Whistleblowing
Anyone making a disclosure in the public interest about wrongdoing in the workplace is protected by law.
This includes concerns relating to issues such as fraud, health and safety, or other unlawful practices.
Reporting Harassment or Discrimination
An NDA cannot be used to cover up workplace harassment, discrimination or other unlawful conduct.
Discussing Equal Pay
Employees retain the legal right to discuss pay where this relates to equal pay rights.
Any clause attempting to prevent this is unlikely to be enforceable.
Why Employers Should Use NDAs Carefully
A well-drafted NDA can provide valuable protection for confidential business information.
However, attempting to extend confidentiality beyond what the law allows can result in agreements that are unenforceable and may expose employers to legal or reputational risks.
Employers should ensure confidentiality clauses are:
- Clear and proportionate.
- Focused on legitimate business interests.
- Consistent with current employment law.
- Regularly reviewed and updated.
Reviewing Employment Contracts
Employment law continues to evolve, making it worthwhile reviewing contracts and policies periodically.
This includes:
- Employment contracts
- Confidentiality clauses
- Settlement agreements
- Staff handbooks
- HR policies
Ensuring documents reflect current legislation can help avoid disputes and provide greater protection for both employers and employees.
Final Thoughts
Non-Disclosure Agreements remain an effective way of protecting confidential business information when used appropriately.
However, they should never be relied upon to prevent employees from reporting unlawful conduct or exercising their legal rights.
If you’re reviewing employment contracts, preparing settlement agreements or want to ensure your business complies with the latest employment law guidance, professional advice can help you stay protected.
If you’d like support reviewing your employment documentation or HR procedures, we’d be happy to help.
📞 01527 368220
📧 info@ojwassociates.co.uk
