Recent developments have put Non-Disclosure Agreements (NDAs) into the spotlight, with significant implications for both employers and employees.
MPs urged to outlaw the misuse of Non-Disclosure Agreements
Earlier this week, former cabinet minister and Labour MP, Louise Haigh, joined campaigners to deliver a petition to 10 Downing Street, calling for a ban on the misuse of NDAs in cases of workplace harassment, discrimination, and abuse. The petition, which garnered over 91,000 signatures in just three weeks, comes as the Employment Rights Bill faces debate in the House of Lords.
This renewed focus on NDAs reform follows years of promised action, dating back to former Prime Minister, Theresa May’s, initial commitment to reform seven years ago. The Diversity Project – with the support of their chair, Baroness Helena Kennedy – continues to campaign to stop the misuse of NDAs. This has gained cross-party support, backed by prominent figures including Baroness Frances O’Grady (former first female General Secretary of the Trades Union Congress) and Baroness Susan Kramer (Liberal Democrat Lords Spokesperson (Treasury and Economy)).
The campaign is further strengthened by research from worker-led platform Organise (established to improve workers’ lives) which revealed in a survey of over 2,000 people, 29% of respondents have signed NDAs and 24% knew someone who had signed NDAs. This widespread use spans multiple sectors, from charities and financial services to healthcare and education.
Below, we have provided a summary of what NDAs are, when they can be legitimately used, and when they might cross legal and ethical boundaries.
What are NDAs?
NDAs – sometimes referred to as a confidentiality clause – in either an employment contract, confidentiality agreement, or settlement agreement, is a legally binding contract that restricts parties from disclosing certain information. In the employment context, NDAs typically serve two primary purposes:
- Protection of legitimate business interests – safeguarding trade secrets, client lists, financial information, and other proprietary knowledge.
- Settlement agreements – as part of resolving workplace disputes, often including provisions that prevent parties from discussing the terms of settlement or the underlying issues.
Legal and appropriate uses of NDAs
When used properly, NDAs play a valuable role in business operations:
- Protecting intellectual property and trade secrets – Essential for maintaining competitive advantage
- Preserving client confidentiality – Particularly crucial in sectors like legal services, healthcare, and financial services
- Safeguarding sensitive business strategies – Including merger discussions, product development, and expansion plans
- Facilitating open commercial discussions – Enabling parties to share information securely during negotiations
When NDAs cross the line
The current debate centres on when NDAs become problematic:
- Using NDAs to silence victims of workplace harassment, discrimination, or abuse
- Preventing employees from reporting criminal activity or legal violations
- Creating a workplace culture of fear and silence
- Inhibiting whistleblowing on matters of public interest
- Concealing patterns of misconduct that might otherwise be addressed
Current legal protections and limitations
Despite their legally binding nature, NDAs cannot override certain rights:
- Public Interest Disclosure Act 1998 – Protects whistleblowers who disclose information in the public interest
- Equality Act 2010 – Prohibits discrimination and harassment based on protected characteristics
- The Employment Rights Act 1996 – Provides protections against unfair dismissal for those who make protected disclosures
However, the complexity of these legal frameworks, combined with the inherent power imbalance between employers and employees, means that individuals often feel unable to speak out despite these protections.
Best practices for employers
For employers seeking to use NDAs responsibly:
- Be specific and reasonable – Clearly define what information is protected and ensure the scope is justifiable
- Consider the purpose – Use NDAs only for legitimate business reasons, not to conceal misconduct
- Allow exceptions – Explicitly state that the NDA does not prevent disclosures to regulatory bodies or law enforcement
- Provide support – Ensure employees have access to independent legal advice before signing
- Review regularly – Audit existing NDAs to ensure they comply with evolving best practices and legal requirements
Guidance for employees
If you’re asked to sign an NDA:
- Seek legal advice – Understand exactly what you’re agreeing to before signing and do not sign any document with an NDA without obtaining legal advice
- Clarify the scope – Ensure you understand what information is covered and for how long
- Know your rights – Remember that NDAs cannot prevent you from reporting criminal activity or exercising statutory rights
- Negotiate terms – Many aspects of NDAs can be negotiated to better protect your interests
- Keep records – Maintain copies of all documentation and correspondence related to the NDA
Potential legislative changes
The current push for reform through the Employment Rights Bill could result in significant changes:
- Explicit prohibition on using NDAs to silence victims of workplace misconduct
- Clearer guidance on when NDAs are appropriate
- Enhanced protection for those who speak out despite having signed NDAs
- Greater transparency requirements for employers regarding their use of NDAs
How Nelsons Can Help
Rachel Hatton is a Partner in our expert Employment Law team. Rachel has a strong reputation in all aspects of employment law, including Employment Tribunal litigation, discipline and grievance issues, and unfair and constructive unfair dismissal claims, and has particular experience in developing HR support services for businesses.
At Nelsons, our employment law specialists provide pragmatic advice on the drafting, implementation, and enforcement of NDAs. We support:
- Employers – Ensuring that and NDAs in contracts of employment, confidentiality agreements and settlement agreements protect legitimate business interests while remaining legally compliant and ethically sound.
- Employees – Providing clear guidance on your rights and obligations when presented with an NDA, particularly in settlement agreement discussions.
The landscape of NDAs in UK employment law is evolving rapidly. Whether you’re an employer seeking to protect business information appropriately or an employee concerned about your rights, our team can provide the tailored advice you need to navigate these complex waters.
For more information or to arrange a consultation with one of our employment law specialists in Derby, Leicester or Nottingham on 0800 024 1976 or via our online enquiry form.