Non-disclosure agreements, what are they and how do they work?

Despite being commonplace in certain industries, there is often a sense of confusion surrounding non-disclosure agreements (NDAs) and exactly how they can be used in the workplace.

Changes to contract


NDAs, or ‘gagging clauses’ as they are also referred to, are legal contracts used to prevent people from discussing confidential business information and keeping trade secrets private. In most organisations these will typically be reserved for more senior employees with a greater level of responsibility and a more detailed understanding of business operations.  However, there is no restriction on these and employers can request that all staff sign NDAs as a standard business procedure if they so wish.

Individuals are usually asked to sign these as part of their contracts of employment or when they announce plans to depart the company, thereby protecting sensitive information from falling into the hands of a competitor. It will perhaps not be surprising that these are commonly used in the financial and legal industries where client confidentiality forms an integral part of business operations.

NDAs and sexual harassment

Under current legislation it is perfectly acceptable to ask staff to sign a NDA, and the government offers guidance on their usage. However, a string of recent developments has led to calls to ban NDAs, with leading charities suggesting they facilitate sexual harassment in the workplace.

Many will recall this year’s Presidents Club Dinner scandal where hospitality workers, who suffered sexual harassment at the hands of dinner guests, were asked to sign NDAs beforehand in an attempt to secure their silence. There is also a growing number of stories of NDAs being used in conjunction with financial pay-offs to staff that raise valid grievances against their employers for alleged inappropriate behaviour.  This is certainly a worrying trend whereby employers can hold staff to the terms of these contracts and prevent them from discussing any incidents with the press or relevant authorities.

When used correctly and for legitimate business purposes NDAs can form an important part of a successful business by protecting intellectual property. With this being said employers need to make sure NDAs are used appropriately as opposed to creating a scenario that fosters bullying, harassment or racist behaviour towards staff.

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