HM Insights

Confidentiality in employment contracts: government looks at reform of law on non-disclosure agreements

If you've ever had to read a settlement agreement; a confidentiality agreement; or a confidentiality clause in a service agreement or long form employment contract, you'll likely have seen detailed provisions requiring confidentiality and non-disclosure of business-related information.

The basic premise is, of course, that an employer and employee can agree to designate information as confidential and agree that it won't be further disclosed. The primary limitation on such clauses comes from legislation permitting public interest disclosures to be made, with that legislation ensuring that any clause attempting to limit or restrain an individual's ability to make a disclosure is not effective.

Now, following a spate of scandals and concerns that silence is being bought by high profile or powerful persons, the Westminster government has issued a consultation document seeking views on new measures to prevent the misuse of non-disclosure agreements with workplace harassment or discrimination. This consultation is open until 29 April 2019 and can be found here

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Preventing workplace victims from disclosing criminal acts

An essential element of the proposed legislation is a ban on confidentiality clauses preventing a victim from reporting or discussing potential criminal acts to or with the police. This should not be too controversial or difficult to accept in the vast majority of cases, nor indeed as a matter of public policy and decency.

More significant, perhaps, is the suggestion that confidentiality clauses in employment contracts (as opposed to settlement agreements) should be contained in the written statement of particulars of employment issued at the start of the employment relationship.

In addition, the proposal is to require all confidentiality clauses to highlight the disclosures which confidentiality clauses do not prohibit, and making any confidentiality clauses which do not comply with this void in their entirety.

How can employers deal with potential changes?

Whilst this is at consultative stage only, the impetus behind the proposals strongly suggests that these changes will be brought in, meaning that all employers will need to be very careful in how they handle the question of confidentiality within offer letters, contracts and any settlement arrangements.

Clear, concise and legislatively compliant drafting will be essential. Our team of dedicated employment solicitors will be able to assist your business with any such drafting.