The Government has announced that it is to consult on the use of confidentiality clauses/non-disclosure agreements.
A confidentially clause, also known as a non-disclosure agreement, is a legally binding contract.
They are commonly inserted into a contract and seek to prohibit the disclosure of trade secrets or confidential information.
What do Confidentiality Clauses do?
There are often legitimate reasons why parties want to enter into confidentiality arrangements.
Usually this is to prevent inappropriate sharing of sensitive information, which may leave a company exposed or to avoid reputational damage. Confidentiality clauses help formalise relationships and provide legal remedies if they are breached.
- They can be contained as a part of employment contracts and are intended to protect trade secrets and confidential information such as, how a company operates, a company’s data or clients.
- They can be used within Settlement Agreements, which are a method of resolving workplace disputes, which may lead to a claim in the Employment Tribunal. They are usually explicit within the settlement agreement but prevent information relating to the workplace dispute from being disclosed more widely to avoid reputational damage.
What information cannot be protected?
- Information that is already in the public domain
- 'Own skill or Know How'
- Public Interest Disclosures
- 'Whistleblowing' statements cannot be lawfully restricted, if disclosing information is in the public interest
Enforcement of Confidentiality clauses within Settlement Agreements
- Employment Tribunals have jurisdiction over the Written Statement of Particulars that must be given to all employees.
- The Civil courts have jurisdiction over issues of confidentiality and generally disputes arising out of settlement agreements.
Confidentiality clauses have legal limitations, but despite this, they sometimes can be approached unethically and used as a method of hiding workers of their rights and legal protections, to prevent them from making any kind of disclosure.
New Legal Proposals
The UK government has launched a consultation into concerns that some employers are abusing such clauses. They will begin to look at a potential need to implement new rules around confidentiality clauses. This will include the following;
- a ban on confidentiality clauses which prevent a victim reporting potential criminal acts to the police
- ensuring that if a confidentiality clause is included in a contract of employment, that the contract is issued at the beginning of employment
- ensuring that where confidentiality clauses are used, it is also highlighted between parties the disclosures which are not prohibited
Should confidentiality clauses not comply with the above proposed measures they may be void completely.