‘You may have heard that NDAs are now illegal; however, this is a misconception,’ says Frances Woods, Partner and Head of Dispute Resolution, with QualitySolicitors Parkinson Wright. ‘They remain legal and widely used for legitimate business interests. The change lies in their enforceability in certain contexts.’
‘NDAs are unlawful only where they attempt to silence victims of misconduct or prevent the reporting of crimes,’ Frances continues, ‘Legislative updates, like the Victims and Prisoners Act and recent amendments to Employment Rights, have eliminated the gagging power that some companies abused. While you can still legally sign an NDA to protect a company’s genuine commercial interests, any clause that seeks to bury illegal activity is now void from the second it is written.’
‘Often presented as a standard part of a contract of employment or as a condition of a settlement agreement, these documents can feel intimidating,’ Frances adds. ‘However, understanding your rights and the legal boundaries of these agreements is the first step toward ensuring you are protected.’
How your own solicitor can help
Because the line between a legitimate confidentiality clause and an illegal gagging order has become so thin, you should seek legal advice as soon as possible if you are asked to sign an NDA. Relying on your employer’s HR department or their in-house legal team is dangerous, because they do not owe you a duty of care; their loyalty lies with their organisation.
Our solicitors will help to guide you through the documentation, ensuring you do not sign away rights you are legally entitled to keep. In many settlement scenarios, the agreement is not even legally binding unless you have obtained independent legal advice from a qualified professional who has certified the document.
In addition, expert legal advice helps to protect you from unknowingly breaching a valid provision that could lead to costly litigation or being forced to repay settlement funds.
What can an NDA legitimately protect?
NDAs are still vigorously enforced to protect:
- customer or client information, such as sensitive databases, purchasing history, and pricing structures can be protected by an NDA;
- a company reputation, as businesses are allowed to prevent you disclosing sensitive business plans or internal operational details that are not related to wrongdoing;
- intellectual property, ensuring that things like proprietary designs, software code, and manufacturing processes cannot be shared outside a business;
- a settlement agreement, even if the underlying incident that led to a settlement agreement cannot be silenced, the specific financial terms of a payout can usually remain confidential; and
- trade secrets, including confidential know-how that gives a company a competitive edge.
What is not allowed or legally unenforceable?
UK law strictly prohibits NDAs from restricting:
- the reporting of a crime, and any attempt to prevent you from speaking to law enforcement officers is forbidden;
- whistleblowing, as you cannot be prevented via an NDA from reporting wrongdoing in the public interest, such as health and safety breach;
- discrimination and harassment, as you cannot be barred from talking about episodes of sexual harassment, racism, or other protected characteristics under the Equality Act 2010; and
- equal pay, where you cannot be banned from discussing your pay for the purpose of highlighting pay discrimination.
In addition, an NDA cannot be drafted in a way that prevents you from showing the agreement to a professional adviser such as your solicitor, doctor, or the police, while any attempt to stop you from sharing information with regulators, such as the Financial Conduct Authority or the Care Quality Commission, is unenforceable.
Key things to consider before signing an NDA
When reviewing an NDA, a solicitor will scrutinise the duration of the confidentiality obligations. Provisions should not be allowed to run indefinitely unless they involve highly sensitive trade secrets, such as proprietary formulas, which retain value for as long as they remain secret. For most standard commercial arrangements, solicitors will look for a duration of between two to five years, ensuring the restrictions are proportionate to the commercial relevance of the information being shared.
The definitions section of the document is also critical, as it must clearly specify what constitutes ‘confidential information’ without being overreaching. Your solicitor will examine whether the definition is so broad that it includes information already in the public domain. If these definitions are too vague or wide, they could effectively prevent you from using your own skills and experience in future roles, potentially making the clause unenforceable.
Finally, the geographic scope and legal framework of the agreement must be appropriate for your location and the nature of the transaction. If you are based in the UK, your solicitor will ensure the document is governed by the laws of England and Wales rather than an overseas jurisdiction. This ensures that any disputes can be resolved in local courts, avoiding the significant costs and complications associated with foreign legal systems, and ensuring the agreement remains subject to familiar regulatory standards.
Protecting your interests
You have the right to take independent legal advice and should be given reasonable time to do so. You must ensure the agreement protects your interests as much as the company’s; for example, if you are being asked to keep their information secret, you might request a mutual clause where they also agree to keep your personal information confidential.
Most importantly, you have the right not to be bullied. If an employer uses ‘high-pressure’ tactics, such as threatening immediate dismissal if you do not sign within the hour, the agreement could later be challenged in an employment tribunal on the grounds of duress.
How we can help
As highlighted above, early legal advice can be your best recourse for navigating this process. We do more than just read the text; we interpret the implications for your future career.
Our solicitors can help negotiate better terms, such as ‘carve-out’ clauses that specifically state that you are allowed to talk about your experience for the purpose of seeking new employment or reporting regulatory or criminal offences.
They ensure the document complies with the Solicitors Regulation Authority guidance, which forbids lawyers from drafting an NDA that prioritises corporate secrecy over the rule of law.
By getting legal advice early, you turn a potentially restrictive contract into a balanced agreement that respects both the company’s commercial needs and your legal rights.
For further information, please contact Frances Woods or a member of the dispute resolution team on 01905 721600 or via email: worcester@parkinsonwright.co.uk
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.