Madison has experience dealing with both contentious and non-contentious employment law matters. Madison advises a range of employers across various sectors on all aspects of employment law. Madison’s practice area includes advisory work and corporate transactions.
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This month's question:
When and why might Employers have a separate non-disclosure agreement (“NDA”) rather than just merely relying on the confidentiality clauses within an employment contract?
Express confidentiality clauses in agreements are used to expand upon an employee’s limited implied duties of confidentiality to ensure adequate protection both during employment and afterwards. In the employment sphere, they are most commonly seen in (a) compromise agreements to resolve employment disputes and (b) in contracts of employment to protect business’ commercially sensitive information. This likely becomes more important the more senior the employee.
Benefits of a well-drafted NDA and confidentiality clauses
These can be advantageous to both the employer and employee. They can facilitate a clean break after a contentious dispute, allowing the employee to continue their career without fear of their termination being used against them. For employers, it can mitigate potential reputational damage and keep the settlement details private from other employees.
When might an NDA be used instead of just relying on the confidentiality clause with the contract of employment?
With senior employees, the employer may require more detailed and tailored non-disclosure provisions. In this instance, it may be preferable to set these out in a separate NDA which could afford greater convenience and clarity.
An NDA can be tailored towards a role or section of the business, particularly if it is an area that demands higher levels of confidentiality or if the role means the employee will have greater access to confidential and commercially sensitive information. The provisions in the NDA can be tailored to cover specific information, situations, or periods of time that may not be adequately addressed in the standard confidentiality provisions of an employment contract.
However, it is worth noting if the employer wants to introduce new non-disclosure obligations, as with any contract, the usual contractual requirements will apply, namely offer, acceptance and valid consideration.
If you are considering the use of an NDA or reviewing your confidentiality clauses, it is highly recommended you seek specialist legal advice to assist as inappropriately drafted NDA and confidentiality clauses could render them unenforceable.
This article was provided by Madison Bowyer, an Associate in the Employment Law Group at Arthur Cox NI.
T:+44 28 9026 5886
E: Madison.bowyer@arthurcox.com
https://www.arthurcox.com/
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